GROUP MEMBER Om prakash gupta Prerana ghimire Neha dubey Aniket gupta Kunal gaur Gaurav gupta Sunny gulia

 Sahara India pariwar is an indian conglomerate in lucknow, India  It has a business intrest in finanace, infrastructure and housing, media and entertainment.  The company has an estimated market capitalisation of us$25.94 billion of march  The group is a major promoter of sports in India such as Indian hockey team.  The company owns a 42.5% stake in formula one.

 In 2010, two Sahara Group Companies Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) were raising large sums of money – Thousands of Crores from investors by issuing Optionally Fully Convertible Debentures to the public.

 These two companies were raising thousands of crores but SEBI was not fully aware of why they were doing so or what they were doing with the collected money. Ideally speaking, before such an issue happens, the company is expected to file a request with SEBI, get it approved and then start the collection of public money.

 Mr. Abraham review DRHP, to raise equity for real estate company sahara prime city ltd through an initial public offering (IPO).  DRHP disclose details of two associate group companies (SIREC and SHIC) raising funds from public through optionally fully convirtable debentures.

 So, when SEBI found out that two Sahara Group Cos were raising thousands of crores by issuing optionally fully convertible debentures which they were not aware of, they started digging to find out what exactly is happening.

 SEBI asked the two companies – Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) to stop raising money through an order dated 24 November 2010

 Sahara rushed to the Lucknow bench of the Allahabad High Court, which stayed Sebi's order but not its investigation. Sebi moved the Supreme Court, but the apex court too was not of much help. It merely directed the high court to expedite the case. The high court vacated its stay only on 7 April 2011, when it found that the Sahara group was not cooperating with Sebi as it had directed.

 Sahara group challenged SEBI intrusion.  That SEBI is not under juridiction since they are hybrid instrument- neither shares nor debentures.

 Of Course Not. Any market related instrument comes under SEBIs Jurisdiction. SEBI demolished this argument easily since they were debentures that could be converted into shares. This contention was later upheld by the Securities Appellate Tribunal and the supreme court in 2012.

Sahara’s counter to the Private placement point was - when Sahara offices and agents were busy hawking these OFCDs, and when the two companies SIREC and SHIC had over 6 million investors, the offers can’t possibly be considered as a private placement.

 Absolutely Not. Before the OFCD Issue starts, according to the Schedule II of the Companies Act of India, SEBI has to Review and Vet the DRHP of the company. The Schedule also specifies that, when the company files its DRHP, the Company Directors have to file a Declaration saying that they have complied with all provisions of the Companies Act and the SEBI guideline.

 In reality, the Directors of these 2 Sahara companies SIREC and SHIC excluded all references to SEBI while signing their declarations. On top of all this, this whole OFCD Issue had actually started in 2008 for SHIC and the SIREC Issue had no-closing date. How can an Issue happen which has no closing or end date?

 The main reason behind SEBI Asking companies to follow the guidelines is to protect the Investor. If some random company starts issuing stocks or bonds in the market and dupes investors, who would be responsible? Ya that’s right SEBI. This is why SEBI has those guidelines. Plus, unregulated collection of funds from the public could result in Money Laundering and other illegal activities which SEBI is trying to control here…

 SEBI simply asked the following questions: 1 Why are you raising the money? 2 Who are the owners and investors in these companies that are collecting money? 3 What do you Intend on doing with the collected money? 4 Why did the OFCD Issue Open without the DRHP being filed with SEBI?

 Unfortunately NO. They were not able to get straight answers to questions 1,2, 3,and 4. In fact, they dint even have a list of Investors who had invested into the company. To find out the names of its own investors, SIREC actually needed the help of professional accounting firms. If the identity of the investors and addresses themselves are not readily available with a company how is it practically possible that the issue was even legit one?

 The courts were totally unhappy about the fact that the Sahara Group was non-cooperative throughout the Investigation. The Supreme Court had directed the group to refund the money collected by them to the Investors. Sahara was asked to block or pledge assets worth 20,000 crores to help SEBI recover the money and refund it to investors.

On 26 february 2014, the supreme court of India ordered the arrest of subrata roy, chairman and founder of Sahara India Pariwar, for failing to appear in connection with the rs crore deposits his company has not refunded to its investors. UP police on a supreme court warrant, in a dispute with market regulator- SEBI.

 En.m. wikipedia.com  Wikipedia of sahara  www. Slideshare.net-svasani  Saharascam - scribd

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