Capital markets regulator SEBI has issued a settlement order worth ₹7 lakh in the matter of “delayed disclosure of the invocation of pledged shares” to exchanges by Zee Entertainment Enterprises Ltd.

In its settlement order, SEBI said the instant adjudication proceedings initiated against the company on July 15, 2022, are disposed of with immediate effect after the acceptance of settlement terms.

SEBI conducted a probe into the scrip of Zee Entertainment, which is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), from January 01, 2019, to December 26, 2019.

SEBI in its examination report observed that Zee had made delayed disclosure -- 54 days in 3 instances and 27 days in 2 instances -- to exchanges with respect to the invocation of pledged shares. Therefore, it was alleged that Zee has violated regulation 7(2)(b) of the PIT Regulations. Accordingly, SEBI initiated adjudication proceedings under section 15A(b) of the SEBI Act against the company.

In this regard, K Saravanan was appointed as an adjudicating officer (‘AO’) to conduct the adjudication proceedings, and a show-cause notice was issued on July 15, 2022.

"Pending the instant proceedings commenced by the SCN dated July 15, 2022, Applicant has filed Settlement Applications...with SEBI in terms of SEBI (Settlement Proceedings) Regulations, 2018 proposing to settle the pending proceedings, without admitting or denying the findings of fact and conclusions of law, through a Settlement Order," the regulator said in its settlement order.

The company representatives had met with the internal committee of SEBI on January 10, 2023, wherein, the settlement terms were deliberated. "Thereafter, the IC had deliberated on all applicable base values and recommended ₹7,00,000 to the applicant towards a full and final settlement of alleged default contained in the SCN."

SEBI's high-powered advisory committee on settlement considered the proposed settlement terms on February 22, 2023, and accordingly, recommended the settlement on payment of ₹7 lakh by the company.

The order said it’s SEBI’s right to take any enforcement action including restoring or initiating the proceedings in respect to which this settlement order is passed if any representations made in settlement proceedings are untrue or the applicant breaches any clauses, conditions of undertakings, and waivers.

Separately, Zee has suffered a blow after the market regulator confirmed siphoning off funds worth ₹200 crore by Zee promoters on June 12, 2023, and banned Essel Group chairman Subhash Chandra, and his son and Zee Entertainment Ltd managing director and chief executive Punit Goenka from holding the position of a director or key managerial personnel in any listed company or its subsidiaries.

The case pertains to SEBI's probe following the resignation of two independent directors (Sunil Kumar and Neharika Vohra) of Zee in November 2019 after they raised 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 Zee promoters have appealed against the SEBI order in the securities appellate tribunal, and the matter has been listed for hearing on June 26.

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