InGovern urges SEBI to act against Viceroy Research on Vedanta Report

This creates a regulatory gap, allowing such firms to influence Indian markets without adhering to the same standards of transparency, said InGovern

Proxy advisory firm InGovern has raised concerns over foreign research outfits not registered with SEBI publishing reports on Indian companies without being subject to Indian regulatory scrutiny even when their actions directly impact Indian investors and markets.

The firm has published a note on the recent report by the US-based short-seller Viceroy Research making several allegations against mining major Vedanta, which the company denied.

“Instances have emerged where offshore research firms release critical reports while holding economic interests in the securities, yet did not respond to regulatory summons or cooperate with Indian authorities,” said InGovern.

Indian regulators can enforce compliance and accountability among domestic research analysts, but have limited recourse against unregulated foreign entities, it said.

This creates a regulatory gap, allowing such firms to influence Indian markets without adhering to the same standards of transparency, said InGovern.

On the proposed demerger of Vedanta, InGovern has noted that it was supported by leading proxy advisory firms (including InGovern) all of whom recommended a vote in favour of the demerger. These advisors cited potential benefits such as enhanced management focus, improved capital market access, and the opportunity for investors to hold shares in businesses with distinct investment profiles.

On the Viceroy report’s observations on entity structures, InGovern said that such structures are quite common and legitimate.

“Infrastructure, mining, and energy businesses require large upfront investments and often operate through holding company structures for regulatory, tax and operational reasons, it said,

The parent companies often raise debt at the group level and use subsidiary cash flows for servicing, which is disclosed and regulated.

“This model is not unique to India — most large conglomerates globally use similar structures, as seen with Glencore, Anglo American, and BHP,” the report said.

Published on July 14, 2025