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SAT rejects Sahara plea against Sebi order cancelling mutual fund licence

Company granted six weeks' time to approach the Supreme Court

BS Reporter  |  Mumbai 

Sahara, Subrata Roy

The Securities Appellate Tribunal (SAT) on Friday upheld regulator Sebi's order cancelling the registration of Mutual Fund, saying the latter no longer met the 'fit and proper' criterion for this business.

And, ordered transfer of its operations to another fund house. However, on the counsel's request, the tribunal granted six weeks to the company, to approach the

In 2015, the Securities and Exchange Board of India (Sebi) had passed an order against India Financial Corporation and Asset Management Company, declaring them not ‘fit and proper’. “They have failed to fulfil the eligibility criteria to remain as the sponsor and asset management company, respectively,” went the order.

Later, had challenged Sebi, presenting a 300-page affidavit before the tribunal. SAT, in a 21-page order on Friday, said: “We find no merit in the appeal.”

“The present appeal before us is regarding the fit and proper status of a promoter/director of India Financial Corporation (Sponsor), who holds about 80 per cent of its capital and who controls all group Companies and, hence, on the fit and proper status of Sponsor to continue as sponsor of a in the context of Sebi/orders against (Subrata Roy) and two group Companies,” noted

It states that regulations say the sponsor company and its key managerial persons or key person who controls the company is to be 'fit and proper’. And, that the law empowers to take actions in the interest of protecting investors. Hence, lifting the corporate veil to the extent of identifying who controls a regulated entity cannot be faulted. The group has been involved in a legal battle with ever since the regulator ordered refund of Rs 24,000 crore by two entities.

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