Order in the matter of application of Onelife Capital Advisors Limited to become sponsor of Sahara Mutual Fund

Under Sections 11 and 11B (1) of the Securities and Exchange Board of India Act, 1992 In Re: Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 In the matter of application of Onelife Capital Advisors Limited to become sponsor of Sahara Mutual Fund In respect of: S.No. Name of the Entity PAN Onelife Capital Advisors Limited 1. AAACO9540L

BACKGROUND 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) was in receipt of an application dated March 16, 2018 from Onelife Capital Advisors Limited (hereinafter referred to as “Onelife”) wherein Onelife offered to takeover equity shares of Sahara Asset Management Company Private Limited (hereinafter referred to as “Sahara AMC”) and become sponsor of Sahara Mutual Fund. 2. The application was returned on April 06, 2018 as Onelife did not fulfill the eligibility criteria to become sponsor of a mutual fund as mandated in regulation 7(a)(iv) of the SEBI (Mutual Funds) Regulations, 1996 (hereinafter referred to as "MF Regulations"). 3. SEBI vide order dated April 11, 2018 inter alia had directed Sahara Mutual Fund to Order in the matter of application of Onelife Capital Advisors Limited wind up all its schemes by April 21, 2018 other than the Sahara Tax Gain Fund which was permitted to continue till July 27, 2018. 4. Sahara AMC and others and Onelife filed an appeal before Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”), challenging SEBI order dated April 11, 2018. Meanwhile, Onelife re-submitted the application on April 17, 2018 after fulfilling the eligibility stipulated under regulation 7(a)(iv) of the MF Regulations.

Hon’ble SAT directed SEBI to dispose of the application of Onelife by April 24, 2018. 5. SEBI vide its letter dated April 24, 2018 returned the application stating that Onelife is not a SEBI approved Asset Management Company and that the timeline for completing the process of transfer of business of Sahara Mutual Fund to SEBI approved Asset Management Company had expired. 6. Subsequently, Hon’ble SAT vide its order dated May 03, 2018, issued the following directions: 6.1. Onelife to make a fresh application on or before May 10, 2018 for seeking approval of SEBI for being sponsor by purchasing its 100% equity capital of Sahara AMC. 6.2. If such an application is made on or before May 10, 2018, SEBI shall consider the said application on merits and in accordance with law. 6.3. If the application is made on or before May 10, 2018, then, till the decision on said application is communicated to the appellants and one week thereafter, SEBI shall not enforce the orders impugned in these two appeals (Appeal nos. 127 of 2018 and 128 of 2018). 7. The present application was filed by Onelife on May 07, 2018. SHOW CAUSE NOTICE 8. Consequent to the examination of the application dated on May 07, 2018 filed by Onelife, a Show Cause Notice (hereinafter referred to as “SCN”) dated July 26, 2019 was served on Onelife in the extant matter to show cause as to why its application dated on May 07, 2018 to become the sponsor of Sahara Mutual Fund should not be rejected.

The allegation as set out in the SCN is as follows: 7.1 SEBI vide its order dated August 30, 2013 in the matter of IPO of Onelife had issued directions against Onelife and its Directors viz; Mr. T K P Naig (Chairman), Mr. Pandoo Naig (Managing Director), Mr. D. C. Parikh (Director), Mr. A. P. Shukla (Director), Mr. T. S. Raghavan (Director) and Mr. T. Shirdharani (Director) for diversion of IPO funds in violation of regulations 3(a), (b), (c) and (d) and regulations 4(1), 4(2) (f) and (k) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. 7.2 By the aforesaid order dated August 30, 2013, Onelife and its Managing Director Mr. Pandoo Naig were jointly and severally, directed to bring ` 35.25 crore i.e. the diverted IPO proceeds within six months from the date of the order. Further, they were debarred from securities market for 3 years from the date of interim order i.e. December 28, 2011. The other non-executive/independent Directors of Onelife namely Mr. T. K. P. Naig, Mr. D. C. Parikh, Mr. A. P. Shukla, Mr. T. S. Raghavan and Mr. T. Shirdharani were directed not to take up any assignments as Directors in any company for a period of one year from the date of the order.

7.3 SEBI vide its order dated November 28, 2014 against Onelife, Mr. Pandoo Naig and Mr. T. K. P. Naig levied a penalty of ` 45 lakh, ` 1.55 crore and ` 1.5 crore respectively for violating Section 11C (5) of SEBI Act, regulations 3(a),(b),(c),(d), 4(1), 4(2) (f) and (k) of PFUTP Regulations read with Sections 12A(a), (b) and (c) of the SEBI Act and the provisions of regulations 57(1), 60(4)(a) and 60(7)(a), clause 2(VII)(G)and (XVI) (B) (2) of Part A of Schedule VIII read with regulation 57 (2) (a) of ICDR Regulations. Onelife had additionally violated the provisions of clauses 43A(1), (3) and 49 (IV) (D) of the Listing Agreement. 7.4 Enquiry proceedings were also initiated against Onelife in its capacity of stock broker/ trading member of BSE Ltd. and Merchant Banker vide SCNs dated July 07, 2014 and June 27, 2016 for the alleged violations of the regulations 5(e) read with regulation 5A of the SEBI (Stock brokers and Sub-brokers) Regulations,

1992 and regulation 6(gg) of the SEBI (Merchant Bankers) Regulations, 1992 read with Schedule II of the SEBI (Intermediaries) Regulations, 2008. The said matter was settled vide settlement order dated February 09, 2017. 7.5 In view of the above, it is alleged that Onelife does not comply with regulation 7 (d) of MF Regulations and is not eligible for grant of certificate. Thus, its application is liable to be rejected. REPLY and HEARING 9. In response to the SCN, Onelife vide its letter dated August 16, 2019 submitted as follows: 9.1. Onelife, its Promoters and its management have already undergone the disciplinary actions and thereafter re-ventured into financial services business. 9.2. Onelife requested some time to reconsider its application, prepare the grounds and reasons for continuing with the proposal. 9.3. Onelife requested to keep the application on hold for 3 months and also requested for 3 months’ time to reply to the SCN. 10. On a request for extension of time to submit a reply to the SCN, vide SEBI letter dated August 26, 2019, Onelife was granted 15 days to make its submissions to the SCN.

Subsequently, Onelife vide its email dated September 11, 2019 submitted as follows: 10.1. Onelife has to go to its Board for consideration of the following facts which have a material bearing on its choice to go in for the Sahara Mutual Fund: 10.1.1. Drop in the Net worth of the Sahara AMC. 10.1.2. Senior personnel of AMC have left the services of Sahara AMC. 10.1.3. Considerable time has lapsed since Onelife has been waiting for SEBI approval, making a material difference at this stage. Yet, in the light of fresh requirements of a basic character that were prevailing ab initio and within SEBI’s knowledge, but chosen to be raised by SEBI only now makes Onelife believe that approval process may take yet more time and with uncertain outcome. 10.2. In case Onelife’s Board decides against moving ahead on the proposal, then Onelife would intimate to SEBI of its interest to withdraw the application based on the final recommendations of the Board. 10.3. Onelife requested at least two months’ time to enable it to revert to SEBI on its application. 11. Vide hearing notice dated October 14, 2019, Onelife was granted an opportunity of hearing on October 31, 2019. Onelife was further advised to submit additional reply within 15 days.

Onelife vide its email dated October 29, 2019 requested to adjourn the scheduled hearing by 2 weeks on account of Diwali holidays. Onelife’s request was acceded to and Onelife was granted another opportunity of hearing on November 20, 2019. Due to official exigencies, the hearing scheduled in the matter on November 20, 2019 was postponed to November 26, 2019. Onelife vide its email dated November 25, 2019 requested to adjourn the scheduled hearing to next week as its Director was suddenly indisposed due to personal exigencies. Onelife was granted a final opportunity of hearing vide an email dated November 26, 2019 on December 11, 2019. 12. On the day of hearing, Mr. Pandoo Naig, Managing Director of Onelife and Ms. Aditi Mahamunkar, Company Secretary appeared for the hearing as authorized representative of Onelife and made inter alia, the following oral submissions: 12.1. The Managing Director of Onelife has been in the securities market for last 20 years. 12.2. The group company of Onelife have / had registration from SEBI to operate Portfolio Management Services, Stock Broking services and Merchant Banking services.

12.3. SEBI had earlier given permission to the entity to acquire Dealmoney Securities Private Ltd.

12.4. The reason for which the entity wanted to acquire Sahara AMC was to seize the opportunity to enter the Mutual Fund industry which is dominant by few large players. Sahara AMC is available at book value coupled with entity’s expertise, the entity saw an opportunity to expand into rural and semi-rural areas. 12.5. Considering there has been drop in the net worth of the Sahara AMC, many senior personnel of Sahara AMC having left its services and taking into account the considerable lapse of time in getting SEBI’s approval, the entity is reviewing / reconsidering its decision to become the Sponsor of Sahara Mutual Fund. 12.6. Onelife was granted time till December 21, 2019 to make additional submissions in the matter. The hearing in the matter was concluded. 13. Subsequent to the hearing, Onelife vide its email dated December 31, 2019 communicated SEBI its decision to withdraw the application dated May 7, 2018 to act as a Sponsor of Sahara Mutual Fund. FINDINGS and CONSIDERATION 14. SEBI has accepted the said application for withdrawal dated May 7, 2018 to act as a Sponsor of Sahara Mutual Fund. The issue at hand is to determine whether Onelife is eligible to act as a Sponsor of Sahara Mutual Fund as SEBI has prima facie found that Onelife is not in compliance with regulation 7 (d) of MF Regulations. 15. In light of Onelife’s decision to withdraw its application dated May 7, 2018 and the acceptance of the same, the consideration of the present show cause on merits does not arise. In other words, as the application to act as a Sponsor of Sahara Mutual Fund has been decided to be withdrawn and the same has been accepted by SEBI, the extant proceedings becomes infructuous and therefore, the issue mentioned above does not arise for consideration as the proceedings has become infructuous. Order 16. In the facts and circumstances of the case, I, in exercise of the powers conferred upon me in terms of Section 19 read with Sections 11 and 11B (1) of the Securities and Exchange Board of India Act, conclude the instant proceedings as infructuous and accordingly the show cause notice dated July 26, 2019 against Onelife Capital Advisors Limited (PAN: AAACO9540L) stands disposed of. 17. The order shall come into force with immediate effect.

DATE: March 4, 2020 MADHABI PURI BUCH PLACE: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA