The Zee Entertainment Enterprises Limited (ZEEL) and its top management are under SEBI scrutiny for alleged violations of disclosure norms and initially a show cause notice was issued to them in July 2022. File
| Photo Credit: Reuters

Markets watchdog Securities and Exchange Board of India (SEBI) on Thursday (January 2, 2025) said it will slap a fresh show cause notice on Zee Entertainment Enterprises Limited (ZEEL) founder chairman Subhash Chandra, and his son Punit Goenka as it vowed to continue the investigation into alleged violation of listing norms against the media baron and his company.

The order passed by SEBI’s adjudicating officer said the contents of the earlier Show Cause Notice (SCN) issued to them will also be incorporated “in the SCN to be issued in the instant matter”.

The ZEEL and its top management are under SEBI scrutiny for alleged violations of disclosure norms and initially a show cause notice was issued to them in July 2022.

Following the July 2022 show cause notice, Zee Entertainment Enterprises Ltd (ZEEL) and Punit Goenka filed settlement applications with the SEBI.

However, the application to settle the adjudication proceedings was rejected by a panel of whole-time members of SEBI and the matter was referred to the markets watchdog for further investigation.

“In this regard, it has been observed that subsequent to completion of investigation in the instant matter, it has been decided by the competent authority to proceed against the noticees under Section 11B of SEBI Act 1992,” the order said.

Section 11B pertains to SEBI’s powers to issue notices and impose penalties.

The order further said, “the content of the SCN dated July 6, 2022 issued by the Adjudicating Officer (AO) including the examination report and all the relied upon documents will be treated as integral part of the further investigation report by SEBI in the matter of ZEEL”.

Zee Group Chairman Subhash Chandra’s son Punit Goenka.
| Photo Credit: PTI

The shareholders of Zee Entertainment have rejected a proposal for the reappointment of Punit Goenka as director, according to a regulatory filing by the company.

The filing by Zee Entertainment Enterprises Ltd (ZEEL) stated that the resolution for the reappointment of Mr. Goenka was defeated in the annual general meeting (AGM) of the company.

Resolution number three in the AGM, which proposed the reappointment of Mr. Goenka as director, was supported by only 49.54% of the total number of votes cast while 50.4% voted against the resolution.

“Resolution No. 3 [Goenka’s reappointment] failed to get the requisite majority of votes as required under the provisions of the Companies Act, 2013, and SEBI [Listing Obligations and Disclosure Requirements] Regulations, 2015,” ZEEL said.

This is a major setback for Mr. Goenka who is currently the CEO of the company. Several proxy firms had earlier advised the shareholders to vote against resolution number three.

However, the three other resolutions for adopting the financial statement for FY’24, declaring a dividend, and ratification of remuneration to cost auditors were passed.

“Except for resolution number three, all the aforesaid resolutions were passed with requisite majority,” it said.

The Companies Act, 2013, mandates a simple majority of (50% plus one) votes to pass an ordinary resolution at an annual general meeting.

Earlier this month Punit Goenka, had resigned from the post of managing director of ZEEL. However, he continued as CEO of the media and entertainment major. He had also withdrawn himself from reappointment for the said post in the AGM.

While sharing Mr. Goenka’s resignation letter to exchanges last week, Zee Entertainment said he is “withdrawing his consent for his re-appointment as managing director of the company as proposed in the notice of the ensuing annual general meeting”.

On October 18, the board of ZEEL approved the proposal for Mr. Goenka’s reappointment for a five-year term, effective from January 1, 2025, to December 31, 2029.

Mumbai:

In a major relief to Zee Entertainment Enterprises’ promoter Punit Goenka, the Securities Appellate Tribunal on Monday quashed Sebi’s order that had barred him from holding key managerial posts in the company and other group firms.

While setting aside the order, the tribunal also directed Punit Goenka to cooperate with Sebi’s probe against him. If any material comes out against Punit Goenka during the course of the investigation, then the appropriate procedure can be adopted by the regulator in accordance with the law.

Any observation made in this order is only a prima facie observation and will not influence the investigation nor will be utilised by either of the parties, it added.

The order came after Punit Goenka challenged the Sebi’s confirmatory order, passed on August 14, which confirmed the directions of the regulator that had debarred ZEEL promoters — Punit Goenka and Subhash Chandra — from holding any directorship or other key managerial positions in the company and other organisations, including the merged entity of ZEEL and Sony Pictures Networks India until further directions.

In a 94-page ruling on Monday, the tribunal said Sebi’s order cannot be sustained and is quashed insofar as it relates to the appellant (Goenka).

“The restraint order passed by the respondent (Sebi) pursuant to the ad interim order and the confirmatory order restraining the appellant to function as a Managing Director and is set aside,” it said.

While orally delivering the order, Presiding Officer Justice Tarun Agarwala said, “The appellant shall however cooperate in investigation. In the event any material comes out against the appellant during the course of the investigation, appropriate proceeds can be adopted by Sebi”.

The tribunal noted that there is a delay in the issuance of an ex parte ad interim order and the alleged transaction is of the year 2019.

No further evidence has come on record to indicate any further diversion of funds. Consequently, the impugned order is “harsh and unwarranted” as there was no real urgency at this late stage in passing the ad interim order, as per the appellate tribunal.

Passing a restraint order at this stage virtually restrains the appellant from his right to continue as a Managing Director on the basis of a needle of suspicion, which in our opinion is unfounded, it added.

It was also found that shareholders of ZEEL had reposed faith in Punit Goenka to continue as MD and CEO of the merged entity between Zee Entertainment and Sony.

Pursuant to the interim order, the NCLT has also approved the scheme of amalgamation in which the appellant would hold the post of an MD of the merged entity.

This aspect has wrongly been construed by Sebi’s chairperson that it will wield substantial power of management of the affairs of the merged company upon the appellant, which he cannot be permitted to do so.

Such an approach is unwarranted apart from the fact that there is no evidence to show that the appellant exercised positive control over the borrowed entities, the tribunal said.

“When investigations are being done on mere possibilities without any concrete evidence as on date then, in our opinion, passing an ad interim order was wholly unjustified and, in any case, the continuation of the interim order till the completion of the investigation is per se arbitrary and cannot be sustained,” the appellate tribunal said.

In June this year, Sebi had barred then Essel Group Chairman Subhash Chandra and Punit Goenka from holding the position of a director or key managerial personnel in any listed company for siphoning off funds of the media firm.

Subsequently, the watchdog passed the confirmatory order in August.

The case pertains to Subhash Chandra, who was also the chairman of ZEEL, and Punit Goenka, having allegedly abused their position as directors or Key Managerial Persons (KMPs) of a listed company for siphoning off funds for their own benefit.

Sebi had said that Subhash Chandra and Punit Goenka 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.

The siphoning of funds appears to be a well-planned scheme since, in some instances, the layering of transactions involved using as many as 13 entities as pass-through entities within a short period of two days only, it had said. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

File picture of Punit Goenka

The Securities Appellate Tribunal on Monday lifted the ban on Zee Entertainment top boss Punit Goenka to hold board positions in any of the four Zee Group companies, paving the way for him to resume the proposed role in the planned merger between ZEE and the Indian unit of Japan’s Sony Group.

Shares of Zee Entertainment rose as much as 3.7% post the order.

India markets regulator, Securities Exchange Board of India (SEBI), in August, had barred Goenka and Zee Group Chairman Subhash Chandra from holding positions in Zee company boards alleging they were actively involved in diverting company funds to the group’s other listed entities and firms related to founding shareholders.

The SAT’s verdict on Chandra was not announced by 12 pm.

Zee Group had announced a merger of ZEE with Sony’s Indian business in 2021, but the move was delayed due to an interim SEBI order which had restrained Goenka from directorships of any listed companies.

In August, the company tribunal had approved the merger creating a $10 billion company.

While acknowledging the SAT order, Zee said in a statement that Goenka will cooperate with any further investigations by the regulator.