The Securities and Exchange Board of India (Sebi) on Monday modified its order against Subhash Chandra and Punit Goenka, and barred them from holding the post of director or key managerial personnel in four Zee group companies as well as in the merged entity of Zee Entertainment (ZEEL) and Sony Pictures Networks India till further directions.
In effect, it means that they cannot hold any key position in any entity which is formed after merger, amalgamation of the four companies. This will impact Goenka’s directorship post merger of Zee and Sony. Last week, the mega merger got NCLT approval.
Sebi will serve to all recognised exchanges, depositories, registrar and share transfer agents to ensure compliance with the directions.
This is a modification from the interim order passed on June 12 that had barred Chandra and Goenka from holding director and key management person position from all listed entities.
Monday’s order stated that the entities in which Chandra and Goenka cannot hold key positions in, are Zee Entertainment, Zee Media Corp, Zee Studios, Zee Aakash News, or any other entity resulting from the merger, amalgamation, or demerger of the above entities.
Zee Entertainment did not respond to requests for comment.
Further, the order added that allowing them to retain any position of influence in the companies would impact the fairness of the investigation. It also pointed out that the executives had actively tried to conceal acts that had led to a loss of Rs 144 crore to the listed entities including Zee Entertainment.
Chandra and Goenka had, in the aftermath of the interim order, approached the Securities Appellate Tribunal (SAT), which refused a stay on the interim order.
However, following representations by Chandra and Goenka, the regulator has revised the order.
Sebi’s probe had revealed that in 2018, Chandra had issued a letter of comfort (LoC) to YES Bank in lieu of loans availed by Zee’s associate entities. Via the LoC, Chandra appropriated Rs 200-crore fixed deposit with the lender as security for these loans, which the lender liquidated to adjust the outstanding with.
The probe revealed that this was done without the knowledge of the Zee board. The company submitted that it had received the dues back from its associate firms. However, Sebi discovered that the funds moved in a ‘circuitous route’, having originated from Zee itself.
In its interim order, Sebi found him guilty of being in violation of Sebi norms and his actions of being in conflict with 96% shareholders.