BENGALURU/MUMBAI (Reuters) -An Indian tribunal on Monday dismissed an appeal by former Zee Group Chairman Subhash Chandra and Zee Entertainment CEO Punit Goenka to lift the markets regulator’s ban on the duo holding board positions in publicly listed companies.
The Securities and Exchange Board of India (SEBI) issued the ban on June 12, alleging that Chandra and Goenka were actively involved in diverting company funds to the group’s other listed entities and firms related to founding shareholders.
The Securities Appellate Tribunal (SAT) refused to vacate the regulator’s directions, saying it did not find any illegality or irrationality in SEBI’s order and saw no merit in interfering.
The SAT further said the order was passed “considering the sense of urgency which was infused by a host of circumstances, namely diversion of funds from a listed company to related parties which are controlled by them”.
It directed SEBI to pass a final order by the middle of next month and asked Chandra and Goenka to defend themselves before the regulator.
A spokesperson for Zee declined to comment. Chandra and Goenka have denied the allegations.
The ruling comes as Zee and an India unit of Japan’s Sony Group are closing in on a merger announced in 2021 to create a $10-billion TV enterprise, with Goenka set to become the merged entity’s managing director and CEO.
However, regulatory approvals are pending.
A unit of Sony had said it was tracking developments that ‘may affect’ the deal, while Goenka had reportedly said the merger will go through “whether or not” he is the CEO of the merged company.
Zee’s shares fell as much as 5.7% after the ruling. The stock is down 16.6% so far this year after losing 25.2% in 2022.
(Reporting by Sethuraman NR in Bengaluru and Jayshree P Upadhyay in Mumbai; editing by Eileen Soreng, Sohini Goswami and Savio D’Souza)
