A consulting firm set up by Madhabi Buch before she became a member and chairperson of the Securities and Exchange Board of India is registered at the same address as its statutory auditor, regulatory filings by the firm show.
Such arrangements raise “questions about conflict of interest between the firm and the auditor, and about the independence of the auditor”, said Amarjeet Chopra, a former president of the Institute of Chartered Accountants of India.
The firm, Agora Advisory Private Limited, has come under scrutiny after a report by Hindenburg Research on August 10 highlighted it as part of possible conflicts of interest on the part of Buch. The report also alleged Buch and her husband Dhaval had invested in offshore funds linked to the Adani Group. The Buchs denied all the allegations. “All disclosures as required have already been furnished to SEBI over the years,” their statement said.
Documents with the Registrar of Companies show Agora was incorporated on May 7, 2013, with Madhabi Buch as one of its two directors. Buch, then based in Singapore, also registered another firm, Agora Partners Pte Ltd, in Singapore.
The Indian firm’s incorporation certificate states its address as “201, RNJ Corporate, Next to Samrat Hotel, Jawahar Road, Ghatkopar (East), Mumbai”. The same address has been cited in the firm’s latest balance sheets for the year 2023-’24.
These balance sheets have been audited by a chartered accountancy firm called Shah and Savla LLP. Its registered address, according to its filings as well as its website, is “201, 2nd floor, RNJ corporate bldg, Jawahar Road, Ghatkopar East, Mumbai” – the same as Buch’s consulting firm.
In fact, two other firms founded by Madhabi Buch, Aarnaira Impact Solutions Private Limited and Aarnaira Development Foundation, also have the same address. She resigned from their boards before joining SEBI in 2017. Dhaval Buch has been a director in these firms since 2019.
Scroll visited the address in Mumbai. The second floor of the RNJ corporate building houses the office of Shah and Savla LLP. The partners of the firm were not present, but a guard at the building and a person at the reception of the audit firm did not seem to know about Agora Advisory.
Statutory auditors are third party firms that evaluate financial records of their client firms and assess their accuracy. Shah and Savla have been Agora’s auditors since the financial year 2015-’16 at least, and in July 2024, their role was extended till the financial year 2028-’29, show official documents.
Experts said a firm and its auditor sharing the same address was a “shady” and a “lazy” practice usually restricted to medium, small and micro enterprises in the informal sector. “In the formal sector, it is usually a sign of bad corporate governance,” a faculty member at a prominent management institute told Scroll, on the condition of anonymity.
Pooja Madhan, a chartered accountant at the Delhi-based Pooja Jagdish and Associates, told Scroll that an auditor sharing its address with the auditee firm may not necessarily be a red flag, but it can lead to questions about other links. “Other connections like shared ownership, management control, or familial relationships could potentially compromise the auditor's objectivity and independence, warranting closer scrutiny,” she said.
Madhan added that the ICAI code of ethics requires statutory accountants to protect their judgement from bias, conflict of interest or undue influence.
A Delhi-based corporate lawyer said that if an auditor and an auditee have the same address, “the relationship between the parties is to be looked at”.
“If it is a lessor-lessee relationship, it may be said that independence of the auditor may be compromised,” said the lawyer. “[There is] no real law on this except for the fact that the auditor has to be a neutral and independent third party.”
Queries sent to Shah and Savla and Madhabi and Dhaval Buch did not elicit a response.
Dormant or active?
Beyond the overlap between the address of Buch’s firm and its auditor, documents filed with the Registrar of Companies also reveal Madhabi Buch continued to hold 99% stake in Agora Advisory till as late as March 2024, even though she had stepped down as director in 2017. Her husband, Dhaval Buch, replaced her.
In its latest annual returns, the firm says it is engaged in “management consultancy services”. Hindenburg pointed out that the firm had reported revenue of Rs 1.98 crore in 2021-’22, more than four times Buch’s salary as SEBI chairperson.
Seeking to explain Agora’s revenue, the statement by Buchs noted that after he retired from Unilever in 2019, where he worked as chief procurement officer, Dhaval “started his own consultancy practice through these companies”.
However, the statement by Madhabi and her husband also claimed somewhat contradictorily that the two consulting firms “became immediately dormant on her appointment with SEBI”.
The Indian firm’s statutory documents show that is not entirely the case.
Between 2019 and 2024, Agora made Rs 3.63 crore in revenue from operations. Most of this was made between 2019 and 2022, when Madhabi was a whole-time member at SEBI. Madhabi was appointed SEBI chief in March 2022. Between 2022 and 2024, Agora made about Rs 41.75 lakh in revenue from operations.
The statement noted that “Dhaval’s deep expertise in Supply Chain allowed him to work with prominent clients in the Indian industry”.
In response, Hindenburg Research asked the SEBI chairperson to disclose the names of these clients. “What other investments or business has the SEBI chairperson engaged in through her husband's name while serving in an official capacity?” it asked.
Prayag Arora-Desai contributed reporting from Mumbai.
