SEBI bars Zee's Goenka and Chandra from 4 group firms; says probe to be completed in 8 months

Securities and Exchange Board of India (SEBI) on Monday has barred Zee's promoters Punit Goenka and Subhash Chandra from boardrooms of four Zee group companies, including Zee Entertainment Enterprises Ltd, according to an order published on the regulator's website. The other three Zee group companies include - Zee Media Corporation, Zee Media Corp and Zee Aakash News. This is a slight variation of its previous order where SEBI had barred the duo from company boards.

It also said it will complete investigations against them within eight months.

SEBI said Chandra and Goenka cannot be directors in any entity which is formed after merger, amalgamation of the four companies, which will impact Goenka's directorship post merger of Zee and Sony. Last week, the mega merger got NCLT approval.

In the order, Madhabi Puri Buch, chairperson, SEBI said that Goenka's conduct as Managing Director and Chief Executive Officer of ZEEL was found to in violation of norms to prevent fraud.

"His actions were in direct conflict with the interests of 96% public shareholders of ZEEL, necessitating imposition of temporary restraint on him," said Buch.

In the 91-page order on Monday, Buch said the interim order is being modified after considering the material on record, oral and written submissions of the entities.

SEBI noted that post-merger, Goenka would be appointed as Managing Director of the merged company. The same means that he would be entrusted with substantial powers of management of the affairs of the merged company.

''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,'' Buch said in the order.

''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,'' she added.

The case pertains to Chandra and Goenka having abused their position as directors or KMPs of a listed company for siphoning off funds to the tune of Rs 200 crore for their own benefit. They alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them, SEBI mentioned in the interim order in June.

Zee had argued that SEBI didn't have any evidence beyond bank statements to prove allegations of round-tripping of funds and therefore it cannot pass ex parte order.

The order by the Mumbai bench of National Company Law Tribunal (NCLT), headed by H V Subba Rao and Madhu Sinha, will pave the way for the creation of a $10-billion media company, the biggest in the country.

The tribunal also dismissed all objections regarding the merger.

The NCLT, on July 11, had reserved its order on the merger after hearing objections from several creditors.

In December 2021, Zee Entertainment and Sony Pictures agreed to merge their businesses.

With inputs from agencies