- Zee and Punit Goenka seek urgent relief from SEBI restrictions on market access
- SEBI barred Zee for two months over unauthorized pledge of Hyderabad property
- Goenka and Subhash Chandra face one-year bans on securities trading and Rs 1.48 crore fines
Zee Entertainment Enterprises Ltd. (ZEEL) and Punit Goenka are seeking urgent relief from restrictions imposed by the Securities and Exchange Board of India (SEBI) after the regulator took action over the alleged unauthorised pledge of the company's property to secure loans for Essel Group entities.
The Securities Appellate Tribunal (SAT) is scheduled to hear Zee's appeal against the SEBI directions on Wednesday. Zee's lawyer told the tribunal that the company had been “barred from accessing the securities market for two months” and would seek urgent interim relief.
The SEBI action relates to a property in Hyderabad's Jubilee Hills that was allegedly used to secure loans worth about Rs 726 crore for entities belonging to the Essel Group. The regulator said the arrangement was undertaken without key corporate approvals and flagged lapses in disclosures relating to the transaction.
SEBI Action Against Zee, Goenka And Chandra
On July 31, SEBI barred Zee from accessing the securities market for two months, while Goenka and Subhash Chandra, the company's founder-chairman emeritus, face a 12-month market ban. The regulator also imposed total penalties of Rs 1.48 crore.
Under the order, Goenka and Chandra have each been restrained from buying, selling or otherwise dealing in securities for one year.
SEBI's action stems from its findings on the use of Zee's fixed assets in connection with loans for promoter-linked entities. The regulator found that a fixed deposit linked to the company's Hyderabad property was created without approval from the company's board or shareholders.
According to SEBI, the transaction was undertaken to secure loans for entities belonging to the Essel Group. The regulator said the arrangement did not follow the required approval process and raised concerns over the use of Zee's assets for the benefit of promoter-linked entities.
Regulator Flags Disclosure, Approval Lapses
SEBI also found lapses in disclosures relating to the transaction. The regulator flagged inadequate disclosures concerning the pledge of the property and questioned disclosures relating to the release of the title deed.
The case examined whether company resources were used to support promoter group entities through financial arrangements without the necessary corporate approvals.
SEBI said the transaction involved the Hyderabad property and found that the relevant fixed deposit had been created without the approval of the board or shareholders.
The regulator concluded that the arrangement breached securities laws and corporate governance requirements. It also said the company had failed to adequately safeguard the interests of its shareholders.
The SEBI order concluded the regulator's investigation into the matter and imposed the market access restrictions and monetary penalties on the individuals involved.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
