New Delhi, Sept. 10 -- Karan Adani, chief executive officer of Adani Ports and Special Economic Zone Ltd (APSEZL), and B Ravi, chief financial officer of APSEZL, have settled allegations of violating provisions of listing regulations with the market regulator.

Each of them has paid Rs 13.65 lakh (around $14,305) towards the settlement.

In a settlement order issued on September 10, the Securities and Exchange Board of India (SEBI) said it had conducted an investigation into banking transactions and inter-corporate deposits between PMC Projects (India) Pvt Ltd and APSEZL to see if they violated provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations (LODR Regulations) and the Securities Contracts (Regulation) Act (SCRA).

Following the investigation, it was alleged that Adani and Ravi had violated provisions of regulation 17(8) read with paragraph B of Part B of Schedule II of the LODR Regulations and section 21 of the SCRA.

Adani Group's transactions with infrastructure development company PMC Projects had been questioned by short seller Hindenburg Research. In its January 2023 report, the short seller had alleged that Adani entities' transactions with PMC Projects fell under related-party transactions and had not been thus disclosed. It also alleged that PMC Projects' cumulative revenue of Rs 63.7 billion since 2010, up to the time of the report, was mostly attributable to work with the Adani Group.

What were the allegations?

Section 21 of the SCRA deals with the grounds on which a stock exchange can delist a security, while the LODR provisions cited in the order deal with the compliance certificate that a listed entity's CEO and CFO must provide to the company's board.

Paragraph B of Part B of Schedule II of the LODR Regulations requires the CEO and the CFO to furnish a compliance certificate stating that "there are, to the best of their knowledge and belief, no transactions entered into by the listed entity during the year which are fraudulent, illegal or violative of the listed entity's code of conduct".

According to the settlement order, a show-cause notice was issued to both Adani and Ravi on November 22, 2023. The authorised representatives of both noticees sent their replies to the SCN on January 16, 2024.

Four days later, on January 20, their representatives informed SEBI that both had filed settlement applications.

The representatives of both met SEBI's internal committee in May and July 2024, and the committee recommended the settlement amount. Later that July, both agreed to pay the said amount.

Nearly two years later, in June this year, SEBI's high-powered advisory committee (HPAC) recommended that the case be settled upon payment of the said amount. This was approved by SEBI's panel of whole-time members on August 13.

On September 5, representatives of both informed SEBI that the amount had been remitted.

Published by HT Digital Content Services with permission from VC Circle.