Sebi to complete investigation into Zee Entertainment case within 8 months

The Securities and Exchange Board of India (Sebi) will complete its investigation into the case pertaining to Zee Entertainment Enterprises Ltd owners Subhash Chandra and Punit Goenka within 8 months, Chairperson Madhabi Puri Buch said in a revised order.

Until the investigation is complete, Subhash Chandra and Punit Goenka will not hold any directorial positions in any of the Essel Group companies, the regulator said.

The regulator said this as part of the confirmatory order passed against the two individuals.

On June 13, the capital market regulator, through an interim order, restrained Essel Group Chairman Subhash Chandra and Zee Entertainment head Punit Goenka from holding any key managerial position until further notice.

The order was passed following investigations, which revealed that Chandra and Punit Goenka abused their position as directors of Zee Entertainment in 2019 by siphoning off funds for their own benefit.

However, the Goenkas approached the Securities and Appellate Tribunal, seeking a stay on the Sebi order. However, SAT declined to grant a stay on the interim order.

In disposing of the appeals, the appellate tribunal had instructed the Goenkas to submit a response, along with an application to vacate the ex-parte ad-interim order within two weeks.

On July 27, the tribunal directed Sebi to appoint another whole-time member for Punit Goenka and Subhash Chandra's hearing in the case. It was observed that Sebi’s order against the father-son duo was influenced by the Shirpur Gold Refinery order in April 2023, in which the two are not parties.

Sebi’s whole-time member Ashwani Bhatia had passed the order in both cases.

The modification in the order by SAT was done following a request from Sebi, which also sought appointment of Ananth Narayan as whole-time member or an authorised person to pass an order on the matter.

Sebi’s interim order in June threw a spanner to the proposed merger of Zee Entertainment with Sony Pictures, as one of the key clauses of the deal is that Goenka will head the merged entity.

Last week, however, Zee Entertainment received the National Company Law Tribunal’s approval for the merger plan, after nearly three years of the official announcement.

The confirmatory order from Sebi on Monday will restrain Goenka to take any position in the merged entity even if the demerger comes into effect within the 8-month period.

“I note that a detailed investigation in the matter is in progress which may bring out additional acts of omission or commission, of the entities, if any, depending on the material and after considering the facts and veracity of their submissions,” Buch said in the order.