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The Securities and Exchange Board of India has issued a confirmatory order on the case barring Punit Goenka and Subhash Chandra from key managerial and executive positions at Zee Entertainment Enterprises. As per the confirmatory order, SEBI has eight months to complete its investigation on the matter of misappropriation by the father-son duo. The order avers that Punit Goenka and Subhash Chandra will not hold position of a director or KMP in Zee Entertainment and other three other group companies until further direction.
SEBI had passed an interim order in June barring Chandra and Goenka from key executive positions at Zee. The interim order by the capital markets regulator came on the back of an investigation into allegations related to the appropriation of certain fixed deposits of Zee by YES Bank for squaring off loans of related entities of Essel Group.
Chandra and Goenka have appealed this order with various authorities, including Securities Appellate Tribunal and the National Company Law Tribunal, stating that SEBI has been too quick to act on its allegations without completing its investigation.
In its confirmatory order SEBI noted “While the entities (Goenka and Chandra) may argue that even the limited restraint noted above will be excessive and disproportionate in the matter, it is emphasized that the imminent effect of permitting the entities to be in a position of influence is that the ongoing investigation cannot be fair and complete.”
In direct conflict
SEBI noted that the interests of Goenka and Chandra were in direct conflict with the interests of the public shareholders of Zee, especially as the duo have tried to conceal the very acts which led to the SEBI investigation.
Goenka had resigned from the company after SEBI passed its interim order, however, the ongoing merger between Zee and Sony was expected to be undertaken under Goenka’s stewardship, with him leading the media behemoth. The order today is clear that the two are barred from holding managerial positions not only in the specified Zee group companies, but also in any resultant company that is formed pursuant to a merger or amalgamation” of those companies with any other company. It will also apply to positions in “any company, which is formed pursuant to demerger” of any of the specified Zee Group companies.
As of now, SEBI notes that, “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.”
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