Market regulator Securities and Exchange Board of India (Sebi) has ordered cancellation of the registration of Sahara group's asset management business, saying it failed to meet a "fit-and-proper" rule as the group founder in has been in jail.
Sebi also ordered transfer of Sahara's fund management operations to another fund house at the expiry of six months from the date of the order.
''However, keeping the interests of unit holders, the order of cancellation of the certificate of registration of the Sahara Mutual Fund will be effective on expiry of six months from the date of the order,'' Sebi said.
Sebi has barred Sahara Mutual Fund and Sahara Asset Management Company Private Limited (Sahara AMC) from taking any new subscription from the investors (including existing investors in systematic investment plans (SIP) or systematic transfer plans (STP).
Further, Sahara Mutual Fund should not levy any penalties or loads on the SIP/ STP investors for not depositing the installments, the regulator said in its order.
Sahara Mutual Fund should make efforts to transfer the activities of Sahara India Financial Corporation Limited (Sahara Sponsor) and Sahara Asset Management Company Private Limited (Sahara AMC) to a new sponsor and a Sebi-approved asset management company at the earliest.
The board of trustees of Sahara Mutual Fund should oversee and ensure protection of the unitholders' interests during the above period.
On transfer of the activities, the board of trustees should be re-constituted in accordance with the Sebi (Mutual Fund) Regulations, 1996.
In the event of failure of Sahara Mutual Fund to complete the process of transfer of business to a new AMC within a period of five months from the date of the Sebi order, then Sahara Mutual Fund should compulsorily redeem the units allotted to its investors and credit the respective funds to its investors, without any additional cost, within a period of 30 days thereafter and wind up the operations of the mutual fund.
Sebi has directed Sahara Mutual Fund to return the certificate of registration to Sebi on expiry of the six months from the date of the order.
Sahara group has been engaged in a long-running regulatory and legal battle with Sebi ever since the regulator ordered refund of a massive amount of over Rs24,000 crore by two Sahara entities.
Sebi had also recently cancelled the portfolio management licence of a Sahara firm.