Economic Times article on Sahara India Commercial unlisted shares
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Sahara India Commercial unlisted despite having 2.6 mn shareholders
Avinash Celestine, ET Bureau, Apr 23, 2011, 10.36pm IST
NEW DELHI: In October 2009, Sahara India Commercial Corporation (SICCL), part of Sahara Group of Companies, decided to issue shares to a bunch of investors. While the size of the share issue — 3,000 crore — was substantial, what was really startling was not the amount, but the number of shareholders who were allotted shares: 2.6 million.
Even if this were the only share issue by the company, it would make it the third-largest company in the country today in terms of number of shareholders—behind Reliance Power (4.9 million shareholders as of December 2010), and Reliance Industries (3.5 million).
Despite the share issue, SICCL is not listed on any stock exchange. According to filings by the company with the registrar of companies, West Bengal, the company issued 30 crore shares with a face value of 1, at a premium of 99, on October 29, 2009. The number of allottees were 26,89,935.
In response to a questionnaire sent by ET, Sahara spokesperson, Abhijit Sarkar said: "SICCL is an unlisted public limited company and does not intend to list its shares at any of the stock exchanges as decided by the board of directors of the company. Compliances with the Sebi Regulations are applicable for the listed companies as well the company who intend to get their shares listed on the stock exchanges." He said necessary board and shareholder approvals were taken.
Further, the fact that the return of allotment was duly approved by RoC West Bengal was evidence that "required compliances for allotment of equity shares by the company are fully complied with". According to Sahara, an approval from the RoC was given in September 2010.
Two Share Allotments
Says Jayant Thakur, a chartered accountant specialising in securities law: "When a company raises funds from more than 50 people, it does not remain a private placement, but is a public issue. For this, listing requirements, as well as other Sebi norms must be followed." SICCL, according to other filings with the RoC, is primarily a real estate and infrastructure developer.
Documents filed by the company describe it as 'perhaps one of the largest infrastructure and housing development company in India." As of March 2009, the company posted a loss before tax of Rs 449 crore, on revenues of Rs 1,600 crore. SICCL's balance-sheet size, as of March 2009, was Rs 8,591 crore. Of this, Rs 6,922 crore (over 80%) was raised through the issue of optionally fully convertible debentures, or OFCDs.
Thus, the total amount of shares issued by the company, as a result of these two allotments, was Rs 5,000 crore. It could not be ascertained whether the two share allotments arose as a result of the conversion of OFCDs, issued earlier by the company, into shares or whether these were standalone issues of shares to investors.
Late last year, the Securities and Exchange Board of India (Sebi) had banned two other Sahara Group companies—Sahara India real estate corporation ( SIRECL), and Sahara Housing Investment Corporation(SHICL)—from raising funds from the public through the issue of OFCDs, without going through the necessary approvals and procedures required.
The two companies claimed that they had not made a 'public offer' (defined as an offer to more than 50 investors), as claimed by Sebi, but had placed the debentures privately and among a few friends, associates and others close to the group.
Therefore, the companies claimed, Sebi had no jurisdiction. The market regulator, disagreeing with the claim of a 'private placement', had imposed the ban. The Sebi ban on the other two Sahara companies was stayed by the Allahabad High Court but the stay order was lifted earlier this month.
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