The legal battle between market regulator Sebi and Sahara India is
expected to enter a decisive round in the New Year. The Supreme Court is
soon expected to hear a review petition by the Sahara group, while Sebi
is reportedly preparing to move the apex court in case Sahara fails to
deposit the court-directed amount with the regulator.
Over the next few months the battle is sure to involve some of the country's top legal minds. TOI reviewed court papers, opinions given by former judges, and orders of some of the cases that dealt with similar cases to try and discern what's at the core of the dispute and how it has been handled. Sebi and Sahara officials declined to comment on TOI's queries, saying the matter was sub judice.
At the core of the dispute is whether Sebi or the ministry of corporate affairs (MCA) has jurisdiction over fund raising activities by two unlisted Sahara group entities, Sahara India Real Estate Corp (SIRECL) and Sahara Housing Investment Corp (SHICL), through the private placement route. Also, whether raising money from more than 50 people, even if through the private placement route, is construed as public offering or not, because all public offers require Sebi's permission.
For perspective, here are the facts of the case. Sahara started the offering in 2001 and closed it in 2007. Subsequently, it submitted its prospectus giving details of 1.97 crore investors to the concerned Registrar of Companies (RoC). The number of investors, above 50, was not objected to by the authorities. Then in 2008, the two companies took permissions again from two different RoCs to raise funds through optionally fully convertible debentures (OFCDs), through the private placement route and raised money from about three crore investors, all of whom were claimed to be people associated with the Sahara group.
In 2009, when Sahara Prime City, one of the group companies approached Sebi to go public, the regulator suddenly asked SIRECL and SHICL to refund all the OFCD money to investors. That began the battle.
For More Information:-
http://www.zimbio.com/News/articles/KeC6
Over the next few months the battle is sure to involve some of the country's top legal minds. TOI reviewed court papers, opinions given by former judges, and orders of some of the cases that dealt with similar cases to try and discern what's at the core of the dispute and how it has been handled. Sebi and Sahara officials declined to comment on TOI's queries, saying the matter was sub judice.
At the core of the dispute is whether Sebi or the ministry of corporate affairs (MCA) has jurisdiction over fund raising activities by two unlisted Sahara group entities, Sahara India Real Estate Corp (SIRECL) and Sahara Housing Investment Corp (SHICL), through the private placement route. Also, whether raising money from more than 50 people, even if through the private placement route, is construed as public offering or not, because all public offers require Sebi's permission.
For perspective, here are the facts of the case. Sahara started the offering in 2001 and closed it in 2007. Subsequently, it submitted its prospectus giving details of 1.97 crore investors to the concerned Registrar of Companies (RoC). The number of investors, above 50, was not objected to by the authorities. Then in 2008, the two companies took permissions again from two different RoCs to raise funds through optionally fully convertible debentures (OFCDs), through the private placement route and raised money from about three crore investors, all of whom were claimed to be people associated with the Sahara group.
In 2009, when Sahara Prime City, one of the group companies approached Sebi to go public, the regulator suddenly asked SIRECL and SHICL to refund all the OFCD money to investors. That began the battle.
For More Information:-
http://www.zimbio.com/News/articles/KeC6
I think if the man is spending so much for the noble causes, then where the question comes of not refunding its own investors? Sahara Still has truckload evidence that he has gradually paid back to the investors. Why SEBI changes its own statement in the parliament and in the Court?
ReplyDeleteWell... there is no way out to identify investors on the basis of their accounts, more than 80% of the investors don't have any bank account, SEBI will have to get a huge human resource to track em all which is not possible with the snail walk processes of SEBI, now the sole game is in the hands of Sahara, no one can really blame them SEBI Failed, Sahara is the new name of victory! Check this out -
ReplyDeleteSahara SEBI Issue