Sebi finds no evidence Vinod Adani controlled FPIs, drops Adani MPS case

Sebi said there was no evidence of Vinod Adani directing the management or policy decisions of two FPIs that invested in listed Adani group companies.

The Securities and Exchange Board of India (Sebi) on Monday said that it could not establish that Vinod Adani, brother of Adani group Chairman Gautam Adani, exercised control over investments by two foreign portfolio investors (FPIs) in certain listed companies of the coal-to-port conglomerate, disposing of proceedings over alleged violations of minimum public shareholding (MPS) requirements.

 

MPS norms require that every listed company maintain at least 25 per cent public shareholding. Public shareholding excludes promoters and promoter group entities to determine whether a shareholder is genuinely independent or part of the promoter group.

 

In a final order issued on Monday, Sebi stated, “It has been held that there are no evidences of Vinod Adani positively directing management or policy decisions of the two FPIs. Similar finding has been recorded with respect to investment of Opal (Investments) in APL (Adani Power).”

 

 

“It is also observed that there is no allegation that source of financing of investments in the Adani Group Companies was Vinod Adani. If that had been the allegation and there were evidences to prove the same, the situation could have been different,” notes the Sebi order.

 

In an earlier show-cause notice, the market regulator had alleged an aggregate wrongful gain of ₹1,984 crore earned by the entities through a specific investment structure—based on the pattern of acquisitions by investors through FPIs Emerging India Focus Funds (EIFF) and EM Resurgent Fund (EMR) in shares of Adani Enterprises, APL, Adani Ports & Special Economic Zone, and Adani Transmission, now known as Adani Energy Solutions.

 

Sebi stated that the case has been examined based on an analysis of various judicial pronouncements, including that of the Supreme Court, where it was held that de facto control must be demonstrated with evidence of ‘positively directing management or policy decisions’ and should not be based on suspicion or business and financial relationships alone.

 

“Merely based on business or financial relationship, it cannot be held that Vinod Adani is in control of all of them. Any such conclusion would have unintended consequences for implementation of various securities laws in the capital market,” stated the order.

 

However, Sebi has established allegations regarding failure to furnish correct and complete information against Nasser Ali Shaban Ahli and Chang Chung-Ling, imposing a penalty of ₹20 lakh each.

 

Eighteen other entities named in the show-cause notice have already settled the proceedings by paying the settlement amount.