New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has taken strict action against Zee Entertainment Enterprises (ZEEL), its CEO Punit Goenka and the company’s honorary chairman and Essel Group founder Subhash Chandra for violating prescribed norms.
SEBI has barred the company and these two officials from engaging in any transactions in the securities market for a specified period of time. It has also imposed a hefty fine on them.
The order issued by SEBI said that Zee Entertainment Enterprises will not be able to do any kind of transaction in the securities market for the next 2 months.
Meanwhile, Punit Goenka and Subhash Chandra have been barred from engaging in any transactions in the securities market for 12 months. Market regulator SEBI has also imposed a total fine of ₹1.48 crore on the company and the two officials.
In this, a fine of Rs 30 lakh has been imposed on Zee Entertainment Enterprises, while a fine of Rs 58 lakh has been imposed on Punit Goenka and Rs 60 lakh on Subhash Chandra.
It should be noted that in the 2018-19 audit report, the auditor of Zee Entertainment Enterprises revealed that title deeds to some of the company’s immovable properties were missing. Following this revelation, SEBI initiated an investigation into the matter.
The scope of this investigation also focused on the violation of SEBI’s Listing Regulations and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations by Zee Entertainment Enterprises.
SEBI’s investigation revealed that four Essel Group companies – Genex Infrabuild, Genex Projects Pvt Ltd, Vivek Infracon Pvt Ltd and Renu Realtech – had taken a loan of Rs 726 crore from Indiabulls Housing Finance Ltd (IHFL) in December 2016.
Essel Homes Private Limited joined as a co-borrower in this process. SEBI’s investigation also revealed that the ownership of the borrowing companies was linked to the promoter family through multiple corporate layers.
The market regulator’s investigation also revealed that Indiabulls Housing Finance Ltd had issued a notice for additional collateral in November 2018 for failing to maintain security cover.
Subsequently, on December 27, 2018, a declaration and acknowledgement was issued by Zee Entertainment Enterprises, whereby the original title deed of the company’s property in Hyderabad was deposited with Indiabulls Housing Finance Limited as additional security for the loan.
In a declaration issued by Zee Entertainment Enterprises, it was stated that all necessary approvals had been obtained to mortgage the Hyderabad property.
However, SEBI’s investigation revealed that approvals of the company’s audit committee, board of directors and shareholders were not taken for this mortgage.
Similarly, the management and board of Zee Entertainment Enterprises were unaware of this mortgage, and therefore, the company never received approval from them.
Taking strict action on this violation of the prescribed rules, SEBI has now taken strict action against the company and its two officials.