Case Overview

This final order disposes of a Show Cause Notice (SCN) dated September 27, 2024, and a Supplementary SCN (SSCN) dated March 03, 2025, issued to 30 noticees. The proceedings concerned allegations that four Adani Group companies—Adani Enterprises Limited (AEL), Adani Power Limited (APL), Adani Ports and Special Economic Zone Limited (APSEZ), and Adani Transmission Limited (ATL)—violated Minimum Public Shareholding (MPS) requirements under Rule 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR) and corresponding regulations.

The core allegation was that investments made by two Foreign Portfolio Investors (FPIs), Emerging India Focus Funds (EIFF) and EM Resurgent Fund (EMR), in the shares of the Adani companies from June 2013 to June 2018 were not genuine public shareholding. SEBI alleged these investments were controlled by Mr. Vinod Adani (Noticee No. 1), a member of the promoter group, through a complex offshore structure. Consequently, these holdings should have been classified as promoter shareholding, pushing the companies' public float below the mandated 25% threshold. A separate allegation concerned the shareholding of Opal Investments Private Limited in APL, claimed to be under promoter control.

The alleged structure involved Four Underlying Investors—Gulf Asia Trade & Investment Ltd., Lingo Investment Ltd., Gulf Arij Trading FZE, and Mid-East Ocean Trade & Investment Pvt. Ltd.—who funded the FPIs. SEBI's case rested on proving Mr. Vinod Adani's control over Excel Investment Advisory Services Limited, which advised the investment manager of the FPIs (GMAML), and his close business ties with the beneficial owners of the underlying investors, Mr. Nasser Ali Shaban Ahli and Mr. Chang Chung-Ling. The SCN alleged an aggregate wrongful gain of ₹19,839,701,563.21.

The legal analysis focused extensively on the definition of "control" under securities laws, referencing the SEBI (SAST) Regulations, 2011, and the Companies Act, 2013. The order relied on Supreme Court and SAT precedents (ArcelorMittal, Shubhkam Ventures) to define control as a proactive power to direct management or policy decisions, not merely reactive influence or business relationships.

After considering preliminary objections (e.g., delay, jurisdiction, vagueness of SCN), which were rejected, the WTM examined the allegations on merits. Key findings on the chain of control were:

  • Mr. Vinod Adani was found to have de jure control over the Asankhya Resources Family Trust (ARFT) and its subsidiary Excel by virtue of his powers as Enforcer to appoint/remove trustees.
  • However, the crucial link of control over the FPIs' investment decisions through Excel was not established. The Investment Advisory Agreement between Excel and GMAML was non-binding and contained a clause prohibiting advice on group companies.
  • The investigation provided no evidence of any specific advice given by Excel directing investments into Adani companies or of Mr. Vinod Adani's involvement in these decisions.
  • Funding arrangements and historical business relationships between Mr. Vinod Adani, Mr. Ahli, and Mr. Chang, along with the presence of an ex-Adani employee as a Power of Attorney holder, were deemed insufficient to prove control, falling short of the legal standard requiring evidence of "positively directing management or policy decisions."
  • Similar reasoning was applied to dismiss allegations against Opal Investments, where continuance of authorized signatories was deemed an oversight without evidence of exercised control.

Since the foundational allegation of control failed, the consequent allegations of MPS violation and fraud under Regulations 3 and 4 of the SEBI (PFUTP) Regulations, 2003, also failed. The order cited the Supreme Court's judgment in Reliance Industries Ltd. vs. SEBI (2026) to emphasize that a violation of other regulations does not automatically constitute fraud under PFUTP without proof of manipulative intent or investor injury, which was absent here.

Final Outcome

The proceedings against Noticees 1 to 12 are disposed of with the following directions:

1. The allegations of violation of MPS norms and PFUTP Regulations are not established against Noticees No. 1 to 12. No directions under Sections 11(1), 11(4), or 11B of the SEBI Act are warranted against them.

2. Noticees No. 13 to 30 (Adani companies and their directors) had already settled the proceedings vide a separate order dated August 26, 2026, by paying a collective settlement amount of ₹1,48,20,000 without admission of guilt. This order does not cover them.

3. Noticee No. 2, Mr. Nasser Ali Shaban Ahli, is held liable for violating Section 11C(3) read with Section 15A(a) of the SEBI Act for failing to respond to SEBI summons. A monetary penalty of ₹20,00,000 (Twenty Lakh Rupees) is imposed on him.

4. Noticee No. 3, Mr. Chang Chung-Ling, is held liable for violating Sections 11(2)(ia) read with Section 15A(a) for furnishing incomplete and misleading information to SEBI. A monetary penalty of ₹20,00,000 (Twenty Lakh Rupees) is imposed on him.

5. Noticee No. 7, Mr. Tejal Ramanlal Desai, is not held liable for the alleged violation of Section 11C(5).

6. The penalties must be paid within 45 days of receiving this order.

The order concludes that while the circumstances warranted investigation, the evidence presented did not meet the legal threshold of preponderance of probability required to establish control and fraud.

Topics: Minimum Public Shareholding, Foreign Portfolio Investors, Control Definition