Winning Bizness Desk

Mumbai. Anil Ambani, the embattled industrialist, is preparing to take legal action following the Securities and Exchange Board of India's (SEBI) decision to ban him from participating in the stock market for five years. This ban, announced on August 22, 2024, is part of a larger case involving alleged fund misappropriation related to Reliance Home Finance Limited (RHFL). Ambani, along with 24 others, has also been fined, with Ambani himself facing a penalty of ₹25 crore. SEBI’s final order stems from an investigation that began in February 2022, which found that Ambani, along with key officials of RHFL, misappropriated funds by falsely categorizing personal usage as corporate loans. Despite being instructed by the Board of Directors to halt such loans and regularly review corporate lending practices, the management of RHFL allegedly ignored these directives. As a result, SEBI not only penalized Ambani but also restricted his ability to serve as a director in any listed company.

Broader Impact and Legal Response

Following SEBI’s announcement, shares of Reliance Infrastructure and Reliance Power, both companies linked to Ambani, saw significant declines, with Reliance Infrastructure’s stock falling by 11% and Reliance Power by 5%. In response to SEBI’s order, Ambani’s spokesperson stated that he has complied with all interim orders over the past two and a half years and is now carefully reviewing the final order. Ambani intends to take appropriate legal steps based on the advice he receives. SEBI’s investigation has also implicated several other entities and individuals, imposing fines on former RHFL officials and associated companies for their roles in the alleged fund misappropriation. Reliance Unicorn Enterprises and Reliance Exchange Next, among others, were fined ₹25 crore each for their involvement.

Background: The Ambani Family Business Split

Anil Ambani's challenges with SEBI are the latest in a series of financial troubles for the younger Ambani brother. The division of the Reliance empire between Anil and his elder brother Mukesh in 2005 marked the beginning of diverging fortunes. While Mukesh Ambani’s businesses have flourished, Anil’s ventures have struggled, culminating in several legal and financial setbacks. One such blow came earlier this year when the Supreme Court rejected a claim by Anil's Delhi Airport Metro Express, a subsidiary of Reliance Infrastructure, for ₹8,000 crore from Delhi Metro Rail Corporation, leading to a 20% drop in Reliance Infra's stock. As Anil Ambani gears up for a legal battle against SEBI’s latest order, the outcome could have far-reaching implications for his remaining business interests and his role in the corporate world.