Chennai, Feb 27 (IANS): Terming Sahara Asset Management Company Private Ltd (Sahara AMC) as not "fit and proper person", India's markets regulator Friday rejected its application for renewal of certificate of registration as a portfolio manager.

The order was passed by S.Raman, whole time member of Securities and Exchange Board of India (SEBI).

Sahara AMC had submitted the renewal application July 6, 2012.

On July 11, 2014, the SEBI informed Sahara AMC that prima facie it was not a "fit and proper person" eligible for renewal of certificate of registration and also asked why its application should not be rejected.

In its reply dated July 28, 2014, Sahara AMC contended that SEBI is proceeding on a completely incorrect/erroneous basis since it considered the orders and action initiated or pending against the directors, promoters and the associate entities while determining the "fit and proper person" criteria.

In its final order, SEBI said it has to has to take into account the financial integrity, honesty, good reputation and character of the applicant.

"The role of the portfolio manager as a market intermediary is indeed very crucial, especially as a portfolio manager handles money kept with him in fiduciary capacity. As a regulator of the securities market, SEBI indeed has to take into consideration important facts such as prosecution proceedings, detention order, etc. pending against the persons ultimately controlling or influencing Sahara AMC, while considering its eligibility as a portfolio manager," the order said.

"Keeping Sahara AMC in the mainstream market after considering the antecedents of Subrata Roy Sahara and some other companies of the Sahara group, may cause prejudice to the interests of investors and the safety and integrity of the securities market. I am, therefore, of the firm opinion that the applicant is not a 'fit and proper person' to act as a portfolio manager in the Indian securities market," Raman ruled.

According to the order, Sahara AMC shall, within 30 days from the date of cancellation of certificate of registration as a portfolio manager, transfer its business to another SEBI registered portfolio manager.

Sahara AMC should also allow the client to withdraw the securities and funds in its custody at the option of the client, and in either case, without any additional cost to the client. The option shall be granted to each client separately, the order said.