SEBI bars Zee’s Goenka and Chandra from 4 group firms, Investigation to be Carried out over a Period of 8 Months

Mumbai(India), 15/08/23: The Securities and Exchange Board of India (SEBI) barred Zee’s promoters Punit Goenka and Subhash Chandra from serving on the boards of four Zee group firms, including Zee Entertainment Enterprises Ltd, in a decision published on the regulator’s website on Monday.

The other three Zed group enterprises are Zee Media Corporation, Zee Media Corp, and Zee Aakash News. This is a small modification of SEBI’s prior judgement, which prevented the duo from serving on business boards.

It further stated that investigations into the two, will be completed within eight months.

SEBI stated that Chandra and Goenka cannot be directors in any entity formed as a result of the four firms’ merger, which will have an influence on Goenka’s directorship following the merger of Zee and Sony. The massive merger was approved by the NCLT last week.

The ruling stated that Goenka’s conduct as Managing Director and Chief Executive Officer of ZEEL was determined to be in violation of fraud-prevention guidelines.

Madhabi Puri Buch, chairperson, SEBI said, “His actions were in direct conflict with the interests of 96% public shareholders of ZEEL, necessitating imposition of temporary restraint on him.”

Buch stated in the 91-page order issued on Monday that the interim order is being updated after taking into account the material on record, oral and written submissions of the corporations.

SEBI stated that Goenka would be appointed as Managing Director of the amalgamated company following the merger. That is, he would be given significant management authority over the affairs of the amalgamated business.

Buch said, “That very role in ZEEL is under question and therefore, till the final outcome of the proceedings in the instant matter, it would be appropriate that he is not part of the management of ZEEL or any corporate avatar of it.”

She further added, “A detailed investigation in the matter is in progress which may bring out additional acts of omission or commission, of the entities, if any, in detail, depending on the material and after considering the facts and veracity of their submissions. The findings in the extant order are prima facie findings in a matter under investigation.”

The lawsuit involves Chandra and Goenka abusing their positions as directors or KMPs of a publicly traded firm to syphon off funds worth ₹200 crore for their own advantage. They transferred the assets of ZEEL and other listed companies in the Essel Group for the benefit of affiliated corporations owned and managed by them, according to the interim order issued by SEBI in June.

Zee had contended that SEBI lacked proof beyond bank statements to show charges of financial round-tripping and hence could not issue an ex parte order.

The ruling by the Mumbai bench of the National firm Law Tribunal (NCLT), led by H V Subba Rao and Madhu Sinha, will pave the way for the formation of the country’s largest media firm, valued at $10 billion.

All merger-related objections were likewise dismissed by the tribunal.

The NCLT postponed its decision on the transaction on July 11 after hearing objections from multiple creditors.

Zee Entertainment and Sony Pictures have agreed to integrate their businesses in December 2021.