In a 22-page order which is applicable with immediate effect, Sebi whole-time member Prashant Saran stated that Sahara’s AMC did not fulfil the criteria of ‘fit and proper’ to carry out the business of a mutual fund
The Securities and Exchange Board of India (Sebi) on Tuesday cancelled Sahara Asset Management Company (AMC) certificate of registration and has granted five months to transfer the AMC to a new sponsor and Sebi-approved AMC.
In a 22-page order which is applicable with immediate effect, Sebi whole-time member Prashant Saran stated that Sahara’s AMC did not fulfil the criteria of ‘fit and proper’ to carry out the business of a mutual fund. Sebi has ordered the fund house to neither take any new subscription from the investors nor levy any penalties on the systematic investment plans (SIP) and systematic transfer plans (STP) to investors for not depositing the installments.
“Sahara Mutual Fund shall make efforts to transfer the activities to a new sponsor and a Sebi approved AMC at the earliest,” Saran said in its order. “In the event of failure of Sahara Mutual Fund to complete the process of transition as mentioned, within a period of five months from the date of this 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 order stated.
Sebi has also ordered Sahara AMC to return the certificate of registration to Sebi on expiry of six months from the order.
According to the data from Association of Mutual funds in India (Amfi), total assets under management of the fund house at the end of June quarter stood at R134.29 crore.
In February, the capital markets regulator had cited similar reason to reject Sahara AMC’s renewal application for registration as portfolio manager. Sebi has directed SAMCPL to transfer its business to another Sebi registered portfolio manager within 30 days or allow clients to withdraw the securities and funds in its custody at the option of the client.