SEBI can direct even unlisted firm :SAT

The Securities Appellate Tribunal (SAT) on Monday observed that the Securities and Exchange Board of India (Sebi) has wider powers under the Sebi Act to issue directions to even unlisted firms to protect interest of investors in the securities market.

The SAT observation came in response to a Sahara Group argument that the jurisdiction to regulate an unlisted public company lies with the Central government and not with the Sebi.

The Sahara counsel pointed out Section 55 A of the Companies Act, which makes a distinction between listed and unlisted public companies with relation to the issue and transfer of securities.However, SAT observed that Section 55 A of the Companies Act should not override the wider powers enjoyed by Sebi under the Sebi Act.

The issue relates to Sebi’s finding in November, 2010 indicting two Sahara Group firms — Sahara India Real Estate Corporation now known as Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation — for raising funds from the public through optionally fully convertible debentures(OFCD) scheme without conforming to prudent disclosure and other investor protection norms, which governs such public issues.

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