Why SEBI has issued a show-cause notice to Adani Group
What's the story
The Securities and Exchange Board of India (SEBI) has sent a notice to the Adani Group, alleging the conglomerate wrongly classified some investors as public shareholders.
Adani Energy Solutions revealed the development in its September quarter results filed today.
The company confirmed receiving the show-cause notice (SCN) during the period but did not provide further details.
Company's response
Adani Energy Solutions to respond to SEBI's notice
Adani Energy Solutions has promised to reply to the regulatory and statutory authorities in due course.
The company said, "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 intends to provide information, responses, documents and/or clarifications as required by these authorities.
Legal status
Adani Group faces no further regulatory proceedings
Adani Energy Solutions has clarified that apart from two pending show-cause notices, there are no additional regulatory proceedings against the company.
The statement is based on independent opinions from lawyers and an accounting review conducted by the Adani Group.
The firm also received another notice from SEBI in the March quarter, questioning the validity of peer review certificates issued by its statutory auditors, which remains unresolved.
Allegation denial
Adani denies allegations of violating MPS norms
Adani Group has denied allegations leveled by US-based short-seller Hindenburg in a January 2023 report.
The report alleged that the group violated minimum public shareholding (MPS) norms, and hinted at links between some foreign funds with stakes in the Adani Group and promoter entities.
As per SEBI rules, every listed company must have a minimum of 25% of its equity owned by public investors, with any investments linked to the promoter group classified as promoter holding.