The Securities and Exchange Board of India (SEBI) has rejected the applications submitted by Zee Entertainment Enterprises (ZEALOUS) and Punit Goenka on Thursday, January 2, and demanded further investigation into the matter. Although SEBI withdrew the show cause notices issued to Zee, Subhash Chandra and Punit Goenka for alleged violations of SEBI regulations, it demanded consolidation of the contents of the show cause notices in the ongoing larger investigation.
“The allegations contained in the SCN dated July 6, 2022 issued by the AO need to be incorporated into the findings of the further investigation conducted by SEBI in the present matter. Accordingly, the contents of the SCN dated July 6, 2022 issued by the AO have to be incorporated into the findings of the further investigation conducted by SEBI in the present case. including the examination report and all documents relied upon will be treated as part of SEBI’s further investigation report in the ZEEL matter,” the Sebi order said.
The case relates to judgment proceedings which were initiated against Zee Entertainment Enterprises under section 23E of the Securities Contracts (Regulation) Act, 1956.
Sebi has referred the matter for further investigation. In an arbitration order issued on Thursday, the market regulator highlighted that Zee and Goenka had filed a settlement claim for alleged violations of the Listing Obligations and Disclosure Requirements Regulation (LODR). Sebi had issued a show cause notice in this case in July 2022.
Shares of ZEE ended at Rs 123.95 on the BSE on Thursday, up 0.73 per cent.
Sebi mentioned that the examination report and all other documents invoked will be included as a crucial part of the ongoing investigation. The initial show cause notice will also be mentioned in future notices to be issued.
Consequently, Sebi’s decision in August 2023 resulted in Chandra and Punit Goenka being barred from holding key positions in four group companies. Sebi had earlier accused the promoters of Shirpur Gold Refinery, an entity of the Essel Group, of indulging in fraudulent practices and misappropriation of funds in June 2023. Following Sebi’s actions against the founders, the merger of 10 billion between Zee and the Sony India unit has been disrupted.
Regulators are currently investigating the alleged misappropriation of funds by Chandra and his son, Punit Goenka. The initial investigation involves a letter of comfort (LoC) worth Rs 2,000 crore. However, Sebi informed the Securities Appellate Tribunal (SAT) that other LoCs are also under review, including one worth Rs 4,210 crore issued by Chandra in his capacity as chairman of the Essel Group.
The SAT granted Goenka a lifting of the ban.
