Zee-Sony merger in trouble again as NCLT reportedly wants approvals reviewed

The merger of Zee and Sony, the two conglomerates that dominate Indian TV screens, could mark a major shift for the country's media and entertainment industry. But the amalgamation has been held back for a while because of objections from Zee's creditors, and the network has worked out a settlement with most of them.

Despite paying off lenders and getting the competition watchdog's nod, the deal may get stuck as the National Company Law Tribunal has asked stock exchanges to reconsider their permissions.

Need to take a closer look at Zee's dealings

• According to an Economic Times report, the NCLT wants BSE and NSE to issue updated no-objection certificates for the deal, after the Securities and Exchange Board of India also gave an adverse interim ruling in the matter.

• SEBI had passed an order against Shirpur Gold Refinery, which is promoted by a company owned by family members of Zee's founder Subhash Chandra, and diverted Rs 400 crore to benefit firms linked to his son Amit Goenka.

Creditors accusing network of fraud

• In addition to that SEBI had also ordered a review of the Rs 1,100 crore non-compete fee to be paid by Sony to Zee as part of the deal.

• This came after one of Zee's creditor JC Flowers alleged that the fee is changing hands between Mauritius-based entities, so that the firm can evade taxes and defraud lenders.

• This has raised serious questions on the functioning of Zee's entities and prompted NCLT to ask BSE and NSE to take another look at their permissions for the merger, which SEBI itself had approved.