The Supreme Court on Tuesday has directed Trinamool Congress (TMC) Member of Parliament Mahua Moitra to submit a detailed representation to the Securities and Exchange Board of India (Sebi) regarding the public disclosure of portfolio holdings by Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).
A bench of Justices B V Nagarathna and Satish Chandra Sharma was hearing Moitra’s plea, which calls for Sebi to mandate the disclosure of ultimate beneficial owners and portfolio holdings of AIFs, FPIs, and their intermediaries in India. During the hearing, the court asked whether Moitra had already made a representation to Sebi on the matter.
Court’s Directive
The bench observed that Sebi had not yet had the opportunity to consider the grievances raised in Moitra’s petition. Advocate Prashant Bhushan, appearing for Moitra, argued that the lack of public disclosure of AIF and FPI investments in India was causing significant issues in the financial market.
Moitra’s plea argues for greater transparency and investor awareness in India’s financial markets, which are growing rapidly with the increasing presence of AIFs and FPIs. The petition claims that, unlike mutual funds which are required to disclose their investors and investments, AIFs and FPIs operate under less transparent structures, raising concerns of market manipulation, money laundering, and tax evasion.
Sebi’s Current Position
Bhushan explained that Sebi currently mandates public disclosure of information for mutual funds and other regular investors. However, AIFs and FPIs are not required to make similar disclosures to the public. Sebi’s regulations require disclosures only for entities with assets under management above ₹50,000 crore, but even then, the disclosure is not made public.
Sebi has justified this policy, claiming that requiring disclosure for AIFs and FPIs could infringe on the privacy of these investors.
Court Scrutinity
The bench disposed of Moitra’s petition but allowed her the opportunity to approach Sebi with a more detailed representation of her concerns. The court further observed that if Sebi does not consider this representation within a reasonable time, Moitra has the legal right to seek other remedies.
Moitra’s Public Interest Litigation (PIL) aims to push for greater transparency in India’s financial markets, particularly concerning the disclosure of the ultimate beneficial owners and portfolio holdings of AIFs and FPIs, to ensure the integrity of India’s financial systems.
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