Allahabad High Court’s Order Vacating Stay in the Sahara Case

We have previously discussed SEBI’s order restraining two entities of the Sahara group as well as certain promoters and directors from accessing the capital markets. The order was subsequently stayed by the Allahabad High Court.

On April 7, 2011, the Allahabad High Court vacated its stay, and this order is now accessible through eLegalix (Writ Petition No.11702 (MB) of 2010). While vacating the stay, the High Court has not ruled on any questions of law, particularly relating to the scope of a public offering of securities as compared to a private placement. The decision has been based largely on the conduct of Sahara in evading the requests of SEBI for providing further information regarding the names and addresses of investors to whom securities have been issued. The court offers some guidance regarding the types of information that can be sought by SEBI, and rules that the information needs to be provided within a reasonable time frame.

A report in today’s Mint discussed the impact (or lack thereof) of the High Court order on the offering of securities by the entities involved.