Shares of ZEE Entertainment Ltd tumbled 6 per cent in Monday's trade after Securities Appellate Tribunal (SAT) refused to grant interim stay on market watchdog Sebi's order on Subhash Chandra and Punit Goenka.
Sebi had barred Subhash Chandra and Punit Goenka from being directors or key management personnel in any listed firm. Goenka is the MD and CEO while Chandra is the Chairman Emeritus at the media firm. Chandra is also the Chairman at Essel group. Chandra and Goenka allegedly abused their positions in the company, siphoning off funds for their own benefit.
ZEE Entertainment Enterprises is listed on both BSE and NSE. Shares of ZEE Entertainment fell 5.81 per cent to hit a low of Rs 194.45 on BSE. The stock is down 18 per cent year-to-date.
This Sebi order had raised concerns over ZEE-Sony Pictures Networks merger. A definitive merger agreement between Zee and Sony was signed in December 2021. Days after the Sebi order on Subhash Chandra and Punit Goenka, ZEE had written to the markets regulator saying its 'continuous and repetitive' investigations on the same cause can potentially impact its merger with Sony.
Sonam Chandwani, Managing Partner at KS Legal & Associates said the Sebi's interim order puts the impending merger with Sony at risk and potentially upends the planned leadership structure.
"To navigate these precarious waters, it's imperative that a thorough and transparent investigation is conducted. A potential reevaluation of the future leadership structure may also be warranted to secure stakeholder confidence and ensure the successful completion of the merger," Chandwani said.
ZEE insisted it was in the process of a merger with Sony Pictures Networks India for which a No Objection Certificate (NOC) was obtained from Sebi. "Please note that the said merger is at an advanced stage post receipt approvals from various regulators (including SEBI, Stock Exchanges and CCI etc.) and the scheme is also approved by 99.9 per cent of the equity shareholders of ZEE," Zee said in a letter to SEBI.
On May 11, NCLT had directed the exchanges to reassess and validate the non-compete clause of the merger, which was approved by the market regulator Securities and Exchange Board of India (Sebi). The NCLT instructed the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to review their approval of the Zee-Sony merger.
Meanwhile, ZEE recently settled its dispute with IndusInd Bank over dues. In a filing to BSE, ZEEL said the company and IndusInd Bank have entered into a settlement agreement by which all disputes and claims have been settled.
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