Supreme Court refuses to order ‘full public disclosure’ of ultimate beneficiaries of AIFs, FPIs without ‘legal framework’

The Supreme Court on Thursday (October 29, 2026) refused to direct the Securities and Exchange Board of India (SEBI) to mandate full public disclosure of the details of ultimate beneficial owners who own and profit from Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs) operating within the Indian securities market.

A judicial order mandating full public disclosure of the individuals behind these AIFs and FPIs could be justified without the support of an existing “legal framework of Regulations”, the court said.

A three-judge Bench headed by Justice B.V. Nagarathna said it was ultimately for the Union government and the market regulator (SEBI) to put in a framework, based on which the court could issue a mandamus for “full public disclosure”. The court asked the Centre and SEBI to consider the need for bringing out suitable transparency Regulations.

“SEBI is the regulator. It has been granted certain powers. The situation in the country and in the international economy keeps on evolving,” Justice D.K. Upadhyay said.

The court was hearing a writ petition filed by Member of Parliament Mahua Moitra, represented by advocates Prashant Bhushan and Cheryl D’Souza, who argued that the rapid expansion of AIFs and FPIs in financial markets had given rise to serious concerns over transparency.

Unlike mutual funds, which were subject to stringent public disclosure norms, AIFs and FPIs operate under opaque structures, raising risks of market manipulation, money laundering, and tax evasion, the petition said.

AIFs registered with SEBl had increased over 30 times from 42 in 2013 to 1,528 in 2025, Ms. Moitra said. Their average Assets Under Management (AUM) had hiked by over 835 times from ₹1,437 crore in 2013 to almost ₹13 lakh crore by the end of 2024. Mr. Bhushan submitted that the Assets Under Custody (AUC) of registered FPIs was over ₹74 lakh crore in 2025.

In contrast, the total AUM of mutual funds in India was only around ₹68 lakh crore in 2025. While mutual funds were subjected to strict public disclosure norms under the SEBI Mutual Fund Regulations, 1996 and SEBI Collective Investment Scheme Regulation 1999, there were virtually no public disclosure norms for both AIFs and FPIs, the petition said.

Justice Nagarathna questioned why an MP wanted to “lend her name” and file a public interest petition under Article 32 of the Constitution. Ms. Moitra could have very well raised the issue on the floor of the House for discussion, the judge said

The MP was concerned about the lakhs of innocent investors, Mr. Bhushan said. It would be a “very dangerous proposition” for the court to suggest that an MP could not file an Article 32 petition in public interest, he said. Besides, he said, discussions have hardly taken place in the House in the recent past. The senior counsel pointed to Ms. Moitra’s expertise as a former investment banker.

“She is also an investor,” Mr. Bhushan said.

Then this was hardly a petition in public interest, Justice Nagarathna said.

“Is the court saying that no MP in the country can approach the Supreme Court under Article 32? As an MP, she is concerned about the fate of crores of people who are investing in the stock markets. She believes the opacity may lead to manipulation through AIFs and FPIs,” Mr. Bhushan submitted.

Justice Nagarathna pointed out that the court had the discretion to entertain writ petitions under Article 32. The judge reminded the counsel that the court had allowed Ms. Moitra’s petition against the premature release of 11 convicts in the Bilkis Bano gangrape case.

Solicitor General Tushar Mehta, for SEBI, said that disclosures of investments of AIFs and FPIs were, in fact, made to the regulator, and detailed investigation was conducted when warranted.

Mr. Mehta referred to the Supreme Court’s own judgment of January 2024 in the Adani-Hindenberg short-selling case (Vishal Tiwari versus Union Of India) that courts have only limited powers of judicial review into SEBI’s regulatory domain.