SEBI rejects charge of minimum public shareholding violation by Adani Group companies
SEBI has dropped allegations against four Adani Group companies regarding minimum public shareholding violations, concluding a probe started in 2020.
LABEL: FOCUS: Adani Group SEBI MPS violation LABEL: SEO_TITLE: SEBI Clears Adani Group of MPS Violation Charges LABEL: SEO_DESC: SEBI has dropped allegations against four Adani Group companies regarding minimum public shareholding violations, concluding a probe started in 2020. LABEL: TAGS: India News, India, Business, Adani Group LABEL: SLUG: sebi-rejects-adani-group-mps-violation-charges
SEBI Clears Adani Group of Minimum Public Shareholding Violations
In a significant development for the Indian capital markets, the market regulator Securities and Exchange Board of India (SEBI) has ruled that allegations of minimum public shareholding (MPS) violations against four Adani Group companies could not be established. This decision brings a close to an investigation that had been ongoing since 2020.
The Core of the Investigation
The probe was triggered by complaints received in mid-2020, which suggested that certain listed entities within the Adani Group were not complying with mandatory public shareholding requirements. Following these complaints, SEBI issued a show cause notice (SCN) targeting several key companies.
The allegations specifically focused on the period between 2013 and 2018, involving the following entities:
- Adani Enterprises
- Adani Power
- Adani Ports and SEZ
- Adani Transmission (now Adani Energy Solutions)
The SCN claimed that shares held by two foreign portfolio investors (FPIs) in these companies were, in reality, promoter holdings disguised as public shareholding. Furthermore, the regulator investigated potential violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, 2003.
No Evidence Against Vinod Adani
In a detailed 81-page order, SEBI stated that it found no evidence to support the claim that Group Chairman Gautam Adani's brother, Vinod Adani, exercised control over the two FPIs in question. The investigation had previously looked into whether Vinod Adani influenced investment decisions through business associates Nasser Ali Shaban Ahli and Chang Chung Ling.
The regulator clarified its stance on the relationship between these parties, stating:
"It has been held that no evidence has been produced which can show that Vinod Adani controlled Mr. Ahli or Mr. Ling and through them the investment decisions of Four Underlying Investors. Merely based on business or financial relationship, it cannot be held that Vinod Adani is in control of all of them."
SEBI further cautioned that concluding control based solely on financial or business connections could lead to unintended consequences for the implementation of securities laws across the capital market.
Dismissal of Fraudulent Trade Allegations
The regulator also addressed a similar allegation regarding the shareholding of Opal Investments Pvt Ltd. in Adani Power. Because the foundational claim—that there was effective control over the FPIs and Opal—could not be proven, the subsequent charges regarding MPS violations were also dismissed.
As the primary allegations regarding control and shareholding norms failed to hold up, SEBI subsequently dropped all related charges concerning fraudulent and unfair trade practices. The ruling effectively clears the four Adani Group companies of the specific regulatory breaches alleged in the 2020 investigation.