More than three weeks since the US President Donald Trump announced an investment by ‘Reliance’ in a new oil refinery in his country, a lack of clarity from both the Mukesh Ambani-led company and India’s two top stock exchanges on the subject has exposed gaps in India’s rumour verification rules, experts said.
While some experts believe that Reliance Industries Ltd should have provided further clarity on whether it was investing in the US, others think the situation falls within the ‘grey area’ of the disclosure rules governing listed companies.
However, experts say India’s two top stock exchanges–BSE Ltd and the National Stock Exchange–could have used their discretion to seek clarification from Reliance Industries on the subject, as they often do with other firms for matters of far less significance.
Rumour verification is governed by Regulation 30(11) of the Securities and Exchange Board of India’s (SEBI) Listing Obligations and Disclosure Requirements, 2015 (LODR). The regulation was amended in 2024 to link verification to stock price movement rather than event materiality.
For a stock priced above ₹200, such as Reliance Industries, the price movement threshold is 3% relative to the benchmark. This threshold was not breached for Reliance Industries on 11 March, the day after Trump's announcement.
“The framework is still relatively recent in its current form, and situations involving cross-border developments or multi-source disclosures can raise interpretational questions on both issuer obligations and exchange intervention thresholds,” said Sumit Agrawal, senior partner, Regstreet Law Advisors & former Sebi officer.
However, nothing prevented the stock exchanges from seeking discretionary clarification in this case, Agrawal said.
For instance, on 30 March, both the BSE and the NSE sought clarification from Vedanta Ltd after news reports appeared that the company was seeking energy partnerships in the US and was ready to invest up to $5 billion in the country. The reports were based on comments made by Vedanta chair Anil Agarwal at a conference in the US earlier that week.
“The Company, from time to time, evaluates various strategic opportunities, including investments and partnerships, in the ordinary course of business. Such discussions, if any, are exploratory and preliminary in nature,” Vedanta clarified to the bourses on 30 March. There were no binding decisions or material developments that required disclosure under Sebi regulations, the company said.
The BSE and the NSE did not respond to Mint’s request for a comment.
Trump’s announcement
On 10 March, Trump took to social media to announce that America First Refining, a Texas-based firm, was opening the first new oil refinery in the country in over 50 years.
“Thank you to our partners in India, and their largest privately held Energy Company, Reliance, for this tremendous Investment,” the 79-year-old Republican wrote on Truth Social, a social media platform.
America First Refining put out a press release shortly in which it claimed to have received “a 9-figure investment from a global supermajor at a 10-figure valuation” in February. It did not name the investor. A 9-figure investment translates to anywhere between $100-999 million ( ₹925-9,250 crore).
So far, Reliance Industries has neither confirmed nor denied whether it is involved in any kind of deal with America First Refining.
“Based on the amended Sebi Listing Regulations, it is necessary to clarify the rumours or make requisite disclosures to stock exchanges regarding the said deal,” said Gaurav Pingle, a practising company secretary, who believes that a clarification by the company was in order.
Reliance Industries and America First Refining did not offer a comment.
The episode is similar to developments in March 2020, when Reliance’s silence on news reports of a potential deal with Facebook to sell a stake in Jio Platforms Ltd drew regulatory ire. After the deal was eventually announced and confirmed to be true, Sebi issued a show-cause notice to Reliance in December 2021, alleging violation of two sections of its Listing Obligations and Disclosure Requirements Regulations, 2015.
The regulator eventually fined the company ₹30 lakh. Reliance challenged this decision in the Securities Appellate Tribunal and the Supreme Court, but both the judicial authorities ruled in Sebi’s favour.
“The Reliance-Facebook precedent is the reason we now have a mathematical formula for truth in the Indian markets,” said Ankita Singh, managing partner at Sarvaank Associates, a boutique law firm. Back then, Reliance was fined for remaining silent during a month-long media leak because the rules were vague, she said, adding that the episode forced a move from discretionary to mandatory conditions.
Under the new rules, unless a rumour causes the stock price to breach material thresholds relative to the broader market, the company was legally entitled to maintain its silence, she said.
“Reliance seems to have perfectly applied the legal application of the new price-first verification rules that protect companies from reacting to every headline that the market hasn't yet bought into,” Singh said.
Agrawal, the former Sebi officer, believes that when information originates from third-party statements and is subsequently amplified through media reports, as in this case, the applicability of the rumour verification obligation may not be straightforward.
“From a policy perspective, there may be merit in further refining the guidance to provide greater clarity on such scenarios, particularly on when exchange-led clarification should supplement issuer-driven disclosure to enhance market transparency," he said.
Agrawal, however, said that if Reliance Industries’ promoters made the investment in their personal capacity, or through an entity outside the listed company, the company would not be required to disclose it. He added that exchanges could have checked this separately as part of their surveillance, and would not be required to disclose it either.
The exchanges did not comment on whether they had made any outreach to Reliance on the matter.