Mumbai: 2024 begins on an easier note for several foreign portfolio investors (FPI) betting on India. Among the offshore funds who were put off by the onerous disclosure rules imposed by the Indian capital market regulator, some now have a leeway.A number of FPIs that are pooled-vehicles from countries like Mauritius, Singapore, and Cayman Islands – though not from the US – will be able to meet the regulatory conditions that would exempt them from the new rules that require funds breaching certain exposure levels to reveal the identities of all its investors down to the last natural persons. According to a revised standard operating procedure (SOP) finalised by fund custodians, and ratified by the Securities Exchange Board of India (SEBI), on Friday evening, FPIs can report their global assets under management (AUM) – a key information needed to avail the exemption – through ‘self-declaration’, two persons who have reviewed the new SOP told ET.106428615Determining Global AUMThis marks a change from the initial SOP which had laid down that the global AUM can be determined only from regulatory filings or from the websites of the fund regulator in the respective country. This was a problem as the data is not available from such filings or website information. However, under the new SOP, the global AUM stated in the website of the regulated investment manager (or the asset management company) of the fund or its trustee will be accepted for verifying whether an FPI qualifies for the stern disclosure exemptions.The global AUM number assumes significance because a ‘regulated’ fund whose exposure to an Indian business group and to the Indian equity market is below 25% and 50%, respectively, of its global AUM is spared of the granular disclosure regulations.Funds Must be ‘Regulated’Besides keeping the share of India exposure in the global AUM below the threshold levels, the other condition for disclosure exemption is that an FPI must be ‘regulated’ by its home country regulator. This is a hurdle for FPIs from certain jurisdictions such as the US where the ‘fund manager’ is regulated but not the ‘fund’, thanks to the Investment Company Act, 1940 – the US law which requires only funds raising money through public offering to be registered with the US SEC. Funds that mobilise money through the private placement route – as most FPI pooled vehicles do – are not registered with the SEC.Thus, FPI pooled-vehicles from the US would not be able to avoid the disclosure rules as they can fulfil only one of the two conditions. Even though they can unambiguously state their global AUM, the fund vehicles per se are not ‘regulated’. However, FPIs from Mauritius, Singapore and even Cayman (a favourite jurisdiction for many US investors) where the ‘funds’ are regulated can claim exemption if the exposure to India is below the cut-off percentages of its global AUM. As against 11,000-odd FPIs registered with SEBI, only a small group of around 5% of them would be impacted by the disclosure regulations which were brought in by SEBI in the wake of the Hindenburg Report accusing the Adani group of stock manipulation and incorrect disclosures among other things.