Terming Sahara India Financial Corp Ltd as an entity not 'fit & proper', market regulator Securities and Exchange Board of India (SEBI) has cancelled registration of the Sahara group unit as sub-broker of National Stock Exchange (NSE) and BSE.
In an order, G Mahalingam, whole-time member (WTM) of SEBI,
says, " Subrata Roy Sahara is a promoter and continues to hold substantial shareholding in Sahara India Financial Corp and therefore, is also capable of exercising control and influence over the management of the Sahara India Financial Corp, thereby making it not a ‘fit and proper person’ in terms of Regulation 7(2)(e) read with Schedule II of the Intermediaries Regulations, to continue to act as a sub-broker."
The designated authority (DA) in its enquiry report had noted “considering the antecedents of Subrata Roy Sahara and the various judicial pronouncements against him and other Group Companies of Sahara, it is determined that Sahara India Financial Corp is not a ‘fit and proper person’ to continue as a sub-broker in the securities market.”
The SEBI order also refers to an order passed by the Securities Appellate Tribunal (SAT) on 28 July 2017 in Sahara Asset Management Company (AMC) Pvt Ltd issue.
The SAT order had stated, "Subrata Roy Sahara holds 79.80% of the equity capital of Sahara India Financial Corporation Ltd (Sahara Sponsor) and 53.34% of its preference capital. Even after the resignation of Subrata Roy Sahara there is no change in this equity or preference holding. It is also a fact that the full equity and preference holding in the Sahara AMC is also held by the Sahara Sponsor and other Sahara Group Companies together though two of its group companies Sahara India Real Estate Corp Ltd (SIRECL), and Sahara Housing Investment Corp Ltd (SHICL) are not holding any equity in the Sahara AMC. It is also on record that Mr Sahara was a director in all the group companies, which hold the shares of Sahara AMC. Such high shareholding in the sponsor by one promoter and in the AMC by the same promoter group companies clearly establish the capability of that one promoter and director to control the affairs of the Sahara Sponsor and thereby that in the Sahara AMC and Sahara Mutual Fund."
In the present case, the WTM says information obtained from the portal of ministry of corporate affairs (MCA) shows six people as directors of Sahara India Financial Corp. This includes, Om Prakash Srivastava, Madhukar, Satish Kumar Singh, Janardan Singh, Babita Chauhan Singh and Vivek Singh.
On 22 March 2017, Subrata Roy Sahara resigned from the board of directors of Sahara India Financial Corp. However, as per the shareholding as on 30 December 2020, he continues to be a substantial shareholder of the company.
Mr Mahalingam also noted that Om Prakash Srivastava, present director in Sahara India Financial Corp, was earlier also a director in Sahara AMC, whose certificate of registration to act as a portfolio manager was cancelled by SEBI on 27 February 2015.