The Securities and Exchange Board of India (SEBI) has dismissed allegations against the Adani Group concerning the use of intermediary firms to route related-party transactions (RPTs), ruling that the transactions were legal under the regulations in effect at the time. The investigation was triggered by a Hindenburg Research report, which claimed that Adani companies used entities like Adicorp Enterprises, Milestone Tradelinks, and Rehvar Infrastructure as “conduits” to bypass RPT rules. SEBI found that while funds did pass through these firms, they were not legally related parties under the law then, and therefore the stricter RPT disclosure and approval norms did not apply.
SEBI also noted that all loans, if any, had been repaid with interest before the probe began, and there was no diversion of funds. The transactions were determined to be genuine commercial dealings in the ordinary course of business, and the intermediary firms also conducted business with non-Adani companies, indicating they were not exclusively acting as conduits. The regulator highlighted that the definition of RPTs was later expanded in November 2021 to cover indirect or interposed arrangements benefiting related parties, effective April 2022. However, SEBI emphasized that these amendments could not be applied retroactively to past transactions.
As a result of its findings, SEBI did not impose any penalties or take action against the Adani Group or its executives. Allegations of fraud or unfair trade practices tied to these transactions could not be sustained because the transactions did not legally qualify as RPTs at the time they were made. Gautam Adani publicly called Hindenburg’s claims “baseless”, requesting an apology from those who spread false narratives.
This case underscores the importance of timing in regulatory compliance, showing that companies are judged based on the laws in effect when transactions occur, and that amendments generally apply prospectively. It also highlights the need for corporate entities to closely monitor evolving SEBI rules, as many structures that were previously allowed now fall under stricter regulations. SEBI’s clearance provides a significant relief for the Adani Group, ending uncertainty around the Hindenburg allegations and reaffirming that past actions conducted in accordance with existing laws remain lawful.
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