The Ministry of Corporate Affairs on Saturday made it clear that it would not intervene in the initial public offering of Sahara Prime City Ltd, as it was between the company and SEBI.
In an official release, the MCA stated that the Sahara Group company intending to go in for an IPO, had filed information about its group companies to SEBI in its Draft Red Herring Prospectus.
Show cause notice
Upon noticing some inadequacy in material disclosures, SEBI asked information about some Sahara companies. On not receiving the information, SEBI passed as interim order issuing show cause to two Sahara Group companies — SIRECL and SHICL — restraining them from mobilising funds from the public.
The companies challenged this order and the case is now sub judice before the Lucknow Bench of the Allahabad High Court.
On its part, to check misuse of private placement provisions under the Companies Act, 1956, the Ministry has mandated its field offices to scrutinise documents filed by unlisted public companies proposing to raise money through the private placement route, said the release.
The Ministry may also consider substituting Unlisted Public Companies (Preferential Allotment) Rules, 2003 and replace it with Unlisted Public Companies (Preferential Allotment) Rules, 2011, which requires more disclosures and keeping the securities in demat form.
Further checks and balances, coupled with stringent penalty provisions have been built into the Companies Bill to prevent misuse, said the Ministry.