The Securities and Exchange Board of India’s (Sebi) order barring Zee Entertainment Enterprises promoter Punit Goenka from holding key positions in four Zee group firms and the merged entity with Sony Pictures Networks India was overturned by the Securities Appellate Tribunal (SAT) on Monday.
Goenka can now be appointed as the amalgamated entity’s Managing Director (MD).
In the decision, Justice Tarun Agarwala asked Goenka to participate in the probe, adding that if any violations are found during the investigation, the market regulator can take necessary action.
The SEBI stated in an August confirmation ruling that it will finish the probe into suspected fund siphoning and money circulation through connected firms within eight months.
In its inquiry, SEBI discovered that the duo misused their position as Zee Entertainment directors in 2019 by allegedly siphoning off monies for their own gain. The SEBI was looking into claims of appropriation of certain fixed deposits of Zee Entertainment Enterprises by Yes Bank for squaring off loans of Essel Group connected firms.
According to the SEBI ruling, Chandra and Goenka are not permitted to serve as directors of any firm established following the merger.
Zee Group announced a merger with Sony’s India operations in 2021. Over 70 TV stations, two video streaming services (Zee5 and SonyLIV), and two film companies (Zee companies and Sony Pictures Films India) were to be merged.
On August 10, this year, the National Company Law Tribunal (NCLT) accepted the Zee-Sony merger, dismissing objections from Zee’s lenders, including IDBI Trusteeship, IDBI Bank, Axis Finance, JC Flowers Asset Reconstruction Co, and Imax Corp. The merger was, however, delayed due to an interim order issued by SEBI that barred Goenka from serving on the boards of any of those publicly traded firms.
In this ruling, SEBI chairwoman Madhabi Puri Buch said that Punit Goenka’s behavior as ZEEL MD and CEO was deemed to be in violation of the anti-fraud guidelines. “His actions were in direct conflict with the interests of 96 per cent public shareholders of ZEEL, necessitating imposition of temporary restraint on him,” Buch had stated at the time. Meanwhile, shares of Zee Entertainment are up 1.24 percent to Rs 252.20 on the BSE and 1.14 percent to Rs 252 on the NSE.