Madhabi Puri-Buch, chairperson of the Securities and Exchange Board of India (Sebi), appears to have flunked the market regulator’s litmus test for conflict of interest for its top officials because she has continued to earn revenue from a domestic consultancy firm as its principal shareholder.

Documents submitted by the firm to the registrar of companies reveal that Puri-Buch held 9,900 of the 10,000 shares issued – or 99 per cent of its shareholding of Mumbai’s Ghatkopar-based Agora Advisory Private Ltd — as of March 31 this year.

This means that Puri-Buch had never completely severed her ties with the advisory firm after she joined Sebi as a whole-time member in April 2017 – continuing as the primary shareholder of Agora Advisory for well over seven years.

Puri-Buch was caught in a cleft recently when US short-seller Hindenburg Research came out with fresh revelations based on whistleblower documents that linked investments made by her and husband Dhaval in a Mauritius offshore fund that was also used by the Adani group, opening a new can of worms in the saga of shenanigans that engulfed Gautam Adani-led conglomerate early last year.

There were two Agora Advisory firms — one based in Singapore and the other in India. Both were established in 2013.

In her strong rebuttal of the Hindenburg charges, Puri-Buch said both consulting companies had become “immediately dormant” after her appointment at Sebi.

She also claimed that her shareholding in the two companies “were explicitly part of her disclosures to Sebi”.

Agora Advisory is still registered as an “active” company with the Registrar of Companies. The company’s latest filings with RoC shows that it earned ₹6 lakh for “sales and supply of services” in 2023-24 and another ₹13,95,225 as “other income”, for a total revenue of a little over ₹13.95 lakh. It had a net profit of ₹8,09,882 in FY24.

The documents show that revenue was down over 65 per cent from the ₹40.82 lakh earned in the previous fiscal. Profits fell 59 per cent from ₹19.74 lakh in the year ended March 2023.

Over the past seven years, Agora Advisory earned a revenue of ₹3.71 crore, the publicly-available documents reveal.

As per the filing, the registered address of Agora Advisory Private Limited is 201, RNJ Corporate, Jawahar Road, Ghatkopar in Mumbai.

At its annual general meeting held on July 6 this year, a resolution for the appointment of Shah & Savla LLP, Chartered Accountants as its statutory auditor for a second term of five years till 2029 was also passed. Incidentally, the website of Shah & Savla LLP says that it is also housed in `RNJ Corporate, 2nd level, Jawahar Road, Ghatkopar, Mumbai’.

In a recent report, digital news publication Scroll quoted Amarjeet Chopra, a former President of the Institute of Chartered Accountants of India, as saying that there were serious questions about the independence of the auditor if both firms are located at the same address.

Puri-Buch’s holdings potentially violate a 2008 Sebi policy that prohibits officials from holding an office of profit, receiving salary or professional fees from other professional activities.

Subhash Chandra Garg, a former top bureaucrat in the Indian government and a Sebi board member during Buch’s tenure, told Reuters that Puri-Buch’s equity holding in the firm and its continued business operations amounted to a “very serious” breach of conduct.

“There was no justification for her to continue to own the firm after she joined the board. She could not have been allowed even after making disclosures,” Garg said. “This makes her position completely untenable at the regulator.”

Buch has not clarified whether she was granted a waiver to retain her shareholding in the Indian consulting firm. According to Garg and a Sebi board member, no disclosures were made by her or any other officials to the board regarding their business interests.

“There was a requirement to make annual disclosures, but board members’ disclosures were not placed in front of the board for information or scrutiny,” the board member told Reuters but declined to be identified as information on disclosures to the board is not public.

“To be sure, no members’ disclosures were discussed. If the disclosures were made only in front of Ajay Tyagi, the then chairperson, I am not privy to that,” Garg said.

With inputs from Reuters