ORGANISED CRIME AND CORRUPTION REPORTING PROJECT (OCCRP)
After Hindenburg, the Organised Crime and Corruption Reporting Project (OCCRP) has made fresh allegations of stock manipulation against the Adani Group.
OCCRP’s report, published earlier today (August 31, 2023), claims that exclusive documents obtained by it show that “in at least two cases … [supposedly public] investors turn out to have widely reported ties to the group’s majority shareholders, the Adani family”, and helped manipulate Adani companies’ stock prices
2.Rule 19A of the Securities Contracts (Regulation ) Rules 1957
Rule 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR) requires listed companies to maintain a minimum public shareholding of at least 25%.
This rule is intended to ensure that there is a wider distribution of shares among the public and to prevent the concentration of control in a few hands
The rule applies to all listed companies, except for public sector companies. Public sector companies are those that are owned or controlled by the government.
There are a few exceptions to the 25% minimum public shareholding requirement. These exceptions include:
- Companies that are listed on a foreign stock exchange and have a minimum public shareholding of at least 25% in that exchange.
- Companies that are in the process of delisting their shares from the stock exchange.
- Companies that are undergoing a merger or acquisition
The 25% minimum public shareholding requirement is an important regulation that helps to protect the interests of investors and promote a more equitable distribution of wealth. It also helps to ensure that listed companies are accountable to a wider range of stakeholders.
Here are some of the key provisions of Rule 19A of the SCRR:
- Every listed company (other than a public sector company) shall maintain public shareholding of at least 25%.
- The company shall achieve the minimum public shareholding within a period of three years from the date of its listing.
- The company shall make a public announcement if its public shareholding falls below 25%.
- The company shall take steps to increase its public shareholding within a period of six months from the date of the public announcement.
- If the company fails to maintain the minimum public shareholding requirement, it shall be subject to penalties imposed by SEBI.
- The Organized Crime and Corruption Reporting Project (OCCRP) has published a new report alleging that the Adani Group, a conglomerate controlled by Indian billionaire Gautam Adani, used opaque offshore funds to buy shares of its own companies.
- The report, titled "The Adani Leaks," is based on a trove of leaked documents that detail the financial dealings of the Adani Group.
- The documents show that the group used a network of offshore shell companies to buy shares of its own companies, both in India and abroad.
- The report alleges that this practice allowed the Adani Group to artificially inflate the value of its shares and to gain control of strategic assets.
- It also alleges that the group used the offshore funds to avoid paying taxes and to conceal its financial dealings from regulators.
4. SBI and DRI on Allegations of OCCRP
The Securities and Exchange Board of India (SEBI) and the Directorate of Revenue Intelligence (DRI) have both said that they are investigating the allegations made by the Organized Crime and Corruption Reporting Project (OCCRP) against the Adani Group
SEBI said in a statement that it is "looking into the matter" and that it will "take appropriate action" if any wrongdoing is found. The DRI said that it is "conducting a preliminary inquiry" into the allegations and that it will "take further action as warranted".
5. Security Exchange Board of India (SEBI)
- The Securities and Exchange Board of India (SEBI) is the regulatory body responsible for overseeing and regulating the securities market in India.
- It was established on April 12, 1992, as an autonomous statutory body under the SEBI Act, 1992.
- SEBI's primary objective is to protect the interests of investors in securities and promote the development and regulation of the securities market.
- SEBI regulates various aspects of the securities market, including stock exchanges, intermediaries such as brokers and investment advisers, and listed companies.
- It formulates regulations and guidelines to govern market activities and operations.
- One of SEBI's primary goals is to safeguard the interests of investors.
- It works to enhance transparency, provide accurate information, and prevent fraudulent and unfair trade practices
- SEBI encourages research and education related to the securities market. It provides resources and information to help investors make informed decisions.
6. Director of Revenue Intelligence (DRI)
The Directorate of Revenue Intelligence (DRI) is a premier intelligence and enforcement agency of the Government of India on anti-smuggling matters. It is under the Central Board of Indirect Taxes and Customs (CBIC), Department of Revenue, Ministry of Finance, Government of India.
The DRI was established in 1957 to combat smuggling and related economic crimes. It has a wide range of powers and functions, including:
- Collecting intelligence on smuggling and related economic crimes.
- Conducting investigations into smuggling and related economic crimes.
- Apprehending smugglers and seizing smuggled goods.
- Prosecuting smugglers in court.
- Undertaking preventive measures to curb smuggling.
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For Prelims: SEBI, DRI, Rule 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR)
For Mains: 1.Discuss the role and functions of the Securities and Exchange Board of India (SEBI) in regulating the securities market. How has SEBI contributed to investor protection and market development in India?
2.Examine the regulatory measures implemented by SEBI to prevent insider trading and market manipulation in the Indian securities market. How do these measures contribute to market integrity?
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Source: The Hindu
