As Zee promoters Subhash Chandra and Punit Goenka failed to overturn a SEBI order against them, the Zee Entertainment Enterprises' board, in its meeting today, formed an internal committee to manage its affairs. Amid the development, the Zee Entertainment Enterprises stock closed 7.04%, or 15.20 points, up at ₹231.20 on the NSE.
Without naming anyone, a Zee Entertainment spokesperson says the company board has formed an interim committee of senior executives to run the media & entertainment organisation smoothly.
"Since the order restricts Mr. Punit Goenka from holding the position as director or key managerial position in a listed company, the Board of the Company has constituted an Interim Committee of senior executives to ensure smooth operations of the Company," says the spokesperson, adding that the board discussed "all the necessary steps" in the wake of orders passed by the Securities and Exchange Board of India (SEBI) and the follow-up judgment by Securities Appellate Tribunal (SAT).
The committee will work under the board's supervision and will seek its opinion on all crucial matters, adds the statement. It also says it has "immense faith" in the leadership qualities of Punit Goenka and will keep track of the ongoing matter. It says the board also remains confident that the “company will deliver robust growth consistently and generate higher value for all shareholders”.
In a major setback, the appellate tribunal SAT on July 10, 2023, dismissed an appeal filed by Zee Entertainment's group ex-chairman Subhash Chandra and its chief executive officer Punit Goenka. The matter pertains to a SEBI ban on them from holding board positions in listed companies for a year, in a fund diversion case.
On June 12, 2023, Chandra and Goenka were barred by SEBI from taking leadership roles at listed companies, which also sought "urgent action" against the Zee Entertainment promoters in ₹200-cr fund diversion case.
The market regulator, in its reply to SAT, said the promoters indulged in violations as well as multiple "false disclosures" to cover up "wrongdoings".
The regular said the promoters failed to submit any evidence to prove they suffered prejudice, and that they were given a personal hearing before SEBI passed the order because it was willing to give a hearing to them.
The case pertains to SEBI's probe after the resignation of two independent directors (Sunil Kumar and Neharika Vohra) of Zee in November 2019 after raising concerns over several issues, including the appropriation of certain fixed deposit (FD) of ZEEL by Yes Bank Ltd (Yes Bank) for squaring off loans of related entities of Essel Group.
The probe revealed Chandra, the then chairman of ZEEL/Essel Group, provided a ‘letter of comfort’ on September 4, 2018, towards credit facilities availed by certain group companies from Yes Bank. Neharika Vohra's resignation letter to then ZEEL chairman showed this LoC was known only to a few persons in management and even the board of ZEEL was not aware of the same.