“NSE and BSE inform NCLT of SEBI order related to Essel Group’s Shirpur Gold Refinery during Zee-Sony merger hearing”

The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) recently informed the National Company Law Tribunal (NCLT) about an order passed by the Securities and Exchange Board of India (SEBI) regarding Essel Group’s Shirpur Gold Refinery.

The matter was raised during the hearing on the proposed merger between media giants Zee Entertainment Enterprises and Sony Pictures Networks India. The NSE and BSE had already cleared the merger, but the SEBI order related to Shirpur Gold Refinery led the tribunal to instruct the exchanges to place the order on record.

In its April 25 interim order, SEBI accused Amit Goenka, the son of Essel Group Chairman Subhash Chandra, and seven others of fraudulent practices and manipulating financial statements of Shirpur Gold Refinery, a listed firm. SEBI alleged that the company had created a scheme to divert funds from debtors to promoter group entities. SEBI member Ashwani Bhatia noted that the reason for Shirpur’s defaults to lenders was the non-receipt of funds from its debtors, amounting to INR 404 crore. Bhatia claimed that this was part of a scheme devised by the promoters to move funds out of Shirpur and transfer them to their accounts while misusing the Insolvency and Bankruptcy Code process.

The NCLT bench, while posting further hearings on the Zee-Sony matter for June 16, instructed the NSE and BSE to take into consideration SEBI’s order in the Shirpur matter, since they had already cleared the merger.

The SEBI order could have implications for the proposed merger between Zee and Sony. The merger was announced in 2021 and received the approval of the Competition Commission of India (CCI) in April 2022. However, the merger still requires the approval of other regulatory bodies, including SEBI.

The merger between Zee and Sony would create one of the largest media companies in India, with a combined market share of over 27%. However, the merger has faced opposition from some minority shareholders who claim that the deal undervalues Zee. The merger has also faced scrutiny from the Ministry of Information and Broadcasting, which has raised concerns about the concentration of media ownership.

In conclusion, the NSE and BSE informed the NCLT about the SEBI order related to Essel Group’s Shirpur Gold Refinery during a hearing on the proposed merger between Zee and Sony. The SEBI order accused Amit Goenka and seven others of fraudulent practices and manipulating financial statements. The NCLT instructed the exchanges to place the order on record and consider it when reviewing the merger. The proposed merger between Zee and Sony still requires the approval of SEBI and other regulatory bodies, and has faced opposition from minority shareholders and scrutiny from the Ministry of Information and Broadcasting.