(Bloomberg) --
Punit Goenka is free to return to his role heading up Zee Entertainment Enterprise Ltd. after an Indian appellate tribunal lifted a ban on the son of the media house's founder following allegations that they had siphoned off company funds.Â
The Securities Appellate Tribunal on Monday set aside an order made in June by India's capital market regulator that had imposed an eight month management restriction on Goenka. The Securities and Exchange Board of India can, however, proceed with its investigation in relation to the allegations and Goenka has been asked to co-operate, the tribunal ruled.
Zee's shares gained as much as 3.7% in Mumbai trading. The regulator has the option to appeal against the verdict before India's Supreme Court.
The ban against Goenka earlier this year created major uncertainty as Zee sought to close its merger with a wholly-owned subsidiary of Sony Group Corp. Goenka's position at the company formed a key ground for the group's creditors in opposing the deal, which was finally approved by a company law tribunal in August.Â
Zee's founder Subhash Chandra was keen to some family influence. One of the prerequisites for the merger was for Goenka, his son, to remain as managing director and chief executive officer of the new entity. Both deny any wrong doing.
The Sony-Zee deal is aimed at creating a $10 billion media giant with the financial muscle to challenge global entertainment powerhouses including Netflix Inc. and Amazon.com Inc., as well as local conglomerates such as Reliance Industries Ltd.Â
The agreement still faces legal challenge before the National Company Law Appellate Tribunal even after receiving all the regulatory and shareholders' approvals. The seperate litigation mounted by IDBI and Axis Finance Ltd opposing the merger hinges on Goenka's ability head the company.
The merger, first announced in 2021, was also initially held up by a courtroom feud between Zee's founders and its largest shareholder, then later by an insolvency case filed against Zee that was halted in February.Â
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.