The Securities Exchange Board of India (SEBI) said its investigation into two crucial aspects raised by the Hindenburg Research report against the Adani Group continues to be in an “interim” stage.
The markets regulator said in a status report submitted to the Supreme Court that it had completed work in 22 of the 24 investigations initiated into the allegations raised by the U.S.-based entity against the Indian conglomerate.
One of the two investigations which has so far foxed SEBI is about the 13 overseas entities (12 FPI and one foreign entity) who were classified as public shareholders of the Adani group of companies.
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SEBI said it needed more information on the economic interest shareholders of these entities in order to ascertain whether there was any non-compliance with the minimum public shareholding requirement specified in Rule 19A of the Securities Contracts (Regulation) Rules, 1957.
“As many of the entities linked to these foreign investors are located in tax haven jurisdiction, establishing interest shareholders of the 12 FPIs remains a challenge. However, efforts are still being made to gather details from five foreign jurisdictions pertaining to the economic interest shareholders of the FPIs,” SEBI informed the court.
So far, SEBI has sent these external agencies approximately 90 communications seeking assistance.
In May, the Supreme Court-appointed Justice A.M. Sapre expert committee had flagged this very same problem in its report to the court.
The Justice Sapre panel had said SEBI had “drawn a blank” and was in a “chicken-and-egg situation” in its investigation into the “ownership” of 13 overseas entities, including 12 Foreign Portfolio Investors (FPIs), associated with the Adani group.
SEBI, however, had differed with the findings of the Justice Sapre committee. It had countered that the “challenge” to its enquiry into the Hindenburg-Adani allegations case lay in the fact that the requirement to disclose the “last natural person” or the ultimate owner of Foreign Portfolio Investors remained non-existent. In mid-August, SEBI had maintained that it had “substantially progressed” in its investigations.
The second investigation in an interim stage is about any unusual trade patterns in certain Adani entities at the time of release of the Hindenburg report.
Again, SEBI is waiting for information from external agencies.
The other areas in which SEBI has already given its final probe reports include manipulation of stock prices in contravention of existing laws, related party transactions and failure to disclose these transactions, violations of SEBI (Foreign Portfolio Investors) Regulations, SEBI (Substantial Acquisition of Shares and Takeover) Regulations and SEBI (Prohibition of Insider Trading) Regulations.