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Listen to this article in summarized format In a final order, Sebi said the regulator's investigation failed to produce adequate evidence showing that Vinod Adani exercised effective control over two foreign portfolio investors, Emerging India Focus Funds (EIFF), and EM Resurgent Fund (EMR), which invested in Adani Enterprises, Adani Power, Adani Ports and Special Economic Zone and the erstwhile Adani Transmission. The case centred on whether holdings classified as public shareholding were, in substance, controlled by the promoter group. Listed companies must maintain at least 25% public shareholding. Sebi alleged that investments made through EIFF and EMR between June 2013 and June 2018 were directed or controlled by Vinod Adani through a chain of offshore entities and an investment advisory arrangement. The show-cause notice also questioned an 8.91% holding in Adani Power by Opal Investments, alleging that it too was effectively under promoter-group control. The order, however, found that the evidentiary chain did not support that conclusion. Sebi's case rested on an investment advisory agreement between Excel Investment Advisory Services and Global Macro Asset Management, which managed Global Opportunities Fund. While the order found that Vinod Adani controlled the trust structure that ultimately owned Excel, it said this did not establish that he controlled investment decisions taken by GMAML or the FPIs. The agreement expressly described Excel’s advice as non-binding and left final investment decisions with GMAML, the order said. SEBI’s investigation also failed to produce any instance showing that Excel actually directed GOFL to invest in Adani group companies or that any such advice was binding. "Merely because an entity proposes non-binding investment advice to another entity, that does not by itself mean that it controls decision making of such entity," the order said. It consequently held that Vinod Adani could not be said to control GMAML and GOFL through Excel. Also Read: SEBI’s new PMS framework could potentially double industry size over time: APMI Chairman Vikas Khemani Sebi reached a similar conclusion regarding the relationship between Vinod Adani and businessmen Nasser Ali Shaban Ahli and Chang Chung-Ling, whose entities provided funds to the underlying investors. The investigation established commercial and financial relationships among the parties, but the order said business ties, loans, common directorships and historical associations were insufficient on their own to prove control. To establish de facto control, Sebi said evidence was needed to show that one person positively directed the management or policy decisions of another. The order also noted that there was no allegation of direct funding by Vinod Adani, no evidence of circular movement of funds, contractual rights giving him decision-making authority, or contemporaneous communication directing how the money was to be invested. Sebi also rejected the argument that the FPIs' concentration in Adani group shares was itself evidence that Vinod Adani controlled the investments. Concentrated investments could arise from legitimate commercial strategies, it said, adding that there was no material showing coordinated decision-making or the absence of independent judgment. The regulator also found no evidence that Vinod Adani or any other promoter-group member exercised effective control over Opal's management or investment decisions. The existence of authorised signatories linked to the group, an interest-free loan used in the investment structure and Opal’s failure to exercise voting rights were insufficient to establish control without evidence that those powers were actually exercised at the promoters' direction. Disclosure: This article was written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. 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