The Supreme Court of India said on Friday that it may give the Securities and Exchange Board of India (Sebi) another three months to complete its probe into the Adani Group. The court will hear the market regulator’s plea, along with other public interest litigations (PILs) on Monday. A bench consisting of Chief Justice of India DY Chandrachud and Justices PS Narasimha and JB Pardiwala stated that the court registry had received the report of the six-member AM Sapre committee on the issue and would hear the matter in the next hearing.
Advocate Prashant Bhushan, who was among the petitioners opposing the granting of additional time to the regulator, said that Sebi was a member of International Organisation of Securities Commissions (IOSCO) and could seek information from member countries, according to reports.
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The timelines for Sebi’s investigation will depend on the information and resources made available to them, said experts.
“The Adani-Hindenburg report had made several serious allegations against Adani Group companies, including financial irregularities, environmental violations and related-party transactions. These are complex issues, and Sebi will need to review financial records, interview company officials and stakeholders, and collaborate with other regulatory bodies. Given these factors, it is possible that the investigation may take longer than three months,” said Reena Bajaj, Associate Partner, Singhania & Co.
The market regulator had filed an application with the Supreme Court on April 29, seeking a six-month extension to complete its probe into the allegations levelled by US-based short-seller Hindenburg against the Adani Group.
In its application, the regulator had stated that it had formed a prima facie view on some of the allegations levelled in the Hindenburg report, including violations related to misrepresentation of financials, related party transactions disclosures, corporate governance matters, and minimum public shareholding norms in the context of FPI shareholding. It also mentioned possible stock price manipulation and trading in Adani Group stocks in the periods before and after the Hindenburg report, as well as a possible violation of Overseas Direct Investment (ODI), Foreign Portfolio Investment (FPI), short selling, and insider trading norms.
Sebi had stated that probe into some of these violations would take more time. For instance, it said the examination relating to 12 suspicious transactions was complex and had many sub-transactions. A rigorous investigation of these transactions would require collation of data and information from various sources, along with detailed analysis, including verification of submissions made by the companies. This includes financial statements of listed and unlisted companies, offshore entities, disclosures filed with stock exchanges, minutes of board meetings, and bank statements of the concerned entities.
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Sebi said that the detailed investigation process would also include depositions from various key managerial personnel, statutory auditors, and other relevant persons. In March, the apex court had directed the market regulator, which was already probing allegations against the Adani Group companies, to probe the allegations levelled by Hindenburg and specifically investigate if there was a violation of the minimum public shareholding norms in public limited companies, failure to disclose transactions with related parties, and any manipulation of stock prices.
Sebi was told to conclude the investigation within two months and file a status report by May 2. The regulator was also asked to apprise a six-member expert committee of the action taken following the court’s directions.