India’s capital market regulator Securities and Exchange Board of India (SEBI) on Thursday directed two Sahara group firms Sahara Commodity Services Corp. Ltd (earlier known as Sahara India Real Estate Corp. Ltd or SIRECL), Sahara Housing Investment Corp. Ltd (SHICL), their promoter Subrata Roy and the directors of two firms to immediately refund the money collected through sales of optionally fully convertible debentures (OFCDs) with annual interest of 15%.
SEBI’s order follows a 12 May Supreme Court direction and will come into effect after the apex court ratifies it. In November, SEBI had barred the two firms from raising public money in any manner, citing violations of capital-raising norms and certain sections of the Companies Act.
On Thursday, SEBI directed the entities to refund the money to the OFCD subscribers in cash and restrained the two firms from accessing the capital market till the repayment.
The SEBI order also restrained Roy and the directors of the two firms—Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary—from associating “with any listed public company and any public company which intends to raise money from the public” till the repayments are completed.
The order requires the two firms to file a certificate of completion of all repayments with SEBI from two independent chartered accountants. If the companies fail to do so, SEBI will take “appropriate action, including launching of prosecution proceedings…in accordance with the law”, the order said.
SEBI has found that OFCDs raised by the two firms are “in effect no different from deposits from the public, except that they come with an ‘option to convert’ appended to it…it seems that under the guise of OFCDs, the two companies are extensively taking up parabanking activities and running deposit schemes”.
