Vested interests at play: Zee says taking all steps to protect interest of its shareholders

Zee Entertainment Enterprises Ltd (ZEEL) on Saturday said that the reports claiming possible corporate governance lapses in the company and probes by higher authorities are incorrect and false. On Friday, it was reported that the Ministry of Corporate Affairs (MCA) had sought details from the Securities and Exchange Board of India (Sebi) on its latest findings of 'fund diversion' at Zee Entertainment Enterprises.

The ministry's preliminary probe had found appropriation of ZEEL's fixed deposits (FDs) by Yes Bank, for trading off loans of related entities of Essel Group.

In a statement issued on Saturday, the company said: “The reports pertaining to possible corporate governance lapses in the company and subsequent probes by relevant departments, are incorrect and false. The reports also indicate vested interests of a third party. ZEE has maintained utmost standards of governance; and is a company that is guided by an experienced Board. The company has consistently extended complete co-operation to all concerned authorities and has transparently provided all information requested."

It addee: "The company and its Board are taking all the required measures to protect the interest of its shareholders. The recently formed Independent Advisory Committee, comprising of 2 Independent Directors, presided by Dr. Satish Chandra, Former Judge of the Allahabad High Court; is a step taken to review such widespread circulation of misinformation, market rumours and speculation. The Company has also requested SEBI to take cognizance of such market rumours that lead to misinformation and consequently erosion of investor wealth.”

Zee Entertainment Enterprises on Friday constituted an independent advisory committee headed by Satish Chandra, retired judge of Allahabad High Court, to curb erosion of its investor wealth in the wake of speculations, leading to negative public opinion of the company.

"The board of ZEE Entertainment Enterprises Ltd (ZEEL), has approved to constitute an independent advisory committee that will enable it to review and take cognizance of the widespread circulation of misinformation, market rumours, and speculation that has led to the formation of negative public opinion about the company and consequent erosion of investor wealth," ZEEL said in a statement.

In June, the Securities and Exchange Board of India (Sebi) charged Goenka and Zee Group Chairman Subhash Chandra with misappropriating company funds. However, Goenka's ban on holding board posts in Zee Group entities was lifted by the Securities Appellate Tribunal (SAT) in October.

As per news reports, both the MCA and Sebi have been investigating the group over allegations levelled by independent directors since 2019. The MCA is investigating claims of Companies Act, 2013 violations, while Sebi is looking into capital market breaches. They discovered that Yes Bank used Rs 200 crore from FDs to repay loans of Essel Group's related parties.

Also read: MCA seeks info on Zee even as firm sets up panel to shore up investor confidence

Also read: Zee sets up advisory panel under retired judge amid 'eroding investor wealth' concerns