Sebi asks exchanges to look into disclosure concerns on Adani Group

Exchanges have sought clarification from the group entities on LODR-related lapses, if any

The Securities and Exchange Board of India (Sebi) has directed exchanges to look into the disclosure-related concerns on the Adani group entities as part of its “regular surveillance mechanism,” sources said.

 

The stock exchanges have written to the Adani group companies seeking clarification specifically around Listing Obligation and Disclosure Requirements (LODR), said people aware of the development.

 

The queries were to check if there was any lapse or delay in the disclosures on the probe in the United States on which group chairman Gautam Adani and his nephew Sagar Adani were charged on November 20.

 

However, sources said that no investigation has been initiated at the moment on the executives or the companies.

 

 

“Any such (investigation) action comes only at a very late stage. Currently, all processes are under our surveillance mechanism,” said a person familiar with the developments.

 

In case any lapse or delay is established in such cases, sources said that the exchanges can take action or issue an advisory to the companies, and the Sebi can take up the matter for adjudication.

 

“Exchanges have sought clarification and are awaiting a response on the LODR specific queries. This is different from the usual clarifications on spurt in volumes or news verification. However, a qualitative analysis on whether the information of the US investigation was 'material' information mandated to be disclosed can only be assessed after an inspection,” said another person with direct knowledge. 

 

Emailed queries sent to Sebi, BSE, the National Stock Exchange (NSE), and the Adani Group remained unanswered till the time of going to the press. “The charges have been made on individual executives. This limits the scope of disclosures also. Further, companies usually avoid making premature disclosures to defend the stock prices. It needs to be analysed if the information met the thresholds for classifying it as a ‘material information’ upon which a disclosure is mandated,” said a legal expert on the condition of anonymity.  

 

The US prosecutors have pointed out that Adani group gave misstatements and did not disclose developments around the anti-bribery probe to the bondholders in the US.

 

The charges highlight that the federal agents had in March 2023 provided Sagar Adani the search warrant and served him with a grand jury subpoena identifying the offences, individuals, and entities under investigation.

 

It adds that Adanis made misleading statements to the media, market, Indian stock exchanges, and to financial institutions in their private communications about the Indian Energy Company’s awareness of the US investigation.

 

Experts in the corporate governance space have called for inspection from Sebi and the exchanges on the alleged gaps in disclosures.

 

“Companies should stand by the highest standards of governance. Any criminal charges or such investigations should be disclosed to the investors. In this case, the matter came as a surprise to investors,” a former regulatory official added.