Viceroy Research Flags Vedanta’s Rs2,000 Crore Brand Fee Payments as Governance Breach
Moneylife Digital Team 05 September 2025
US short-seller Viceroy Research LLC has raised serious concerns over corporate governance practices at Vedanta Ltd, alleging that the company’s substantial brand fee payments to its parent, Vedanta Resources Ltd (VRL), violate Indian securities regulations.
 
In a detailed legal opinion, Viceroy says Vedanta’s annual payments, reportedly exceeding Rs2,000 crore, qualify as material related-party transactions (RPTs) under the Securities and Exchange Board of India’s (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, and the Companies Act, 2013. Viceroy argues that such payments required prior approval from disinterested shareholders, with promoter entities abstaining from voting — a process it alleges Vedanta failed to follow.
 
According to the legal opinion obtained by the short-seller, Regulation 23 of the LODR lays down strict thresholds for RPTs. "While regulation 23(1) sets the bar at Rs1,000 crore or 10% of turnover, whichever is lower, regulation 23(1A) specifically introduces a 5% turnover trigger for brand usage and royalty payments." 
 
Viceroy noted that Vedanta’s transactions breached the Rs1,000 crore threshold outright, making them material irrespective of whether the percentage limit was crossed.
 
Citing SEBI’s primary market advisory committee (PMAC) documents and subsequent 2022 amendments, Viceroy argued that both thresholds were intended to apply concurrently to safeguard minority shareholders from abusive transactions, especially in cases involving intangible assets like brand fees.
 
The report also pointed to fiduciary obligations under Sections 188 and 166 of the Companies Act which require directors to seek shareholder approval for material RPTs and act in the best interests of the company. Failure to comply could render the payments voidable, expose directors to personal liability, and subject the company to penalties under section 15HB of the SEBI Act.
 
Viceroy concluded that Vedanta’s brand fee payments “constitute a serious breach of corporate governance” and undermine shareholder rights. It says minority investors could justifiably demand suspension of such payments, full disclosure of agreements with VRL and clawback of fees already remitted.
 
Vedanta has not issued any statement in response to the legal opinion shared by Viceroy Research till publishing this story.
 
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Comments
david.rasquinha
2 months ago
And yet, there is complete silence from the MOF, the RBI, SEBI and the rest of the gang. "All animals are equal, but some are more equal than others".
rhsharpehead1980
Replied to david.rasquinha comment 2 months ago
Exactly, regulators need to act to make sure that even conglomerate will face harsh penalty and scrutiny as everyone else, this is cleaning and regulating the market and setting an example that they do care about corporate governance and integrity.
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