The interim order against the individuals were passed following investigations, which revealed that Chandra and Punit Goenka abused their position as directors of Zee Entertainment in 2019 by siphoning off funds for their own benefit.
Although the promoter family holds just a 3.99% stake in Zee Entertainment, Subhash Chandra and Punit Goenka continue to be at the helm of affairs of the company.
“Considering the above, I am of the opinion that, while the investigation is still underway, their continuation as a director/Key Managerial Personnel in any listed company or its subsidiaries are likely to be prejudicial to the interest of those companies, particularly its investors,” Wholetime member Ashwani Bhatia said in his interim order.
Pending completion of investigation by SEBI, interim directions need to be issued to safeguard the management of such companies and protect their investors and other stakeholders, Bhatia said.
In November 2019, two independent directors of Zee Entertainment – Sunil Kumar and Neharika Vohra – had resigned from their posts after raising several issues, including appropriation of certain fixed deposits of the company by YES Bank for squaring off loans of related entities of the Essel Group.
Vohra in her resignation letter alleged that guarantees were given to a subsidiary without approval from the board. Following this, the market regulator conducted an examination of the matter, which revealed that Chandra, the then chairman of Zee Entertainment, provided a ‘Letter of Comfort’ towards credit facilities availed by certain group companies from Yes Bank.
During the probe, SEBI found that Chandra and Goenka were signing comfort letters on behalf of Zee Entertainment without informing, consulting, or taking approval of the board, thereby violating the disclosure norms.
Having passed the interim order, SEBI has given both the individuals 21 days to file their replies in this regard.
On Monday, shares of Zee Entertainment ended 0.5% up on the NSE at Rs 195.05.
