The Indian stock market regulator has directed two Sahara group firms and their promoters to refund investors who have invested in their optionally fully convertible debentures.
The tough order by the Securities and Exchange Board of India (Sebi) on Thursday is in line with the recent stern actions it has been taking against corporates which have strayed from the straight.
The regulator has asked Sahara Commodity Services Corporation and Sahara Housing Investment Corporation to refund money to its investors with an interest of 15% per annum. Interest will be calculated from the date of receipt of money till the date of such repayment.
However, the Sebi order will now travel to the Supreme Court. The court on May 12, 2011 had directed the capital market regulator to expeditiously hear and decide the case, based on which it can pass suitable orders. The company and their promoters including Subrata Roy Sahara and Ravi Shankar Dubey have also been restrained from further raising funds from the public till the time the payments are made to the satisfaction of the regulator.
The firms have also been restrained from associating themselves with any listed public company and any public company which intends to raise money from the public.
In the past few months, Sebi has passed a string of orders against FIIs and major corporate houses. While most of those have been consent orders, they have made many of them rush to create strong disclosure guidelines to prevent recurrence.