22 million investors too many for private affair

By Rohit Jaiswal and Rishi Raj, Singhania & Partners
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Two unlisted companies of the Sahara Group issued optionally fully convertible debentures (OFCDs) to raise about ₹194 billion (US$3.8 billion), purportedly by way of private placement, without advertising to the general public. The irony was that, in this process, 30 million investors were approached, out of which 22.1 million invested.

Laws governing public issues were flouted, merely by describing the issue as a private issue and stating in the information memorandum that the issuer did not intend to get the issue listed on a stock exchange.

This column analyses the precedent-setting Securities Appellate Tribunal (SAT) order of 18 October in this regard.

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Rohit Jaiswal is a partner and Rishi Raj is an associate at Singhania & Partners, which is a full-service national law practice. The firm has offices in New Delhi, Noida, Bangalore, Hyderabad and Mumbai.

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