Adani Group gets SEBI notice over allegations of misclassifying certain investors

The company acknowledged receiving the notice during the quarter but did not provide further specifics, reported Moneycontrol.

"During the current quarter, a SCN (show-cause notice) has been received alleging wrongful categorization of shareholding of certain entities as public shareholding and consequences therefrom. The company will respond to the regulatory and statutory authorities by providing information, responses, documents and/or clarifications, as applicable, in the due course of time,” the disclosure read, according to the report.

Adani Energy Solutions stated that, based on independent legal opinions and an accounting review conducted by the Adani Group, there were no ongoing regulatory proceedings against the company, aside from two pending show-cause notices.

In addition to the notice regarding investor classification, SEBI had previously sent a notice during the March quarter questioning the validity of peer review certificates issued by the company’s statutory auditors. This issue remains unresolved, the report.

The company further noted in its quarterly results, "the management of the company concluded that there were no material consequences of the SSR (Hindenburg report) and the company continues to hold its position as regards the compliance of applicable laws and regulations."

In January 2023, US-based short-seller Hindenburg Research accused Adani Group entities of violating minimum public shareholding (MPS) norms, alleging that some foreign funds with stakes in Adani Group had links to promoter entities. The Adani Group has denied these allegations.

As per SEBI  regulations, every listed company must ensure that at least 25 percent of its equity is held by public investors.

Any investments by foreign portfolio investors with ties to the promoter group must be classified as promoter holdings.