Market regulator Sebi in its reply to the Securities and Appellate Tribunal (SAT) on the Zee Entertainment Enterprises Ltd’s plea has known as for urgent action against the promoters in the alleged fund diversion case to safeguard the administration, traders and different stakeholders. In its affidavit, the Securities and Exchange Board of India (Sebi) identified that the functions made by Chairman Emeritus Subhash Chandra and Managing Director and CEO Punit Goenka on July 6, 2022, that “there was no urgency and that the same issue is the subject matter of the show cause notice dated July 6, 2022, is completely false and misleading.” Sebi additional acknowledged that “not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings.”
“In the instant case, we have a situation before us where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons,” Sebi mentioned affidavit to SAT. On June 15, SAT had directed them to reply to Sebi’s submission on or earlier than June 19, when the tribunal would take up the matter for remaining disposition.
In the interim order on June 12, Sebi barred Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka from holding the place of a director or key managerial personnel in any listed firm for siphoning off funds of the media agency. Both Chandra and Goenka moved SAT looking for a keep on the Sebi order, citing injustice.Sebi additionally submitted that the appellants had not produced any materials to point out that they had suffered any prejudice by not getting a private listening to earlier than the interim order was handed.
The regulator mentioned it was prepared to give a right away listening to for the appellants “as early as required”. In the affidavit, Sebi alleged that promoters created a façade by way of sham entries to misrepresent traders and the regulator concerning the compensation of Rs 200 crore to ZEEL by seven associated events. Sebi submitted that the current investigation was triggered after the rejection of the settlement utility filed by ZEEL in Essel Group-company Shirpur Gold Refinery (Shirpur) case, on which the regulator had issued an interim order in April.
“In Shirpur, we have also seen that the promoter group timed its offloading of shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur’s shares. It is ultimately the small retail investors who endured the downfall in share price,” the market regulator acknowledged. Sebi mentioned that Shirpur’s case displays a contrived scheme with a set of sham transactions meant to mislead and facilitate a circuitous motion of funds. Sebi initiated the method of acquiring financial institution statements from the assorted banks concerned and tracing the supply of cash utilized by the associated get together to ‘repay’ ZEEL.
Upon investigating the transactions featured in the financial institution statements together with the counterparties to such transactions, SEBI discovered some obvious irregularities. “While ZEEL claimed to have received repayment of money from the related parties on account of the adjustment by Yes Bank, SEBI found that such money originated from ZEEL itself and /or group companies of the Essel Group (which includes ZEEL). Therefore, effectively, ZEEL funded its own repayment,” the regulator mentioned. In reality, Sebi mentioned, a lot of entities that had been used as a conduit for the layering and passing-through of the funds overlap with the entities concerned in the Shirpur investigation as effectively.
“These entities are part of the Essel group, either through commonality in shareholding, control, directorship, or group name. Further, these entities appear to be beneficially owned by the Appellants and their family members,” it added. In November 2019, two unbiased administrators, Subodh Kumar and Neharika Vohra, resigned citing alleged weak company governance and appropriation of FD in direction of cost of promoter loans causes behind their resignation. Meanwhile, the National Company Law Tribunal deferred its listening to on the potential merger of ZEEL with Sony Pictures Networks India to June 26.
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