SEBI slams Sahara, asks it to repay debenture holders

The Securities and Exchange Board of India (SEBI) has asked Sahara entities which had raised money from the public in violation of its regulations to refund it all along with an interest payment of 15% p.a.

The stock market regulator has also restrained promoter Subrata Roy Sahara, two Sahara group companies as well as their directors from accessing the securities market.

The order would be subject to examination by the Supreme Court.

The matter is related to the Sahara group’s filing of a draft red herring prospectus for the initial public offer of Sahara Prime City which omitted details of two group companies Sahara India Real Estate Corporation, now known as Sahara Commodity Services Corporation and Sahara Housing Investment Corporation.

The two had raised money from public by issuing a hybrid instrument called optionally fully convertible debentures, allegedly in violation of the Companies Act and SEBI rules.

These instruments had face values from Rs5,000 to Rs24,000, maturity from 48 to 180 months and varying redemption values and conversion options.

The total amount raised by the two companies through these instruments was not available but the total cost of projects that the two companies were raising money for has been listed as Rs40,000 crore.

SEBI subsequently issued an order restraining the companies from raising capital.

This was followed by petitions to and orders from the Allahabad High Court and the Supreme Court. On May 12, the Supreme Court asked Sebi to conduct inquiries and place its findings before it.

Sahara Commodity Services Corporation and Sahara Housing Investment Corporation and their directors Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary, were found to have violated regulations while raising capital through the OFCDs; along with promoter Subrata Roy Sahara, said the Sebi order released on Thursday.   

The Sahara Group has been asked to file a certificate of completion after repayment from two independent peer reviewed chartered accountants who are in the panel of a public authority or institution.

The regulator has also asked the concerned companies and their individuals to keep away from the securities market for raising funds or associating with any listed company or any public company which plans to raise money from the public till the payments are made.