Markets regulator Securities and Exchange Board of India (SEBI) has summoned several current and former directors of Zee Entertainment Enterprises Ltd (ZEEL) as part of its probe into the entertainment company over the alleged diversion of company funds, through related-party transactions.
The regulator has also widened the scope of the investigation. SEBI is also looking into the role of two prominent Mumbai-based production houses as possible “conduits which were used to siphon off funds,” a Moneycontrol report quoted sources.
The regulator is also probing a wider array of transactions between Zee and private companies owned by promoters. “Some of the former directors, including the independent directors, have received communication to appear before Sebi. They have also been asked to provide certain documents pertaining to the period when they were on the board of the company,” the first person said.
In August 2023, SEBI passed an interim order against promoters Subhash Chandra and his son Punit Goenka, barring them from holding any directorships in listed companies, over allegations of funds siphoning.
The proposed Zee-Sony merger, once expected to create a huge media company worth $10 billion, collapsed in January 2024, the possibility of its revival emerged this week after reports of on-going negotiations surfaced. Zee swiftly denied these.
In the same week, SEBI, discovered a significant discrepancy of over $240 million in the accounts of Zee Entertainment Enterprises Ltd, according to reports.
The regulatory body’s investigation into Zee founders, primarily focusing on Subhash Chandra and Puneet Goenka, reportedly uncovered the potential diversion of approximately Rs 20 billion ($241 million) from the company. This figure is roughly ten times larger than SEBI’s initial estimates, raising concerns about financial irregularities within Zee.
Sony-Zee merger timeline
September 2021: Zee Entertainment Enterprises (ZEEL) announced that its board of directors has unanimously provided an in-principle approval for the company’s merger with Sony Pictures Networks India (SPNI). A meeting in this regard was held on September 21, 2021.
December 2021: After the 90-day due diligence period came to an end on December 21, the merger deal was signed by the two companies.
February 2022: IndusInd Bank filed a plea before the Mumbai bench of the National Company Law Appellate Tribunal (NCLAT) to initiate insolvency proceedings against Zee. Back then, it was claimed that the company defaulted ₹83.08 crore.
July 2022: Indian stock exchanges BSE and NSE approved the merger of ZEEL with Sony Pictures Networks India.
October 2022: On October 4, the Competition Commission of India (CCI), the country’s anti-trust regulator, approved the proposed merger with certain modifications.
Read More: Zee-Sony Merger End: Zee to take legal action after Sony’s merger termination notice
December 2022: On December 15, private lender IDBI Bank moved the National Company Law Tribunal (NCLT) against ZEEL, seeking an insolvency proceeding against the media firm to recover dues of ₹149.60 crore.
March 2023: Zee Entertainment and IndusInd Bank inform NCLAT that they have settled their payment dispute.
May 2023: NCLAT set aside the order of NCLT that directed the stock exchanges to review their earlier approval for the merger.
June 2023: The Securities Exchange Board of India (SEBI) banned Subhash Chandra and Punit Goenka from holding any managerial or directorial roles.
Read More: Zee-Sony merger officially called off. But what are the legal implications and industry impacts?
August 2023: On August 10, the Mumbai bench of NCLT approved the merger between ZEEL and Sony.
September 2023: Axis Finance files an appeal in NCLAT against NCLT’s nod to the Zee-Sony merger.
October 2023: The Securities Appellate Tribunal (SAT) set aside an interim order of SEBI barring Punit Goenka from holding directorial positions in listed companies.
November 2023: Sony reportedly sought NP Singh to lead the merged entity.
December 2023: NCLAT issued notice to ZEEL over petitions filed by IDBI Bank and AXIS Finance against an NCLT order. Last month, Zee also sought an extension of the deadline for the merger, while Sony issued a statement stating that the company is looking forward to hearing ZEE’s plans.
January 2024: Zee-Sony merger saga ends: Timeline of the failed merger