India’s stock market regulator, the Securities and Exchange Board of India (SEBI), has proposed stricter scrutiny of offshore funds that hold large stakes in local companies. This move is intended to unravel opaque ownership structures of conglomerates such as Adani Group, which have recently faced scrutiny. The SEBI has identified high-risk offshore funds that have invested over half of their assets in a single entity, as well as those that hold more than INR 250 billion ($3.02 billion) in Indian stocks. The proposal aims to enhance transparency and minimize potential risks associated with opaque ownership structures.
The Adani Group is a conglomerate with interests in ports, airports, logistics, energy, and agribusiness. Recently, the company has been in the spotlight due to allegations of excessive influence, possible tax evasion, and lack of environmental sensitivity.
The Securities and Exchange Board of India’s proposal follows increased pressure from regulators and investors for greater transparency in corporate structures and associated financial risks. Smaller investors in India have expressed concerns over the possible opacity associated with ownership structures of large conglomerates. The proposed measures are aimed at increasing transparency and reducing financial malfeasance and fraudulent activities through stricter regulations.
