India Supreme Court rejects plea for disclosure of fund beneficial owners

The Supreme Court of India has declined a petition filed by Trinamool Congress MP Mahua Moitra seeking to mandate the Securities and Exchange Board of India (SEBI) to publicly disclose the ultimate beneficial owners and portfolios of Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).

A bench comprising Justices BV Nagarathna, R Mahadevan, and DK Upadhyaya disposed of the writ petition, stating that the court cannot issue a mandamus in the absence of an existing legal or regulatory framework for such full public disclosure. The court noted that if a legal regime existed and SEBI was failing to follow it, the court could direct compliance, but no such framework is currently in place.

Representing the petitioner, advocate Prashant Bhushan argued that the lack of transparency regarding actual investors in these vehicles creates market opacity and enables potential manipulation. He contended that large sums are invested in Indian companies through foreign entities without revealing the identities of the actual investors, which could lead to the manipulation of stock prices to the detriment of retail investors.