By jayshree p upadhyay

Mumbai (Reuters) - India's market regulator has threatened two Mauritius-based funds and invested in the Adani Group's investments, which may cancel their licenses for two years because they do not share the details of the shares, but according to Reuters' review.

Since Hindenburg Research in 2023, Adani Group and 13 offshore investors have faced investigations from the Securities and Exchange Commission of India (SEBI) that allegedly improperly used tax paradise, triggering a stock sell-off. The group repeatedly denied misconduct and its stock has since recovered.

Indian regulations require public shareholders to hold at least 25% of the shares of listed companies, but Hindenburg claims that the Adani Group violated these rules because some offshore funds related to Adani Company Holdings are linked to the conglomerate.

According to the SEBI document of March 28, the two Mauritius-based Ellara Funds - Ellara India Opportunity Fund and Vespera Foundation have been asked to provide “grained disclosures” for all shareholders since 2023, according to the SEBI document of March 28.

"To date, these FPIs (foreign portfolio investors) have not provided them to SEBI... They have not provided any reason either," the document said.

India's Elara Capital and Sebi did not respond to Reuters' questions. Adani Group did not respond either.

The SEBI document states that the Elara Fund did not disclose its acquisition of some Adani shares over 5%, which is required by Indian regulations. It does not specify the exact shares associated.

Even if the funds are from Mauritius, they are still registered as FPI with SEBI, which will comply with the norms and review of Indian regulators.

Two sources who are directly aware of the matter said the two funds had applied to SEBI to resolve the matter without admitting a fine and refused to be named as an investigation was confidential.

It is unclear what penalties they will face in the end.

In November, U.S. authorities sued group chairman Gautam Adani and some other executives, accusing them of bribing to secure India's electricity supply contracts and misleading U.S. investors during the fundraising period. Adani denies the wrongdoing and says the allegations are unfounded.