Is it time to revisit shareholding disclosure norms?

Is it time to revisit the disclosure rules for foreign portfolio investors or FPIs in terms of their holdings in Indian listed companies? 

Foreign investors play a significant role in the Indians stock markets and if one takes into consideration all the companies listed on the National Stock Exchange (NSE), the cumulative stake of foreign investors is pegged at a little over 18 per cent. 

While details regarding their holdings are disclosed as part of the quarterly shareholding data that all listed companies submit to the exchanges, given the current rule regarding such disclosures, the names of the FPIs are available only for a small portion of their total holding in Indian companies. 

Data from primeinfobase.com shows that the value of FPI holdings in listed Indian firms was pegged at Rs 57.78 lakh crore in the September quarter—an increase of 5.13 per cent over the previous quarter. 

In percentage terms, FPIs’ share was pegged at 18.40 per cent as on September 30, 2023, marginally lower than 18.96 per cent as on June 30, 2023. 

More importantly, data related to the names of FPIs who own shares in Indian companies is available in the public domain only for Rs 8.38 lakh crore out of the total Rs 57.78 lakh crore invested—which is just 14.50 per cent of the overall FPI holding. 

This is because current norms state that the name of the FPI shareholder—or for that manner any category of public shareholder—needs to be disclosed only if the entity holds more than 1 per cent in a company. 

This assumes significance as FPIs are the largest non-promoter category of shareholder in the Indian market and a more detailed disclosure regarding their holdings would only enhance the transparency standards of the stock market. 

“Disclosure of holdings of FIIs by name is only available for holdings in a company greater than 1 per cent... FIIs are the largest non-promoter shareholders in the Indian market and their investment decisions have a huge bearing on the stock prices and overall direction of market. It is thus time that complete details of all their holdings are made mandatory to be disclosed in India,” stated a recent release by primeinfobase.com. 

Per existing disclosures, the Government of Singapore is the largest FPI in terms of the value of its holdings in Indian listed companies—the value was pegged at Rs 1.83 lakh crore as on September 30. 

Vanguard, Invesco, Norges, Amansa, Goldman Sachs and BNP Paribas also feature among the biggest FPIs in the Indian stock market. 

 

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