MUMBAI - India's markets regulator has threatened two Mauritus-based funds with investments in the Adani Group that they could face penalties and cancellation of licences for not sharing shareholding details despite repeated requests over two years, according to a document reviewed by Reuters.

The Adani Group and its 13 offshore investors have been facing an investigation by the Securities and Exchange Board of India (SEBI) since Hindenburg Research in 2023 alleged improper use of tax havens by the group, triggering a stock sell-off. The group has repeatedly denied wrongdoing, and its shares have since recovered.

Indian regulations require that at least 25% of the shares of listed companies be held by public shareholders, but Hindenburg alleged the Adani Group breached those rules since some offshore funds with Adani company holdings were related to the conglomerate.

The two Mauritius-based Elara funds - Elara India Opportunities Fund and Vespera Fund - had been asked since 2023 to provide "granular disclosures" of all their shareholders since they had "concentrated positions" in the Adani Group, according to a SEBI document dated March 28, which was reviewed by Reuters.

"To date, this has not been provided by these FPIs (foreign portfolio investors) to SEBI ... They have also not provided any reasons," the document said, adding that such delays had "impeded the investigation into the Adani Group's compliance with minimum public shareholding norms."

India's Elara Capital and SEBI did not respond to Reuters queries. The Adani Group also did not respond.

The SEBI document noted that Elara funds did not make disclosures about their acquisitions of certain Adani stocks exceeding 5% - as was required by Indian regulations. It did not specify the exact shareholding in question.

Even though the funds are Mauritius based, they are registered with SEBI as FPIs, bringing them under compliance norms and scrutiny of the Indian regulator.

The two funds have applied to SEBI to settle the matter without admitting guilt and by paying a monetary fine, said two sources with direct knowledge of the matter, who declined to be named as the investigation is confidential.

It was not clear what penalties could they face eventually.

In November, U.S. authorities indicted group chairman Gautam Adani and some other executives, alleging they paid bribes to secure Indian power supply contracts and misled U.S. investors during fund raising. Adani denies wrongdoing, and says the allegations are baseless.

At least two other offshore investors in Adani stocks - Mauritius-based Lotus Investment and LTS Investment - also did not supply information on Adani holdings when asked by SEBI, the two sources added.

P.R. Ramesh, a lawyer who represent Lotus and LTS in India, did not respond to repeated requests for comment.

(Reporting by Jayshree P Upadhyay; Editing by Aditya Kalra and Raju Gopalakrishnan)