SEBI Set To Submit Final Adani-Hindenburg Report To Supreme Court: Report

India's capital markets regulator, SEBI, is soon expected to submit its report on the allegations made by US-based Hindenburg Research against the Adani Group to the Supreme Court.

The SEBI on Monday (14 August) sought a 15-day extension from the SC to furnish the status report on Adani issue.

The regulator said that its probe has progressed substantially and that it is awaiting information from foreign agencies to aid its efforts, reports Bar and Bench.

This report will be the final one, indicating that the regulator's investigation is now complete, Economic Times reported citing sources aware of the SEBI's probe.

SEBI has reportedly looked into various aspects, including whether the Adani Group manipulated the share prices of its group companies by exploiting loopholes in the minimum public shareholding (MPS) norms, and whether it failed to disclose related-party transactions.

The regulator's investigation, according to the people cited in the ET report, is unlikely to reveal any significant violations of MPS norms by the Ahmedabad-based infrastructure group, but it may include some findings related to the probe into related-party transactions.

Sebi has been given until 14 August by the Supreme Court to complete its investigation and submit the report. The case will be heard on 29 August.

The Hindenburg report released on 24 January caused a significant drop in the market capitalisation of Adani Group's listed companies due to allegations of related-party transactions and MPS norms violations.

The Hindenburg report released on 24 January caused a significant drop in the market capitalisation of Adani Group's listed companies due to allegations of related-party transactions and MPS norms violations.

The regulator had earlier identified 13 specific deals that are being examined to determine if they meet the legal criteria for related-party transactions.

On Saturday (12 August), Deloitte Haskins & Sells, a global audit firm, ended its six-year association with Adani Ports & SEZ. This decision was made due to concerns about the firm's ability to thoroughly scrutinise certain company dealings, including a transaction mentioned in the Hindenburg report, to determine if they qualify as related-party transactions.

Deloitte issued a qualified opinion, which means an audit report that is not clean, on Adani Ports' fiscal 2023 results after it said the Adani Group company refused to get an independent external examination done to address the auditor's concerns.

The SEBI reportedly faced challenges in investigating the Minimum Public Shareholding (MPS) issue mentioned in the Hindenburg report as around dozen transactions mentioned there involved investigation that were highly complex and spanned multiple foreign jurisdictions.

The lack of cooperation from overseas jurisdictions made it difficult for Sebi to obtain details about the foreign portfolio investors (FPIs) holding Adani Group stocks.

As a result, the regulator reportedly may not have a strong case against the conglomerate, which is owned by Gautam Adani, India's second-richest man, ET reported citing sources.

FPIs are part of the group of non-promoters/public shareholders in listed companies. According to SEBI, listed companies must maintain a minimum public shareholding (MPS) of 25 per cent.

According to the ET report, SEBI earlier suspected that some public shareholders in Adani Group companies were not truly public shareholders, and could be fronts for the promoters due to the regulator's suspicion that the ownership structures of 13 overseas entities (12 FPIs and one financial institution) that held Adani stocks were opaque.

The SEBI reportedly found that 42 investors - spread across seven jurisdictions - put their monies in these 13 entities.

The regulator had sought details on the ownership pattern of these 42 investors from various jurisdictions for the MPS-related investigation.