The Adani Group’s activities with at least three offshore businesses that have ties to the founder of the conglomerate’s brother are the subject of an investigation by India’s market regulator into potential violations of the country’s related party transaction laws.

The people with direct knowledge of the situation claimed that during the past 13 years, the three firms engaged in several investment transactions with unlisted divisions of the ports-to-power conglomerate created by billionaire Gautam Adani.

According to sources, Vinod Adani, the brother of Gautam Adani, is either a beneficial owner or director of those three offshore businesses or has connections to them. “The Securities and Exchange Board of India (SEBI), the regulator, is looking into whether the lack of disclosure violates the laws of related party transactions”, they added.

Direct relatives, promoter groups, and subsidiaries of listed firms are all regarded as connected parties under Indian law. An organization with a sizable investment in a publicly traded company that has the power to affect corporate policy is known as a promoter group.

Shareholder approval beyond a predetermined threshold is required for transactions between such organizations, and disclosure of such transactions in regulatory and public filings is required. Usually, violations result in monetary fines.

SEBI did not respond to an email requesting comment. At a news conference on Wednesday, SEBI Chair Madhabi Puri Buch denied commenting on the Adani probes.

According to an Adani Group spokeswoman, Vinod Adani is a member of the Adani family and a member of the promoter group, but he is not a manager in any of the listed Adani corporations or their subsidiaries.

Without commenting on the regulatory investigation into offshore entities, the spokesperson continued, “This fact, like all other material information needed to be reported, has been revealed to the regulatory authorities in the past and also as and when required”.

The investigation follows a report from US short-seller Hindenburg Research on January 24, 2023, that alleged inappropriate use of tax havens and stock manipulation by Adani Group, among other things. Adani Group has refuted these allegations.

The value of the shares in Adani’s group of firms decreased by more than $100 billion as a result of Hindenburg’s report.

In March, the Indian Supreme Court requested that SEBI look into the Adani Group for any violations of related party rules, public shareholding laws, or regulatory disclosures.

There hasn’t been any prior information about SEBI’s inquiry into Adani’s potential related party transactions with foreign organizations connected to Vinod Adani.

The sources, who spoke on the condition of anonymity because the investigations are confidential, said top regulatory officials are scheduled to provide a status report to a court-appointed panel on Sunday while SEBI investigations are ongoing.