Zee, Punit Goenka challenge SEBI's market ban
What's the story
Zee Entertainment Enterprises Limited (ZEEL) and its CEO Punit Goenka have challenged a Securities and Exchange Board of India (SEBI) order barring them from accessing the securities market. The appeal was filed with the Securities Appellate Tribunal (SAT), which has scheduled a hearing for Wednesday. ZEEL's counsel sought an urgent hearing, stating that "I have been barred from accessing the securities market for two months."
Regulatory action
The regulator also imposed monetary penalties
On July 31, SEBI had barred ZEEL from accessing the securities market for two months. Meanwhile, Goenka and promoter Subhash Chandra were restrained from accessing it for 12 months each.
The regulator also imposed monetary penalties of ₹30 lakh on ZEEL, ₹58 lakh on Goenka, and ₹60 lakh on Chandra.
The total penalties of ₹1.48 crore were to be paid within 45 days.
Property dispute
Regulatory action over alleged unauthorized use of property
The regulatory action was taken over the alleged unauthorized use and pledge of ZEEL's property in Hyderabad as collateral for loans taken by four Essel Group entities from Indiabulls Housing Finance Ltd (IHFL).
SEBI found that the property was pledged for loans worth some ₹726 crore.
The regulator noted that the title deeds were deposited on December 27, 2018, and released on June 1, 2020, after repayment of some ₹225 crore.
Compliance issues
SEBI flagged lack of necessary approvals for transaction
SEBI also flagged the lack of necessary approvals from ZEEL's Audit Committee, Board, and shareholders for the transaction.
The regulator alleged that the company did not make adequate disclosures related to the pledge, related-party transaction, contingent liability, and other developments linked to the property.
The proceedings also covered disclosures related to litigation before the Delhi High Court, a non-disposal undertaking concerning the property, and subsequent release of title deeds.
Legal proceedings
Appeal to seek interim relief from market-access restrictions likely
The latest appeal before SAT is ZEEL and its promoters' next legal step against SEBI's order.
The tribunal will hear the matter on Wednesday, when the company is likely to seek interim relief from market-access restrictions.
Interestingly, SEBI's order was issued on the same day that ZEEL shareholders approved the company's proposed plan at an extraordinary general meeting (EGM), making the timing significant.