The Indian Securities Exchange Commission (hereinafter hereby SEBI) launched a new regulatory policy on November 1, announcing more stringent information disclosure requirements for overseas investors, aiming to increase the transparency of the Indian financial market.The holding structure avoids supervision.

The landing of the new policy of the SEBI regulation marks the "short" of the US Xingdengbao Research Company at the beginning of this year.The large consortium represented by the Adanie Group has reached a new balance.From this perspective, the new regulatory policy launched this time not only shows the characteristics and trends of Indian capital market management, but also reflects India's increasingly fierce political internal fighting and the political and business relationships of dog teeth behind the Modi government.

People check the stock market information Xinhua News Agency/French Xin outside the stock exchange of Mumbai, India

Stock disaster accountability falls into the cycle of death

In January of this year, the United States Xingdengbao Research Company issued a heavy report, stating that the Indian chaebol Gaunt Adidani has a "serious financial fraud" and "manipulation of stock prices" behind the growth of asset -scale explosive growth in recent years.The Adida Group resolutely denied Xingdao's allegations, but the report still triggered the plunge of Adiden companies' stocks, causing the total market value of relevant companies to lose as much as US $ 140 billion in a few days, causing unprecedented financial tsunami in the Indian capital market.

In view of the intimate relationship between the Adidan Group and the Modi government, the Xingdenburg Report also triggered a strong response from India and other India in the country, and the latter criticized Modi to sacrifice the security and safety of the Indian financial system for the interests of the chaebol.Stable and become the puppet of "skirt capitalism".

In fact, in order to prevent major shareholders' control prices, SEBI has set up a "minimum public shareholding ratio", which requires that listed companies, including major shareholders, shall not exceed 75%.However, the Xingdenburg report pointed out that the Adida family transferred funds to overseas for a long time, injected off the offshore investment entity, and then disguised as a "overseas portfolio investment (hereinafter referred to as FPI)" to the Indian stock market, and then purchased the Ada Department enterprise concentratedly.Stocks, while hiding the true source of funds, achieve the purpose of expanding the proportion of real shareholding.

In this model, although the Adidin family does not have more than 75%on the surface of the listed company, if the "hidden shares" held through FPI are added, the real shareholding ratio will exceed the prescribed limit. ThisSevere public shareholders' shareholding ratios, so that the Adida family may manipulate the stock price through centralized holdings and consistent actions.

The allegations of the report of the Xingdenburg report caused the stock price of Adinny's enterprise to plummet. Not only did investors suffer heavy losses, it also impacted the Indian stock market confidence.Due to the general proportion of major shareholders of India's stock market, a large number of investors are worried that other Indian listed companies will also have the problem of Ada's enterprises -big shareholders use FPI to hide their real shareholders in order to manipulate stocks.

In response to this, the National Congress responded to public opinion and proposed to establish a "Joint Parliament Committee" to investigate the acts of Ada Dani Group suspected of fraud, manipulating stock prices and money laundering.At the same time, under the pressure of the Supreme Court of India and under the pressure of the wild party, it also issued an order on March 2 to promote two parallel investigations: First, the Supreme Court ordered the SEBI to complete the SEBI for the financial regulatory authorities to complete the target of the Adida company within the prescribed time limit.The survey, and this survey was actually launched in October 2020, because SEBI received many reports and complaints on Ada -shaped enterprises as early as June 2020; the second is that the Supreme Court formed a senior judge outside the SEBI.The expert committee composed of people in the financial industry investigates whether there is a "systemic loophole" in the regulatory system, including SEBI, and ask the expert committee to submit a conclusion report within 2 months.

On May 6 this year, the expert committee submitted a 173 -page report to the Supreme Court.Although this report clearly concludes that the conclusions of "no 'SEBI exist in regulatory loopholes' and" Adidni Group manipulate stock price' "also revealed more doubts: for example, although SEBI has been launched as early as October 2020, it has been launched for targeting in October 2020.Ada's investigation, but because of "insufficient evidence", did not further perform the relevant survey procedures; for example, although SEBI has been locked and investigated 13 offshore investment entities such as "tax avoidance paradise" from Mauritius, and it is determinedThese investment entities through the FPI share and existing shares of the Adida family, the shareholding ratio of many Adiden companies has exceeded 75%, but SEBI cannot determine the final beneficiary of these offshore investment entities (Final Beneficial Owner can not take substantial actions.

The report of the expert committee also clearly states that the reason why SEBI cannot further investigate is because India's information disclosure and FPI laws and regulations on the information disclosure of listed companies in 2018 and 2019 have been greatly modified.For example, in 2018, Indian law abolished restrictions on "unprecedented FPI investment", and in 2019, it also relaxed investment restrictions on "specific relations" and "specific relationship transactions".Obviously, the amendment of the above laws will provide convenience for the large shareholders to hide through the FPI and finally benefit everyone, so that the Adida family can even break through the upper limit of shares stipulated in the law under the condition of fully compliance.

This ambiguous state puts the SEBI investigation into the dead cycle of "chickens first, or eggs first": In order to determine the facts of the criminal, SEBI needs to have stronger investigation capabilities such as the Law Enforcement Bureau of the Ministry of Finance or the Indian Central Direct Tax Management Bureau, and law enforcement toolsMore regulatory agencies cooperate with the investigation, but these institutions in turn require SEBI to determine the facts of the crime first, and then they can provide further assistance.

Obviously, this survey has entered a weird state of "wanting to speak": Although the expert committee "cannot prove that SEBI has loopholes in law enforcement supervision", it implies that the root cause of the problem lies in the laws and regulations itself;, I also found a clue, but they could not complete the closed loop of law enforcement; although everyone "acts in accordance with the law" and "processes compliance", in the end, the collapse of Adidanic's corporate stock market still caused investors to lose heavy losses; although the National University Party identified the Modi government "Assist "amending laws and regulations to help Adoni enterprises control the stock price, but cannot come up with authoritative evidence.Because "no one is right", the question of accountability cannot be talked about, but because the stock disaster does happen and cause major losses, "strengthening supervision" is at least the largest number of equivalent of all parties.

On August 5, 2022, in Mumbai, India, a man walked through Xinhua News Agency/French New

New regulations: the results of the game of all parties

Regardless of the results of the survey, the Adina scandal has fully stated that under the existing system, major shareholders of Indian listed companies can easily use FPI to hide their true identities and control the stock price.Therefore, even if the expert committee believes that there is no loophole in the SEBI law enforcement supervision, even if there is no allegations of the Adiden Castle report on the Adidi Group, the SEBI must make a difference as a regulatory authorities to calm down the "collusion between politics and business" of the Wild Party to the Modi government.Attacking can also respond to Indian investors 'concerns about "major shareholders' illegal shares and manipulation of stock prices".

Therefore, within one month after the investigation report of the Expert Committee's investigation on May 6, SEBI began to disclose FPI information on May 31, and solicited opinions on the market and society extensively.On June 28, through the proposal of "compulsory disclosure details information", the FPI of specific types of FPI disclosed "actual ownership", "actual controller", and "ultimate beneficiary" and other small particle size informationMumbai Stock Exchange. The purpose is to master theseThe real situation behind offshore funds is used as a basis for strengthening supervision.

Under the new policy, the granularity of the disclosure of information has reached an unprecedented level, which can theoretically confirm that the ultimate benefit of overseas offshore entities can help SEBI better supervise the major shareholders of major shareholders.

However, the content of the new rules involved in information disclosure is unprecedented and has a wide range of details. It is very difficult to spread it as a general rule.Therefore, SEBI classifies the main body of the FPI based on the risk level, and then conducts key supervision.The new regulations of information disclosure point out that government funds, central bank funds, and sovereign wealth funds belong to the category of "low risk". Pension and public fund -raising funds are the category of "mid -risk"."High -risk" category.The new regulations also stipulate that the overseas investment entities of "medium risks" and "low risk" will enjoy exemptions to additional information disclosure.At the same time, the regulatory agency also designated additional exemption clauses, mainly to avoid new overseas investment needs that "require multi -party funds", especially exchanges trading funds (ETFs).

Obviously, the regulatory target for the new regulations for this round of information is exactly the offshore investment entity of "high risk".According to the new regulations, if the "high -risk" overseas investment entity managed asset size accounted for more than 50%of the Indian listed company, or investing in Indian stocks exceeding 250 billion rupees (about 3 billion U.S. dollars), it is necessary to disclose the investment entityAll the identity information of the owner and the final control of the event.The reason for the above stipulated conditions is to prevent overseas investment entities that are "concentrated" in specific Indian listed companies, because such entities are most likely to become shell companies for large shareholders to hide their real shareholding;Overseas investment entities with a large scale of stock market assets, because they hold stocks of different listed companies and have "system importance".

It is worth noting that the most important policy effect of the new rules of information disclosure is to greatly simplify the process of investigating the "suspicious investor" such as SEBI and other regulatory agencies. In particularAdministrative procedures required.For example, within 3 months of the new regulations, relevant overseas investment entities have the obligation to provide the above information. If they cannot be provided within the prescribed time, they cannot continue to hold and trading stocks in the Indian stock market.For another example, in order to dig out deep sensitive information, the new regulations also require relevant overseas investment entities to announce the abandonment of "the privacy of some jurisdictions to grant them."This means that Indian regulatory agencies such as SEBI will be able to break through the "privacy barriers" set up in other countries and regions and make "penetrating supervision" on suspicious overseas investment entities.

With reference to the report submitted by the expert committee, it is not difficult to find that the new rules of the SEBI this round have completely restored the foreign regulatory policy of being "loosening" by the Indian regulatory authorities -once again strengthen the information disclosure of overseas investment entities and comprehensively strengthen the "opaque transparencyStructure "FPI limit.Although the report of the expert committee did not say that the Modi government and the Indian regulatory authorities have never "admitted their mistakes", the policy "turning the cake" objectively shows that the Indian capital market has indeed occurred in serious regulatory issues.When he was concerned about the Modi government, the firepower of the opposition party led by the National University party was full of firepower, attacking the Indian People's Party and Adida Group on various occasions, and questioned "why in 2018 and 2019""Relaxing foreign regulatory policies" "" Who promotes this policy to relax? "" Can the new rules in 2023 disclosure the new regulations back to the "regulatory relaxation" after 2019? "Obviously, the opposition party believes that the relaxation of policy in 2018 and 2019 is the result of the benefit of the Modi government to send benefits to the Adida Group, and the current tightening of the policy not only does not investigate the responsibility of "collusion between politics and business", but also does not even acknowledge that the existing system existsSupervision issues.

On March 13, 2020, in Mumbai, India, a man passed the Mumbai Stock Exchange Xinhua News Agency/United

There are divergent opinions in the future of the new regulations

Although SEBI has formulated a new regulations than previously strict information disclosure, the actual effect is currently difficult to estimate.

Some financial practitioners pointed out that the new rules of implementation information disclosure may encounter many unexpected challenges.For example, if the new rules are strictly implemented, the supervised overseas investment entities must disclose the identity of the ultimate benefit behind the owner and the final controllers behind them, and also have obligations to provide real benefits and control.Multi -level private commission agreements, so these overseas investment entities may not have private information other than their legal obligations.This may make the information disclosure policy difficult to land, but affects the authority of the regulatory authorities.

Some financial practitioners believe that the new rules of information disclosure are too strict, and the strict level of many terms even exceeds the level of developed countries in the West, while the current scale, transaction intensity, and market development level of the Indian capital market do not require such rigorous rules.And too rigorous regulatory structure may not only kill market vitality, but also scare away many potential investors, objectively destroy the "foreign -funded friendly" strategy that the Modi government has worked hard in recent years.

At the same time, many insiders in the industry revealed that the new regulations for information disclosure are extremely strict and fine, so how the specific terms work will largely depend on the standards and methods of regulatory agencies' implementation.For example, the situation of overseas investment entities is very complicated. How to determine the relevant attributes not only depends on the situation of the investor's own statement, but also the qualitative of the regulatory authorities. There is a huge elastic space in the middle.This means that the seemingly harsh information disclosure new rules may create a larger gray area, objectively creating a regulatory environment of "high standard legislation, universal illegal, and selective law enforcement."

In this sense, although the Modi government uses more stringent regulatory regulations to put pressure on the wild party and social public opinion, and theoretically, it also helps to increase the transparency of the Indian capital market and restore investment confidence in investment, but the results of this also haveIt may be counterproductive -not only cannot punish the "skirt capitalism" forces with political protection, but also enhance the Modi government's free tailoring and macro control.For example, with the blessing of new regulations for information disclosure, regulators represented by the SEBI, the Indian Ministry of Finance, and the Indian Central Direct Tax Administration have more choice of policy tools when facing overseas investment entities.

Considering the relationship between the Modi government and the Adida Group, the latter's risk of suppressing competitors by strong supervision tools cannot be underestimated.

It is particularly worth noting that foreign trade has always been the "hardest hit area" of the Modi government's toughness in China, and the biggest motivation behind these policies is that India is concerned that "Chinese capital influx in a large amount, affects and even controls Indian capital.market".Considering that the Modi government has rejected India's direct participation in the country's projects since 2020, after 2020, after the implementation of the new regulations, the Modi government may completely strengthen the control of the Indian background FPI to comprehensively strengthen the control and control of the Indian background.EssenceAfter all, in the context of India's internal political struggle intensified and approaching the general election in 2024, the "toughness against China" and "hit Chinese capital" with national security may become an option that the Modi government and the National University party are welcome in wild forces.Essence(Author is an assistant researcher at the International Cooperation Center of the National Development and Reform Commission)