Sahara disguised issue prospectus: Sebi

Sebi charged the Sahara Group with disguising its prospectus for OFCD issue as a DRHP.

Market watchdog Sebi today charged the Sahara Group with disguising its prospectus for the optional fully convertible debenture (OFCD) issue as a draft red herring prospectus (DRHP),as it had contained the details of price and quantum of the issue among other things.

My submission is that the Sahara Group had actually issued their public issue prospectus disguised as a DHRP. A DHRP does not have the price or the quantum of securities. But the Sahara Groups DHRP contained the price and quantum,as well as the period of maturity and conversion value. So,it was a full-fledged prospectus which was issued.

This cannot be called a DHRP and hence cannot escape Sebis jurisdiction, Sebi Counsel Arvind P Datar told the Securities Appellate Tribunal on the fifth day of the hearing to the OFCD issue.

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Sebi had asked two Sahara Group companies to refund the money they collected through this issue,which was challenged by the company at the SAT.

The Sebi counsel said under Section 236 of the Companies Act,any document inviting deposits or offer of any shares or debentures,is termed as a prospectus. He further argue that the two Sahara Group companies also violated the provisions of Sebis disclosure and investor protection guidelines.

Refuting Saharas earlier argument that there were legal fetters,which ensured that its OFCDs were not marketable securities,he said any security which has a market value is tradable and marketable.

Such arguments are merely to escape provisions of the Securities Contract (Regulation) Act (SCRA), he said.