SEBI probes Zee over suspected fund diversion, summons ex-directors

21 Feb 2024 , 02:43 AM

According to news reports, the securities regulator Securities and Exchange Board of India (SEBI) has called a number of former directors of Zee Entertainment Enterprises Ltd (ZEEL) as part of its investigation into the entertainment company regarding the purported diversion of company funds through related-party transactions.

According to one of the reports mentioned above, ‘two former independent directors have been asked to appear before SEBI and testify so far.’ “Both of these directors had departed from the company’s board around 2021,” the individual said, putting their name behind them.

They went on to say that the regulator has expanded the investigation’s purview and is now examining a larger group of organizations that have recently transacted business with ZEEL. Notably, according to a second source, SEBI is investigating the potential involvement of two well-known production companies in Mumbai as ‘conduits which were used to siphon off funds.’

Additionally, a larger range of transactions between Zee and promoter-owned private companies are being investigated by the regulator. There has been sent to several of the previous directors—including independent directors—to appear before SEBI. Additionally, they have been requested to submit specific records related to their time as employees of the company,’ the first individual stated.

A Zee representative refuted the untrue and inaccurate claims regarding the company’s accounting problems.

A Zee spokesperson stated, ‘The company has been in process of providing all comments, information, or explanation requested by SEBI and has extended complete cooperation on all aspects pursuant to the SAT order, which granted relief to current key managerial personnel.’

Zee Entertainment’s stock dropped more than 10% on Wednesday following Bloomberg’s report that SEBI discovered that the company’s promoters may have misappropriated approximately $241 Million.

Since it may take two to three years to conclude an investigation, SEBI grants interim directives in high-priority matters. SEBI makes temporary orders preventing the accused from accessing the capital markets in the interim in order to safeguard investor interests and prevent them from selling off the proceeds of crime.

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