The Securities Appellate Tribunal's (SAT) decision to reverse Sebi's (Securities and Exchange Board of India) interim rule prohibiting Punit Goenka, MD & CEO, Zee Entertainment Enterprises Limited (ZEEL), from holding any significant managerial position is a positive development for the company.
In June, the Securities and Exchange Board of India barred Subhash Chandra, Chairman of Essel Group, and his son Goenka from holding senior management positions in ZEEL or any other publicly traded firm. ZEEL is in the process of merging with Culver Max Entertainment (Sony Pictures Networks India), which will provide it with a tremendous reach across categories, most notably Hindi entertainment and sports, as well as a strong foothold in regional markets. Goenka was earlier rumored to be in charge of this new venture.
According to Ashish Kumar Singh, Managing Partner at Capstone Legal, the current development is a blow for Sebi. "SAT has set it aside and it is clear that on a prima facie basis nothing has been found," he said in a statement. The quarrel is sparked by a Sebi interim order accusing Chandra and Goenka of transferring funds to private entities. That was in reference to events in 2019, and Singh believes that the delay influenced today's outcome.
From Sebi's perspective, the inquiry could still be completed. "If something comes out of it, the issue can be brought up again." At that point, a new order will be required, which the ZEEL promoters can still contest," said another lawyer following the case. According to Singh, today's judgement indicates that the temporary order is not sustainable.
Culver Max Entertainment said last month that the merger with Zed had been postponed. "Although the transaction was previously expected to close by the end of the first half of the fiscal year ending on March 31, 2024, based on the latest progress, it is currently expected to close in the months ahead," the business stated in a statement. The National Company Law Tribunal (NCLT) has previously approved the transaction.
