SEBI rejects IPO application of Sahara Prime City
New Delhi: Market regulator SEBI has asked two entities of Sahara Group not to mobilise funds from equity markets or from issuance of any security to the public while restraining group supremo Subrata Roy from approaching public for raising money.
Hearing a case related to issuance of securities, SEBI also issued show cause notices to Sahara India Reals Estate(SIRECA) and Sahara Housing Investment as to why action should not be initiated, including directions to refund the money raised by them through a debenture instrument OFCD.
No comments could be obtained immediately from the Sahara Group.
Perusing the balance sheets of group entities, the regulator observed Sahara India Commercial had a balance of up to 
7,000 crore for five years ending 2009 under the head "Optionally Fully Convertible Debentures" and under "unsecured loans".
Prima facie, these Sahara Group companies were raising massive sums in the form OFCD that was characterised by lack of transparency, SEBI said, adding these two deliberately did not give the information pertaining to the issues.
"Considering the quantum of money solicited by them, it is only to presume that prima facie violations have taken place with the connivance of promoter", adding that it also appears that such huge funds were raised by circumventing the applicable laws.
SEBI also prohibited the promoters-- mentioned in the prospects of these two companies-- Subrata Roy, Vandana Bhargava, Ravishankar Dubey and Ashok Roy Choudury, from issuing prospectus or advertisement soliciting money in any manner from the public till further directions.
In its 34-page order, Securities and Exchange Board of India referred draft prospectus filed by Sahara Prime City (SPCL) in September 2009 for its proposed initial public offer.
The regulator passed the order on a complaint from Professional Group for Investor Protection alleging that no disclosure was made about one of the housing companies of the group, SIRECA, raising money by issuing convertible bonds for many months.
Examining the matter under issuance of capital and disclosure requirement, the order said, "It is very clear that the companies have conveniently omitted the necessary statutory declaration of compliance.
"If companies are allowed to go ahead in such manner and raise vast amounts of funds in the guise of private placement it would be mockery of capital market and all established mechanisms to protect investors interest.
Source: PTI
7,000 crore for five years ending 2009 under the head "Optionally Fully Convertible Debentures" and under "unsecured loans".
Prima facie, these Sahara Group companies were raising massive sums in the form OFCD that was characterised by lack of transparency, SEBI said, adding these two deliberately did not give the information pertaining to the issues.
"Considering the quantum of money solicited by them, it is only to presume that prima facie violations have taken place with the connivance of promoter", adding that it also appears that such huge funds were raised by circumventing the applicable laws.
SEBI also prohibited the promoters-- mentioned in the prospects of these two companies-- Subrata Roy, Vandana Bhargava, Ravishankar Dubey and Ashok Roy Choudury, from issuing prospectus or advertisement soliciting money in any manner from the public till further directions.
In its 34-page order, Securities and Exchange Board of India referred draft prospectus filed by Sahara Prime City (SPCL) in September 2009 for its proposed initial public offer.
The regulator passed the order on a complaint from Professional Group for Investor Protection alleging that no disclosure was made about one of the housing companies of the group, SIRECA, raising money by issuing convertible bonds for many months.
Examining the matter under issuance of capital and disclosure requirement, the order said, "It is very clear that the companies have conveniently omitted the necessary statutory declaration of compliance.
"If companies are allowed to go ahead in such manner and raise vast amounts of funds in the guise of private placement it would be mockery of capital market and all established mechanisms to protect investors interest.