"Opaque FPI structures threaten the integrity of minimum public shareholding norms." Examine this in the context of recent SEBI enforcement actions.

Minimum Public Shareholding (MPS) norms require at least 25% of a listed firm's shares to be held by the public. This keeps trading liquid and prices fair. If no one can trace who really owns a foreign portfolio investor (FPI), shares linked to promoters can pass as public float. SEBI's September 2026 order in the Adani shareholding case shows that this threat is real.

How opaque FPIs undermine MPS

• Disguised promoter holding: offshore funds owned through several layers of companies can hold shares for promoters. This overstates the free float and makes prices easier to manipulate. SEBI itself named this risk of MPS circumvention [3].
• Beneficial-ownership gaps: petitioners told the Supreme Court that the 2018–19 FPI amendments, which deleted the "opaque structure" clause, blunted investigation [2].

Lessons from recent enforcement

• High evidentiary bar: SEBI cleared Vinod Adani. It held that his role with two FPIs was "advisory" and rested on "non-binding pacts", so effective control was not proved [1].
• Settlement, not adjudication: 18 of 30 noticees, including Gautam Adani, settled the alleged MPS violations [1]. This was quick, but it left open whether the public float was overstated.
• Delay: in Vishal Tiwari v. Union of India (2024), the Supreme Court refused an SIT and asked SEBI to finish its probes "preferably within three months" [2]. The final order came over two and a half years later [1].

The counter-view

• The Court accepted that the 2018–19 amendments were no regulatory failure [2]. A regulator must act on proof, not suspicion. Stretching the meaning of "control" could deter genuine foreign capital.
• SEBI's August 2023 circular now requires detailed ownership disclosure from FPIs with over 50% of their equity assets in one corporate group or over ₹25,000 crore in Indian equity [4]. A 2025 proposal to double the size threshold, however, shows pressure to ease these rules [5].

Way forward

• Keep the 50% concentration test even if the size thresholds are eased.
• Codify indicators of control for FPIs, such as regular trading advice combined with family or financial links to the promoter.
• Publish a factual summary even in settled cases, and speed up information-sharing with foreign regulators through the IOSCO MMoU.

Opaque FPI structures weaken MPS norms mainly because control through them is hard to prove, not because rules are absent. Layered disclosure, a codified control test and transparent settlements can protect investors while keeping foreign capital flowing, fulfilling the SEBI Act, 1992's twin mandate of investor protection and market development.