In an interim order on Monday, Sebi barred Chandra and Goenka from holding the position of a director or key managerial personnel (KMP) in any listed company as they were involved in diverting company funds to the group's related entities.
The case pertains to Chandra, who was also the chairman of ZEEL during the alleged violation, and Goenka having abused their position as directors or KMPs of a listed company for siphoning off funds for their own benefit.
In its interim order, Sebi noted that Chandra and Goenka alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them.
Sebi noted that the share price of ZEEL has come down from a high of close to Rs 600 per share to the current price of less than Rs 200 per share during the period FY 2018-19 to FY 2022-23. This erosion of wealth despite the company being so profitable and generating profit after tax consistently would lead to a conclusion that "all was not well with the company".
Roadblock for Zee-Sony Merger
This decision by Sebi could become a major roadblock for Zee-Sony merger as Goenka is slated to be the MD and CEO of the merged company.
The merger that was expected to be completed by the first half of the current fiscal year ending March 31, 2024 has been facing one roadblock after another. Earlier, ZEEL was facing issues from its operational and financial creditors; now the merger is facing another issue.
The National Company Law Tribunal on May 11 had asked both BSE and NSE to reconsider Zee's merger with Sony Pictures Networks India after the Shirpur Gold Refinery fund diversion case. However, the National Company Law Appellate Tribunal set aside this order.
The next hearing in NCLT will be on June 16.
Zee Entertainment Share fall 6.50% on Tuesday
Shares of Zee Entertainment Enterprises fell over 6.50 per cent in morning trade on Tuesday after Securities and Exchange Board of India banned Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Limited's (ZEEL) Punit Goenka from holding any directorial or key managerial position in any listed firm.
The stock tumbled 6.28 per cent to an intraday low of Rs 182.60 apiece on the BSE after a weak beginning.
On the NSE, it tanked 6.59 per cent to Rs 182 each share.
In the broader equity market, the 30-share BSE benchmark traded with a gain of 328.44 points or 0.52 per cent at 63,053.15.
