Sahara misrepresented debenture-issue prospectus as draft Red Herring

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

"My submission is that the Sahara Group had actually issued their public issue prospectus in the guise of a DRHP. A DRHP does not have the price or the quantum of securities. But the Sahara Group's DRHP 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 DRHP and hence cannot escape Sebi's jurisdiction," Sebi's counsel Arvind P Datar told the Securities Appellate Tribunal (SAT) on the fifth day of the hearing to the OFCD issue.

Sahara India Real Estate and Sahara Housing Investment Corporation have challenged the Securities Appellate Tribunal (SAT) order directing them to refund investors the money collected by issuing OFCDs.

The two Sahara Group companies had been asked to refund the money that had been collected through the issue, which was challenged by the company at the SAT.

According to Sebi counsel, under Section 236 of the Companies Act, any document inviting deposits or offer of any shares or debentures, is treated as a "prospectus". He further said the two Sahara Group companies also violated the provisions of Sebi's disclosure and investor protection guidelines.