Will not provide redress to investors in OFCDs.
The Securities and Exchange Board of India (Sebi) on Friday informed investors in optionally fully convertible debentures (OFCDs) of two Sahara group companies that it would not be able to provide redress to any investor on any complaint in connection with these instruments.
In a public notice to investors in OFCDs of Sahara India Real Estate and Sahara Housing Investment, the market regulator said it was of the view that the OFCDs issued by these companies was a public issue and had not been done in compliance with the Companies Act, 1956 and the Sebi norms relating to public issue.
“Investors may please note that no offer document, relating to the OFCDs issued by these two companies, has been filed by these companies with Sebi,” the regulator said in the notice.
“Furthermore, the red herring prospectus (RHP) submitted to the registrar of companies (RoC) has not been vatted by Sebi with reference to compliance to Sebi regulations.”
Sebi said investors might also note that the OFCDs were not proposed to be listed on any recognised stock exchange.
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In an interim order on November 24, Sebi had restrained Sahara India Real Estate and Sahara Housing Investment and their promoters and directors, including Subrata Roy Sahara, from mobilising fund through OFCDs till further directions.
Sebi had received certain complaints alleging that these companies had been issuing OFCDs to the public throughout the country for many months, with varying face values and maturity periods extending up to 15 years. The RHPs showed that the cost of projects of both companies was Rs 20,000 crore each. Further, the annual accounts filed with RoC revealed that Sahara India Real Estate had already raised Rs 4,843.37 crore from the investors as on June 30, 2009, Sebi said.
The two Sahara entities challenged Sebi’s order in the Allahabad High Court (HC), which on December 13 had stayed the Sebi order, with liberty to proceed with the inquiry.
Sebi filed a special leave petition before the Supreme Court against the Allahabad HC order. The apex court held that Sebi would be entitled to call for any information which it deems fit, including the names of the investors who have invested in OFCDs in the course of its inquiry.
The Supreme Court directed the Allahabad HC to proceed with the hearing of the case on a day to day basis from January 12 without adjourning the case. Sebi and RoC have been directed to file their counter affidavits by January 7.