The merger of ZEE and Sony: Chairman Emeritus and MD of a significant publicly traded company misused public funds, claims SEBI

19 Jun 2023 , 12:02 PM

In its response to the Securities and Appellate Tribunal (SAT) in the case of Zee Enterprises, the Securities and Exchange Board of India (SEBI) noted that Chairman Emeritus Subhash Chandra and Managing Director and CEO Punit Goenka had diverted public funds to private entities.

IANS cited SEBI’s response to SAT as saying, ‘In the instant case, we have a situation where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons.

Zee Entertainment Enterprises (ZEE) has also written to SEBI claiming that ‘continuous and repetitive’ investigations into the same cause of action are unfair to the company and its shareholders and may have an adverse effect on the merger process.

The Composite Scheme of Merger between ZEEL and Sony Pictures Networks India Pvt. Ltd. Sony has received a No Objection Certificate (‘NOC’) from SEBI. This merger is one of the largest between major players in the media sector and will bring in about USD 1.7 billion (approximately) in foreign direct investment to India.

‘Please note that the said merger is at an advanced stage post receipt approvals from various regulators (including SEBI, Stock Exchanges, and CCI etc.), and the scheme is also approved by 99.9% of the equity shareholders of ZEEL,’ Zee wrote in a letter to SEBI.

It should be highlighted that the transactions in the current matter relate to the year 2019. Zee stated that a thorough justification has already been given to the Stock Exchanges and SEBI.

The corporation stated that it was ‘beyond our comprehension’ as to why the current matter was being re-investigated/re-examined given that the underlying cause of action was over four years old.

‘It is claimed that neither the loan terms nor the loan amount that Borrower Entities and Yes Bank agreed to were ever disclosed to us. There was no contractual relationship between ZEEL, Yes Bank, and the borrowers. Without any involvement from ZEEL, YBL unilaterally took measures that led to the misuse of ZEEL’s FD.

‘It is argued that ZEEL is unwittingly a victim of Yes Bank’s theft. As a result of the embezzlement, the business stated that ZEEL has taken all necessary measures to ensure that money is recovered and shareholders don’t suffer losses, acting in their best interests.

In response to allegations that they stole money from Zee Enterprises, Subhash Chandra and Punit Goenka filed a SAT petition challenging the SEBI order prohibiting them from serving as directors or other key management positions in any listed firm.

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