(Reuters) -An Indian tribunal lifted a ban on Punit Goenka from holding board positions in any of the Zee Group companies on Monday, paving the way for him to head the entity formed by the planned merger of Zee Entertainment and Sony’s Indian business.
The Securities Appellate Tribunal (SAT) ruled that the Securities and Exchange Board of India’s (SEBI) view that Goenka might cause risk to the merged company’s assets was “patently erroneous” as it would have a separate corporate structure.
The SAT said that Goenka will cooperate with any further investigation by India’s markets regulator, which in an August interim order barred Goenka and Zee Group Chairman Subhash Chandra from holding positions in Zee company boards.
The SEBI alleged that Goenka, who is managing director of Zee Entertainment, and Chandra were actively involved in diverting company funds to the Zee Group’s other listed entities and firms related to its founding shareholders.
Both men have denied any wrongdoing. Zee did not respond to a Reuters request for comment on Monday’s order.
SAT said that SEBI’s directions were based on ‘incorrect apprehensions’ and there was no urgency for the interim bans.
“The diversion of funds has not as yet been proved,” it said in its order, adding that there was no evidence of any further diversion of funds.
In 2021, Zee Group announced a merger of Zee with Sony’s Indian arm, but the move was delayed due to an interim SEBI order which restraining Goenka from directorships of any listed companies.
Zee Entertainment’s shares, which rose as much as 3.7% after the SAT order, closed up 0.6%.
Late last month, Sony said that the planned Indian merger, which had an initial deadline of September, would take a few more months to complete, without elaborating.
India’s company tribunal approved the merger in August, paving the way for a $10 billion media and entertainment giant.
(Reporting by Jayshree P Upadhyay and Indranil Sarkar; Editing by Sohini Goswami, Maju Samuel and Alexander Smith)