For a Foreign Portfolio Investor, regulatory Compliance does not end with obtaining an FPI registration.
The real challenge begins when something changes.
A change in control.
A change in beneficial ownership.
A change in eligibility.
Or even a change involving NRI control.
These events can trigger specific reporting and documentation requirements, often within strict timelines.
A recent SEBI Settlement Order in respect of Jetha Global Master Fund highlights exactly how quickly a compliance gap can become a serious regulatory matter.
The Applicant, registered as an FPI since October 23, 2021, entered into settlement proceedings with SEBI concerning alleged violations of the FPI Regulations and related SEBI requirements. The matter was ultimately settled for ₹78 lakh.
The order is particularly relevant for FPIs, fund managers, investment structures and entities whose ownership or control may change during the life of an FPI registration.
What Happened With Jetha Global Master Fund?
Jetha Global Master Fund was registered with SEBI as a Foreign Portfolio Investor.
According to the settlement order, the Applicant came under Non-Resident Indian (NRI) control from March 14, 2025 to October 8, 2025.
This resulted in a breach of the applicable eligibility conditions under the FPI framework.
The issue was not limited to the fact that the NRI control condition was breached.
The larger compliance problem involved when the change was reported, when supporting documents were submitted and what the Applicant continued to do while the breach remained unresolved.
That combination ultimately became the subject of SEBI's proposed enforcement proceedings.
The First Problem:
The NRI Control Breach Was Not Reported on Time
Under the FPI framework, a breach of an eligibility criterion is treated as a Type 1 material change.
The settlement order states that such a change was required to be intimated to the Designated Depository Participant (DDP) within seven working days, with supporting documents to be submitted within the prescribed timeline.
In this case, the breach became effective on March 14, 2025.
However, the Applicant informed the DDP only on September 29, 2025.
That means the notification came more than six months after the event.
The supporting documents were submitted on October 16, 2025, also substantially beyond the prescribed timeline.
This is an important lesson for FPIs:
A material change is not something that can simply be reported when convenient.
Once an event affects eligibility, the reporting clock starts running.
The Second Issue: A Change in Beneficial Ownership
The order also deals with a change in beneficial ownership arising from a change in control.
According to the order, the effective date of this change was April 29, 2025.
The change was required to be reported to the DDP, along with supporting documents, within the prescribed 30-day period.
However, the Applicant intimated the change only on September 19, 2025, while the supporting documents were submitted on October 16, 2025.
Again, the reporting took place several months after the event.
This demonstrates why FPI compliance teams cannot focus only on annual filings or routine reporting.
Ownership and control changes need to be monitored as they happen.
A change that appears to be a corporate or internal restructuring may have direct consequences under securities regulations.
The Bigger Concern:
Fresh Purchases Continued After the Rectification Period
This appears to have been one of the more significant aspects of the matter.
The settlement order states that where a temporary breach occurs, an FPI is required to rectify the breach within 90 days.
If the breach is not rectified within that period, restrictions can follow, including restrictions on fresh purchases and the requirement to liquidate existing positions within the prescribed period.
In Jetha Global Master Fund's case, the NRI control breach started on March 14, 2025.
The 90-day rectification period therefore expired on June 12, 2025.
However, according to the order, the Applicant continued to make fresh purchases even after the expiry of this rectification period.
The DDP ultimately blocked the account from making fresh purchases on September 29, 2025.
This turned what could have been a temporary eligibility issue into a broader compliance matter involving the conduct of the FPI while the breach remained unresolved.
The Importance of Getting the Declaration Right
There was another issue that should not be overlooked.
The Applicant had submitted a letter dated March 10, 2025, stating, among other things, that the proposed change would not affect its eligibility under the FPI Regulations.
According to the settlement order, this declaration was incorrect because the Applicant subsequently failed to satisfy the applicable NRI control eligibility condition.
The matter therefore also involved provisions concerning the FPI's obligations and its regulatory Code of Conduct.
This is a useful reminder for investment funds:
Regulatory declarations should never be treated as routine paperwork.
Before signing a declaration, an FPI needs to ensure that the underlying ownership, control and eligibility position has actually been reviewed.
An incorrect declaration can create an additional layer of regulatory exposure.
How ₹78 Lakh Settlement Was Reached
Jetha Global Master Fund filed a suo motu settlement application with SEBI under the SEBI (Settlement Proceedings) Regulations, 2018.
The purpose was to settle the enforcement proceedings that could be initiated in relation to the alleged violations.
The settlement was proposed on a neither-admit-nor-deny basis.
SEBI's Internal Committee considered the matter and recommended a settlement amount of ₹78 lakh.
The Applicant subsequently submitted revised settlement terms offering the same amount.
The High Powered Advisory Committee considered the proposal on May 6, 2026, and recommended settlement on those terms.
The recommendation was then approved by the Panel of Whole Time Members on June 1, 2026.
Following the Notice of Demand, the Applicant informed SEBI on July 2, 2026 that the amount had been remitted, and SEBI confirmed receipt.
The settlement order therefore provides a resolution to the proposed enforcement proceedings in respect of the specified violations.
What Does the Settlement Actually Mean?
It is important to understand the nature of a settlement order.
The Applicant proposed to settle the enforcement proceedings on a neither admitting nor denying the findings of facts and conclusions of law basis.
Therefore, the ₹78 lakh settlement should not simply be described as a finding that the Applicant admitted the alleged violations.
Instead, the order records the settlement of the proceedings on the agreed terms.
SEBI also retained certain rights under the Settlement Regulations.
For example, the order states that SEBI may take appropriate action if representations made during settlement are subsequently found to be untrue, if undertakings or waivers are breached, or if there is a discrepancy in the settlement amount.
What FPIs Can Learn From the Jetha Global Matter
The case offers several practical lessons for FPIs and investment managers.
1. Monitor Control Changes Continuously
Ownership and control should be reviewed whenever there is a restructuring, transfer, investor change or other significant corporate event.
2. Treat Eligibility Conditions as Ongoing Requirements
FPI eligibility is not simply checked once at registration. Changes in circumstances can affect continuing eligibility.
3. Report Material Changes Within the Timeline
Waiting several months to notify the DDP can significantly increase compliance exposure.
4. Stop and Review Activity When a Breach Occurs
If a temporary breach is identified, the fund should immediately understand the applicable rectification period and restrictions before undertaking further purchases.
5. Verify Every Regulatory Declaration
A declaration submitted to a regulator or DDP should be supported by a proper review of the underlying facts.
6. Maintain Strong Communication With the DDP
DDPs play an important role in FPI compliance. Any ownership, control or eligibility concern should be escalated promptly rather than handled informally or delayed.
Shunyatax Global's View:
FPI Compliance Should Be Proactive
At Shunyatax Global, we believe regulatory compliance becomes expensive when it is treated as a filing exercise rather than an ongoing process.
For FPIs, changes in ownership, control, beneficial ownership and eligibility can have consequences that extend beyond corporate documentation.
If you are an FPI, fund manager, investment entity or global investor dealing with SEBI compliance, material changes, NRI control, beneficial ownership or DDP reporting, a timely compliance review can help identify potential issues before they become regulatory proceedings.
If you are facing a SEBI-related problem or have received a communication from SEBI or your DDP, Shunyatax Global can help you understand the compliance position, review the relevant documentation and seek appropriate professional advisory support.
The best time to identify an FPI compliance problem is before the regulator does.