India's markets regulator rejected applications last week from at least three Mauritius-based funds with investments in the Adani Group to settle cases of regulatory violation involving failure to disclose their shareholder details, two sources with direct knowledge of the matter said.
Thirteen of the Adani Group's offshore investors have been facing an investigation by the Securities and Exchange Board of India (SEBI) since Hindenburg Research in 2023 alleged improper use of tax havens by the group, prompting a stock selloff. The group has repeatedly denied wrongdoing, and its shares have since recovered.
Indian regulations require that at least 25% of a listed company's shares be held by public shareholders, but Hindenburg alleged the Adani Group breached those rules since some offshore funds with Adani company holdings were related to the conglomerate.
Last year, SEBI found two of the 13 offshore funds breached its rules when they failed to disclose their acquisitions of certain Adani stocks exceeding 5% — as was required by Indian regulations — and for impeding investigations.
SEBI last week rejected the applications of at least three more of the investors after they disagreed with the regulator over the monetary fine SEBI sought as part of a settlement, the two sources said. Reuters could not ascertain the names of the funds.
SEBI did not immediately respond to an emailed Reuters request for comment.
As part of the proposed settlement, the regulator sought details of the funds' shareholders, a condition the offshore investors opposed, one of the sources said.
A settlement would have allowed the funds to resolve the proceedings without admitting or denying the regulator's findings. The cases could now proceed through SEBI's enforcement process including disclosure of regulatory findings, licence suspension in India and monetary penalties.
