Mumbai

Marketsregulator Sebi has dropped minimum public shareholding and fraud allegations against Vinod Adani, brother of Adani Group chairman Gautam Adani, saying its investigation could not establish that he controlled two offshore funds that invested in four Adani group companies.

In its 81-page final order, Sebi said it could not prove that Vinod Adani directed investment decisions of Emerging India Focus Funds and EM Resurgent Fund, or controlled Opal Investments’ investment in Adani Power.

The case centred on the requirement that listed companies maintain at least 25 per cent public shareholding. Sebi said a 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 ownership below the prescribed threshold.

The regulator said there was no allegation that Vinod Adani or the promoter group was the beneficial owner of shares held by the FPIs. The issue was whether he exercised control over investment decisions.

Sebi said de facto control must be established through evidence that a person positively directs management or policy decisions. Business or financial relationships by themselves could not establish such control. The investigation also did not establish that Vinod Adani controlled Nasser Ali Shaban Ahli or Chang Chung-Ling and, through them, the investment decisions of underlying investors. Sebi further found that an investment advisory agreement between Excel Investment Advisory Services, allegedly controlled by Vinod Adani, and Global Macro Asset Management did not establish control because the advice was non-binding and investigators found no evidence that Excel had given advice contrary to the agreement.