SEBI turns down Sahara’s application for renewal of portfolio manager

Market regulator SEBI has rejected Sahara Asset Management Company Ltd’s (SAMCL) application for renewal of registration to act as portfolio manager. In an order passed on Friday, SEBI observed that Sahara was not a ‘fit and proper person’ to act as a portfolio manager.

‘Influential position’

SEBI said Subrata Roy Sahara was a substantial shareholder in Sahara India Financial Corporation Ltd (SIFCL), according to information submitted by SAMCL, and was in an important position to exercise control and influence its activities. In addition, all the other promoters of SAMCL were also companies of the Sahara group.

“Therefore, for the purpose of determining whether Sahara AMC is a ‘fit and proper person’, the criteria as contained in Schedule II of the Intermediaries Regulations shall be extended to include Shri Subrata Roy Sahara since through SIFCL, he exercises substantial controlling interest entailing significant influence in that company and also through the other promoter companies,” SEBI said.

The regulator also observed that the number of clients of SAMCL were between six and eight during the period June 2012 to January 2015, with the assets under management between ₹41.37 lakh and ₹76.67 lakh.

SEBI noted that several adverse actions subsisted against Subrata Roy Sahara and the Sahara group such as its order of June 23, 2011, directing two Sahara companies and its promoter and directors to jointly and severally, to refund the money collected from subscribers of optionally fully convertible debentures with interest of 15 per cent a year. Sahara Commodity Services Corporation and Sahara Housing Investment Corporation were the two companies involved in the issue. SEBI also relied upon the Supreme Court order against SIRECL and SHICL to refund to the regulator the amount collected and the two criminal complaints filed by itself against the two entities.

Finding that SAMCL did not comply with the eligibility criteria of being a ‘fit and proper person’ in accordance with the Portfolio Managers Regulations in view of adverse actions subsisting against Shri Subrata Roy Sahara and companies of the Sahara group, SEBI rejected the renewal application.

Sahara has 30 days to transfer its business to another SEBI registered portfolio manager or allow clients to withdraw the securities and funds in its custody.

COMMENT NOW