Explained: no RPT violations, no fund deviation. What the most important findings of Sebi in the Adani – Hindenburg case reveal

Marktregulator Securities and Exchange Board of India (Sebi) rejected the charges against Gautam Adani and his group companies on Thursday as a leadership to edge funds with the group in violation of the transaction standards of Sebi’s related parties. The latest orders were adopted in two separate cases.

In an order of 63 pages, the regulator said that the accusations against Adani and his group companies Adani Ports & Special Economic Zone (APSEZ), Adani Power and two others were not established.

“… After I have considered the issue holistically, I notice that the accusations against notification in the SCN are not determined. Given the above, the issue of the re-assignment of any liability for notification does not arise and therefore the question of the Sebi acts of the Sebi Act 19 of the Sebi Act 19 of the Section 11 and) of Section 11 and) and) of Section 11 and) and) of Section 11 and) and) and) of Section 11 and) and) of Section 11 and) and) and) of Section 11 and) and) of Section 11 and) and) of Section 11 and) of Section 11 and) and) of Section 11 and) () of Section 11 and Section 11 and) () Section 11 and) () Section 11 and Section, Section Section, Section Section.) Section. From section 11b of the Sebi Act, 1992 and subsections (1) and (2) of section 12a of the SCR ACT, 1956, the direct procedure against notification without direction, “said the order.

The allegations of Hindenburg

The report published by Hindenburg on January 24, 2023 claimed that Adicorp Enterprises PVT. Ltd. was a leadership to rug funds within the Adani Group. It said that 4 Adani companies Adicorp RS borrowed 6.2 billion ($ 87.4 million) in 2020, despite the weak financial profile. The report also claimed that the loans were not known in the financial data of the lenders, although some listed entities were. The report said that given the financial profile of Adicorp, the company would cost 900 years to pay back. In 2020, Adicorp then borrowed RS 6.1 billion ($ 86 million) to Adani Power, which was 98% of the funds received – the suggestion of funds has just been routed to support the stated entity, the report claimed.

The transactions were done during FY12-13 to FY20-21.

Adani Group denied these allegations and stated that Adicorp is not a connected party under the Indian law or accounting standards. It also claimed that transactions with Adicorp were not transactions with related parties (RPTs) and claimed that all transactions were carried out in accordance with the applicable laws.

3 important findings

1) No violation of the list agreement of Sebi/LODR regulationsSebi noted that the transactions are not eligible if transactions with related parties (RPTs). At that time, transactions with non -related parties were not included in the RPT definition.

The amendment of 2021 to LODR expanded the RPT -Scope prospective (in force April 1, 2022, with Glidsespad until April 1, 2023).

Since the amendment is substantive, it cannot be applied afterwards.

The former precedents of SEBI also confirm that earlier definitions did not do such cases.

The expert committee appointed by the Supreme Court also ruled that these transactions fell outside the RPT scope before the amendment and the amendment itself was valid and prospectively.

2. No violation of Section 12A from Sebi ACT / PFUTP regulations

Alleged violations came from the treatment of the transactions such as RPTS, which was incorrect. Sebi did not find a siphoning/distraction of funds and all the money returned with interest before investigation, and transactions that are not fraudulent or manipulative.

3. Consequence

Sebi Order noted that there is no violation of the above two important issues and no violation that was claimed in the notification of the shows.

Case 2

In another case, Sebi was investigating the accusations of Hindenburg Research that Adani Enterprises and Adani Power Mundra (now merged with Adani Power) were financed by Milestone Tradelinks PVT. Ltd. and rehvar infrastructure PVT. Ltd. Via Adani Infra (India) Limited. The supervisor was investigating whether the transaction during FY18-19 to FY22-23 was a transaction with the connected party.

The supervisor noted that there was no violation of the SEBI regulations, as claimed by the short seller, because the alleged transactions were not eligible as transactions with related parties. “Clear reading of the LODR regulations shows that transactions between a listed company with a non-related party are not treated within the definition of” transactions with related parties “, as it existed during the time that disputed transactions took place,” said the 44-page order.

Adani Group on Clean Chit

The Adani Group came up with a statement and radiated lighting after more than two years of regulatory investigation. Gautam Adani said on Thursday that Sebi put an end to the procedure a re -confirmation “of what the conglomerate had maintained from the start – the claims were” unfounded “

Also read: ‘Feel the pain of investors who have lost money’: Gautam Adani says after Sebi Clean Chit

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