Indian regulator bars Zee's Goenka, questions role in merged entity (updated)

Zee Media

14/08/2023 18:13

(Adds details from SEBI order, context)
    By Jayshree  P Upadhyay
       Aug 14 (Reuters) - India's market regulator on Monday
barred Punit Goenka from the boards of four Zee Group companies,
including Zee Entertainment Ltd, and questioned his proposed
role in the planned merger between ZEEL and the Indian unit of
Japan's Sony Group.
    The Securities and Exchange Board of India (SEBI) also said
in the order on its website that former Zee Group Chairman
Subhash Chandra and Goenka cannot be directors of any entity
formed through the merger or amalgamation of any of the four.
    Goenka is ZEEL Chief Executive, but due to an earlier SEBI
order an interim committee has taken on day-to-day management of
the company, which is among India's first privately-owned
television networks.
    Zee Group announced a merger of ZEEL with Sony's Indian
business in 2021, but ran into delays due to an interim SEBI
order barring Goenka from directorships of any listed company.
    A spokesperson for Zee Group, Chandra and Goenka declined to
comment on SEBI's final order, which applies to Zee Media
Corporation, Zee Media Corp and Zee Aakash News as well as ZEEL.
    India's National Company Law Tribunal last week cleared the
long-delayed deal to create a $10 billion company.
    However, SEBI said that post the planned merger, Goenka
would be appointed as managing director and would be entrusted
with substantial powers to manage affairs of the company. 
    "That very role in ZEEL is under question," said SEBI,
adding that until the final outcome of an investigation into
alleged fund diversion "it would be appropriate that he is not
part of the management of ZEEL or any 'corporate avatar' of it".
    SEBI said it would complete its inquiry in eight months. 
    Madhabi Puri Buch, SEBI's chairperson, said that Goenka's
conduct as Managing Director and Chief Executive of ZEEL was
found to be in violation of norms to prevent fraud.
    "His actions were in direct conflict with the interests of
96% public shareholders of ZEEL, necessitating imposition of
temporary restraint on him," Buch said.
    Goenka, who has denied the allegations, and Chandra both
challenged SEBI's earlier ban. 

 (Reporting by Jayshree P Upadhyay; Editing by David Evans and
Alexander Smith)
 ((Jayshree.Pyasi@thomsonreuters.com; 9920092491; Reuters
Messaging: Twitter: @jaysh88))