Onelife Capital Advisors (OCAL) has withdrawn its application to become a sponsor of Sahara Mutual Fund (MF), with the Securities and Exchange Board of India (Sebi) also calling off its proceedings against company to assess the fit and proper criteria of the firm.
OCAL had filed an application with Sebi in March, 2018, to become a sponsor of Sahara MF. However, the market regulator returned the application in April, as the company did not satisfy the eligibility criteria to act as sponsor of an MF as mandated in regulation 7(a)(iv) of MF regulations.
This provision required that the sponsor should have profits after providing for depreciation, interest and tax in three out of the preceding five years.
Subsequently, OCAL and Sahara MF filed an appeal with Securities Appellate Tribunal (SAT) seeking relief against the Sebi order.
Meanwhile, OCAL re-submitted the application after meeting requirements under regulation 7. This time Sebi rejected the application on the grounds that OCAL was not a Sebi-approved asset management company (AMC) and timeline for completing the process of transfer of business of Sahara MF to Sebi-approved AMC had lapsed.
Subsequently, SAT directed Onelife to file fresh application with Sebi for purchasing 100 per cent equity capital of Sahara MF. The fresh application was filed on May 7, 2018.
To again assess the fit and proper criteria of OCAL, Sebi served show-cause notice to the company as to why its application should not be rejected. The market watchdog also initiated fresh proceedings against OCAL in its capacity of stock broker and trading member of BSE and merchant banker for alleged violations.
In a hearing with Sebi, OCAL representatives said that considering there was a drop in Sahara MF's net worth and many senior personnel had left its services, the company was reconsidering its decision to become sponsor of the fund house.
Following the hearing, OCAL communicated to Sebi in December, 2019, that it was withdrawing its application for sponsorship of Sahara MF. As a result, Sebi has ordered calling off the proceedings that was aimed at assessing the company's application.