By Jayshree P Upadhyay
(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)