Zee’s Chandra, Goenka move SAT after SEBI's crackdown
MUMBAI: Essel Group Chairman Subhash Chandra and Zee Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka on Tuesday moved the Securities Appellate Tribunal (SAT) challenging the interim order of the Securities and Exchange Board of India (Sebi) that barred them from holding any key position in the group’s listed firms.
The order is likely to delay the planned merger of Zee Entertainment with Sony’s India arm, Sony Pictures Networks India. The market regulatory, in its interim order on Monday, barred Subhash Chandra and Punit Goenka from holding any key managerial position in any of its listed companies or subsidiaries for abusing their positions in the company and siphoning off funds for their own benefit.
Chandra and Goenka have appealed against the market regulator’s order on the principle of natural justice stating that no show cause notice was sent to them, said a source. SAT will hear the matter on Thursday.
ZEEL Chairman R Gopalan said the company is reviewing the Sebi order and seeking the appropriate legal counsel before moving forward.
“The Board of Directors of ZEEL has noted the interim ex-parte order issued by the Securities and Exchange Board of India with respect to Subhash Chandra and Punit Goenka,” Gopalan said in a statement. “The Board is currently in the process of reviewing the detailed order, and appropriate legal advice is being sought in order to take the next steps as required,” he added.
The planned merger of Zee Entertainment with Sony Pictures Networks India will be impacted by Sebi’ order and the merger may be delayed further, say experts. “Sony would like to get more clarity about the role of promoters and the final outcome on this matter. Punit Goenka was proposed to be the Managing Director of the merged entity but after Sebi’s order it is not possible. We may see renewed negotiations between Zee and Sony. With this new development, the merger process will see more delays,” an analyst of a brokerage firm told this newspaper.
Impacted by the speculation about prospects of the merger of both companies, the shares of Zee Entertainment plunged as much as 7% in the morning trade but later recovered and closed 0.4% lower at Rs 194 apiece on Tuesday.
As per the sources, the merger between Sony Pictures Networks India and Zee Entertainment Enterprises was expected to be completed by the first half of the current fiscal year. Zee and Sony had signed definitive agreements in December 2021 to merge their businesses.