The Ministry of Corporate Affairs (MCA) on Saturday said it would not intervene in the ongoing dispute between the Securities and Exchange Board of India (SEBI) and Sahara Group companies, which has been stopped by the market regulator from mobilising funds from the public.
“Sahara Prime City Limited, a Sahara Group company, intending to go for an initial public offering (IPO), had filed information about its group companies to SEBI in its draft red herring prospectus. SEBI, as market regulator vested with the mandate of investor protection, upon noticing inadequacy in material disclosures, has asked information about some Sahara group companies as per SEBI's disclosure requirements,” MCA said in a statement.
“As the information was not furnished to SEBI, on November 24, 2010, an interim order was passed by SEBI issuing show cause notice to two Sahara group companies — SIRECL and SHICL — and restraining them from mobilising funds from the public. This order has been challenged by the said companies and the case is now sub judice before the High Court of Allahabad, Lucknow Bench. As this is a matter between the Sahara group companies and SEBI, the MCA cannot intervene in the matter,” it added.
MCA further said to check misuse of private placement provisions under the Companies Act, 1956, it issued a circular on November 22, 2010, mandating its field offices to carefully scrutinise offer documents filed by unlisted public companies proposing to raise money through the private placement route.
MCA is considering substituting Unlisted Public Companies (Preferential Allotment) Rules, 2003, by replacing it with Unlisted Public Companies (Preferential Allotment) Rules, 2011, which requires more disclosures and keeping the securities in demat form.
