 "SC judgment gives Sebi final say on securities violations: Law firms")
The latest Supreme Court judgment fortifies market regulator Securities and Exchange Board of India’s (Sebi’s) role in deciding securities-related violations and similar concerns, said executives from law and proxy advisory firms.
“The judgment means any securities investigations and violations of securities law needs to be investigated by Sebi. That is the implication for corporate governance in general,” said Shriram Subramanian, founder and managing director (MD), InGovern Research Services, a proxy advisory firm.
Representatives from the legal fraternity subscribed to a similar view.
“Companies that follow good corporate governance, adhere to regulations, and have efficient compliance systems will have nothing to fear from either the executive or the judiciary. They can go about doing their business in a dynamic growth market like India,” said Jidesh Kumar, managing partner, King Stubb & Kasiva Advocates & Attorneys.
JN Gupta, founder and MD at Stakeholders Empowerment Services, said, “The judgment is not a comment on Adani Group or Indian companies’ level of corporate governance. The order, however, emphasises Sebi as the last word in the interpretation of its own regulations.”
He added, “It was not the Hindenburg report but the cacophony after which hurt investor interest. Today's order puts an end to frivolous attempts to involve the courts in such matters.”
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For proxy advisory firm Institutional Investor Advisory Services (IiAS), the pending Supreme Court investigation was a matter of concern from the auditing point of view.
For instance, in a July 3 report, IiAS recommended shareholders should vote against the resolution for adoption of Adani’s cement subsidiary ACC’s FY23 financial statements, for governance and financial impact reasons and observed, “…pending the completion of proceedings before the Hon’ble Supreme Court and regulatory investigations, the auditors are unable to comment on the possible consequential effects on the financial statements.”
Concerned executives from IiAS were unavailable for an updated comment post the judgment.
Shortly after the Hindenburg report released last year, rating agencies, such as CRISIL, in a February note, said, “Any adverse regulatory/ government action in the wake of the research report, emerging issues around corporate governance, or a decline in group’s resource-raising capabilities from banks or capital markets because of a continuing slide in share prices will be key monitorable.”
The rating agency did not have any immediate comment so far.
Others agree that the judgment now shifts focus to Sebi’s view on the matter. “We will await Sebi’s report,” said an executive from a rating agency firm.