SEBI drops shareholding case against Vinod Adani, finds no proof he controlled offshore funds

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SEBI said that de facto control must be established through evidence that a person positively directs management or policy decisions, and cannot be inferred from suspicion or business or financial relationships alone. File | Photo Credit: Reuters

Markets regulator SEBI said it could not establish that Vinod Adani, brother of Adani Group Chairman Gautam Adani, controlled two offshore funds that invested in four group companies, and therefore dropped minimum public shareholding (MPS) and fraud allegations against him and 11 other noticees.

In an 81-page final order, the Securities and Exchange Board of India (SEBI) said its investigation had failed to establish that Mr. Vinod Adani directed the investment decisions of the two foreign portfolio investors (FPIs), Emerging India Focus Funds (EIFF) and EM Resurgent Fund (EMR), or controlled Opal Investments' investment in Adani Power Ltd.

"The investigation has not been able to prove that Mr. Vinod Adani controlled the decision of investment of two FPIs," SEBI Whole-Time Member Kamlesh Chandra Varshney said in the order.

The case centred on the MPS requirement, which mandates at least 25% public ownership in listed companies. SEBI said an MPS violation would arise if shares held by public shareholders were beneficially owned or controlled by a promoter or promoter group and, if counted as promoter holdings, reduced public shareholding below the required threshold.

The regulator said there was no allegation that Mr. Vinod Adani or the promoter group was the beneficial owner of the shares held in the names of the two FPIs or Opal. The allegation was that he controlled the shares because the investments were made at his direction.

SEBI said, however, that de facto control must be established through evidence that a person positively directs management or policy decisions, and cannot be inferred from suspicion or business or financial relationships alone.

"Merely based on business or financial relationship, it cannot be held that Mr. Vinod Adani is in control of all of them," the order said.

The regulator also found no evidence that Mr. Vinod Adani controlled Nasser Ali Shaban Ahli or Chang Chung-Ling and, through them, the investment decisions of underlying investors that invested in Adani group companies.

"Any such conclusion would have unintended consequences for implementation of various securities laws in the capital market," SEBI said.

It was alleged that investments of Gulf Asia, Lingo, Gulf Arij and Mid-East were ultimately funded by Mr. Ahli through multiple layers of entities, while the investment advice for acquiring shares of the Adani Group companies was provided by Excel Investment Advisory Services Limited (Excel), which is alleged to be controlled by Mr. Vinod Adani.

While EIFF and EMR were the immediate investing FPIs, Global Opportunities Fund Limited (GOFL) functioned as the participating redeemable shareholder of EIFF-Class J. GOFL was the sole investor of the Class J share of EIFF, and it is alleged that all investments made by EIFF in Adani group companies were made through EIFF Class J. GOFL was also the participating redeemable shareholder of EMR.

It was further alleged that Excel had entered into an investment advisory agreement with Global Macro Asset Management Limited (GMAML), the investment manager of GOFL, under which Excel advised GMAML regarding investments relating to specified underlying investors. It is alleged that, in effect, GMAML merely implemented investment decisions communicated through Excel.

SEBI, however, said an advisory agreement between Excel, which was under Mr. Vinod Adani's control, and GMAML, which took investment decisions for the two FPIs, did not establish such control. The agreement specified that the advice was non-binding and did not relate to Excel's group companies, and the investigation found no evidence of advice being given contrary to those provisions.

SEBI also said the investigation had not produced evidence demonstrating Mr. Vinod Adani's involvement in the investment decisions of the two FPIs.

"Violation of MPS requirement is not established for the lack of adequate evidence of positively directing management or policy decision of investors in Adani Group companies," the order said.

With the MPS allegation not established, the related allegations under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) Regulations also did not survive.

"Once the allegation of MPS violation fails, the subsequent allegation invoking the PFUTP Regulations also does not survive," SEBI said.

SEBI nevertheless imposed penalties of ₹20 lakh each on Mr. Ahli and Mr. Chang for failing to furnish correct and complete information. A third noticee, Tejal Ramanlal Desai, was not found liable for that charge.

The order said Mr. Chang's denial of any relationship "points towards a deliberate attempt to mislead the investigation."

SEBI also said: "The cooperation from the noticees could have expedited the investigation."

The two penalties are to be paid within 45 days of receipt of the order.

Adani Enterprises Ltd, Adani Power Ltd, Adani Ports and Special Economic Zone Ltd and Adani Energy Solutions Ltd, formerly Adani Transmission, along with Mr. Gautam Adani and 13 other directors, had separately settled the MPS proceedings without admission of guilt.

The settlement amount of ₹1,48,20,000 was paid on August 26, 2026. SEBI said the settlement was not affected by Monday's order.

"Though MPS violation does not stand established, it was decided to allow the settlement to attain finality," the order said.

"Settlement of proceeding at a sufficiently higher settlement price, without admission of guilt, serves the important purpose of reducing litigation," it added.

SEBI began its investigation on October 23, 2020, following complaints received in June and July that year alleging violations of MPS requirements at Adani group companies.

A show-cause notice issued on September 27, 2024, alleged that EIFF and EMR held shares in four Adani group companies between June 2013 and June 2018 and were counted as public shareholders despite allegedly being controlled by Mr. Vinod Adani, a member of the promoter group.

A supplementary notice issued in March 2025 put the alleged wrongful gain at about ₹1,984 crore.

The allegations did not assert that Mr. Vinod Adani was the beneficial owner of the investments or that he had financed them.

SEBI said it reached a similar finding on the allegation concerning Opal Investments' holding in Adani Power.

In its final directions, the regulator said the allegations of MPS violations and PFUTP violations had not been established against noticees 1 to 12, and that enforcement directions were therefore not warranted.

The order was passed by Mr. Varshney on September 28, 2026.

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