,LL ARCHITA SINHA

COLLEGE- MSC
ROLL NO- 1608302
INTRODUCTION
Sahara India Pariwar is an
Indian conglomerate company
headquatered in Lucknow.
Diversified business in finance,
infrastructure & housing,
media & entertainment,
consumer merchandise retail
venture, etc.
Started by Mr. Subrata Roy in
1978.
Subrata Roy was named
among the 100 most powerful
people of india in 2012 by
India Today.
 Sahara India floated two companies- Sahara
Housing Investment Corporation(SHIC), Sahara India
Real Estate Corporation Limited(SIRECL)
On April 25, 2008 the two companies began
inviting and collecting subscriptions to raise funds
through private placement of Optionally Fully
Convertible Debentures(OFCDs) from friends, family
members of Board of Directors and to a few trusted
investors.
 Around 24000 crore rupees raised from 30 million
people without any knowledge to SEBI.
This case ignited in January 2010, whn Roshan Lal,
an Indore based Chartered Accountant, sent a letter
to the National Housing Bank(NHB) requesting them
to investigate the bonds issued by Sahara.
The NHB forwarded to SEBI.
And thus began a never ending battle between
Sahara and SEBI.
SAHARA V/S SEBI
The purpose of issue was to carry out infrastructural
activities like, constructing bridges, modernizing or
setting up of airports, rail system or any other
project which may be alloted by the company.
As per Sahara issue of OFCDs was private
placement.
The requirements applicable to the public offerings
of securities were not complied with.
Continued.
By June 2011, SEBI directed the two companies to
refund the money collected so to the investors.
Also restrained the promoters of the two companies
including Mr. Subrata Roy from accesing the
securities market till further orders.
Sahara preferred an appeal before securities
Appellate Tribunal(SAT) against the order.
Subsequently Sahara filed an appeal before the
Supreme Court of India against the SAT order.
SAHARAS CONTENTION
Issue of OFCDs is legal
Issue of OFCDs is not a public issue.
OFCD are neither shares nor debentures, they are
of Hybrid class.
OFCDs are hybrid instruments and cannot be listed.
Serious error is committed by SEBI.
No statutory requirement to list OFCDs.
Continued.
Bonds issued by Sahara are:-
a) Hybrid instruments according to the Companies
Act
b) Convertible bonds as per the SCR Act.

SEBI contention is not correct and has no credible

evidence.
SEBIS CONTENTION
OFCD was public issue
OFCDs were securities that were transferable.
Violation of section 73 of Companies Act 1956
Untrue Red Herring prospectus
Not following The Securities Contracts(Regulation)
Act,1956
The forms issued by the two companies did not enclose
an abridged prospectus.
Did not submit a Balanced sheet & P&L a/c to the
concerned ROC
Continued.
Aggrieved Sahara appealed to SAT
Passed order in favour of SEBI
Aggrieved Sahara again moved towards Supreme
Court
Finally Supreme Court passed the judgement in
favour of SEBI
Ordered Sahara to repay the investors
CORPORATE GOVERNANCE ISSUES

Case of Fake
money investors
laundering

Political links Inflated Lack of

of Subrata value of transparency
Roy land
LEGAL ISSUES ADDRESSED

Whether SEBI had power to

investigate Sahara in the beginning?

Whether OFCDs fall within

definition of securities

Issue of OFCDs public or private

placement
 MEASURES TAKEN BY SEBI

ISSUE OF DEALING WITH

GUIDELINES COMPLAINTS OF
INVESTORS

PUBLIC INTEREST
ADVERTISEMENTS

INVESTOR DISCLOSURES BY
EDUCATION COMPANIES
TIPS FOR INVESTORS
Remain informed
Be vigilant
Participate and vote in general meetings
Keep a track of activities of the company even
after you have invested in it.
See if the company has complied with all the
guidelines issued by the regulatory authority.
CONCLUSION
Sahara scam is eye opener in several aspects about
the dubious dealings in the interiors of corporate
houses and it brings the need for protecting the
investors who invested their hard earned money.
SEBI proved to be an effective machinery in
tackling Sahara scam.
There is a need for more empowering role of SEBI.
The scams will continue to thrive in the Indian capital
market unless there is a clearer & more transparent
system in place.