New Delhi, October 29: The Supreme Court on Thursday refused to direct the Securities and Exchange Board of India (SEBI) to mandate full public disclosure of the ultimate beneficial owners and portfolios of Alternative Investment Funds (AIFs), Foreign Portfolio Investors (FPIs) and their intermediaries, disposing of a writ petition filed by Trinamool Congress MP Mahua Moitra.

Source: LiveLaw

A bench of Justices BV Nagarathna, R Mahadevan and DK Upadhyaya held that there is presently no legal or regulatory framework that entails the mandatory public disclosure Moitra sought, and that in the absence of such a framework the Court cannot, under Article 32, issue a writ of mandamus directing it. The bench noted that disclosures by every AIF and FPI are in fact made to SEBI and custodians, enabling regulation, even though they are not made public entity-wise.

Appearing for Moitra, advocate Prashant Bhushan argued that the lack of public disclosure of ultimate beneficial owners had created opacity in the stock market and enabled potential manipulation, and that investors did not know who was investing into Indian companies through foreign entities or whether SEBI regulations were being violated. He said the requirement to disclose the ultimate beneficial owner existed earlier and was given up in 2018.

Solicitor General Tushar Mehta, for the government, submitted that the relief sought had implications for the national economy and that all relevant disclosures were already being made to SEBI and the custodians — the petitioner wanted them made public. During the hearing, Justice Nagarathna remarked that investors were not naive, a point Bhushan disputed, saying ordinary investors were very naive.

Source: LawBeat

The bench also questioned why an MP was pursuing the issue through an Article 32 petition, observing that she was at liberty to seek a discussion on the floor of the House, LawBeat reported. It said it was for the respondents to consider the matter in light of the discussions during the hearing. Moitra's petition had argued that, unlike mutual funds, AIFs and FPIs operate under opaque structures with minimal public accountability, raising risks of market manipulation, money laundering and tax evasion — concerns the Court did not accept as a basis to order public disclosure without a legal framework.