Sebi's Adani Group Investigation Finds Violations Of Disclosure Rules: Report

The Securities and Exchange Board of India (SEBI) found a violation of regulations on disclosures by listed businesses and limits on holdings of overseas funds during its examination into Adani Group, according to sources told Reuters, published in a Money Control report.

The SEBI investigation came after the US-based Hindenburg Research raised many concerns about corporate governance in a study on the Gautam Adani-led Adani Group in January of this year.

After a US short-selling business presented charges regarding the Adani group, the company's market value was reduced by about USD 100 billion. Since January, the company has denied the charges presented in the Hindenburg investigation.

According to Reuters, these infractions are of the "technical" variety. Following the conclusion of the inquiry into their offences, no further action would be done other than the monetary penalty.

The Supreme Court, which is hearing the case involving SEBI's inquiry of the Adani group, is expected to hear the case on Tuesday.

The regulators have no intentions to disclose the reports until they have issued orders against the Adani group, according to the sources. SEBI did not react to an email on the subject either.

Earlier on Friday, SEBI informed the Supreme Court that its inquiry into Adani Group's dealings was nearly concluded. On Monday, Adani Group did not react to a Reuters request for comment on SEBI's findings. The market regulator has yet to respond to the e-mail request for comment.

According to sources, one of the investigation's key findings is a failure to disclose some related party transactions. According to the source, "transactions with related parties should be identified and reported." If this is not done, the financial situation of the Indian-listed company may be misrepresented. However, Reuters has not disclosed which companies have been scrutinised by SEBI.

SEBI stated in court records that it had investigated 13 incidents of related party transactions. According to sources, the maximum penalty for each infringement committed by each company might be Rs 1 crore.

The examination also discovered that the offshore fund's holdings in other Adani companies were not in accordance with the rules, according to the article. Under Indian law, an offshore investor may invest up to 10 per cent through the FPI mechanism. Greater investments are designated as Foreign Direct Investment (FDI). According to sources, some offshore investors have unwittingly exceeded this restriction.