The Securities and Exchange Board of India (SEBI) has questioned the Bombay Stock Exchange (BSE) the basis on which it gave a certificate to the Sahara group on the ‘listability’ of optionally fully-convertible debentures (OFCDs).
The move came after the group produced a copy of an email sent by a BSE official, saying “OFCDs are not listed on the BSE”, as an evidence before the Securities Appellate Tribunal (SAT).
Sahara used the statement to support its claim that OFCDs being fixed price convertible instruments cannot be listed on a bourse.
According to the BSE, the mail was sent by a junior official and not a “regulatory statement”. A BSE spokesperson said, “Our website people responded to an oral query through e-mail. They said there are no OFCDs listed on the BSE, which is the factual position as of on Wednesday. This does not mean OFCDs were not listed earlier and new ones cannot be listed, if they comply with the applicable rules and conditions.” The official said the exchange had responded to the SEBI query on similar lines.
Taking on record the BSE response, the market regulator filed a fresh affidavit before the SAT, contesting Sahara claims that these OFCDs cannot be listed on the stock exchange. The tribunal on Wednesday, September 12, heard SEBI and the companies on the fresh affidavit. It said the submissions would be taken into account while deciding the case. The tribunal has completed the hearing of SEBI, the Corporate Affairs Ministry and two Sahara group firms almost a month ago. It had reserved its judgement after asking the parties to make their final written submissions.
The e-mail from BSE was produced as a new piece of evidence as part of the final submission by the Sahara group, resulting in the fresh affidavit. In August, the apex court had directed the tribunal to hear the appeal by the two Sahara group firms challenging a SEBI order against them. The two firms, Sahara India Real Estate Corp and Sahara Housing Invest Corp, raised at least Rs 24,029 crore from 29.6 million investors by issuing OFCDs.
SEBI, according to an order passed in June, found the money-raising activity was not in compliance with its public issue rules and ordered the firms to refund the money to investors. The firms challenged this order before the SAT on the direction of the apex court.
According to the companies, since they are unlisted firms and do not intend to list, the market regulator does not have powers to issue such orders to them. According to them, the firms come under the jurisdiction of Corporate Affairs Ministry.
