SEBI Confirms Order Barring Zee's Subhash Chandra, Punit Goenka From Company Boards

The markets regulator passed a confirmatory order on Monday barring Zee Entertainment Enterprises Ltd.'s Chairman Emeritus Subash Chandra and former Managing Director Punit Goenka from company boards over allegations of diversion of the company's funds.

They are barred from holding key managerial positions until further directions, according to the order of the Securities and Exchange Board of India. The letter of comfort given by Chandra encumbering the assets of Zee was not given in personal capacity but as the chairman of the company and is a violation of SEBI's Unfair Trade Practices Regulations, the regulator held. SEBI is carrying out a detailed investigation into the matter, which will be completed within eight months.

SEBI, through an interim order on June 12, 2023, barred Chandra and Goenka from directorial positions for allegedly diverting funds from the listed entity. According to the regulator, Chandra, in 2018, as the chairman of the company, issued a letter of comfort to Yes Bank Ltd. for loans availed by associate companies of Zee. The letter of comfort gave the bank the authority to appropriate a Rs 200 crore fixed deposit from Zee with it for repayment of these loans. This was done without the approval of Zee's board.

Later, during the investigation, Zee submitted that they received these amounts back from associate entities. However, the fund trail proved something else. SEBI found the funds, which originated from Zee or other listed entities of Essel Group, moved in a circular fashion.

Goenka and Chandra appealed against the order on June 13 and were denied interim relief by the appellate tribunal. The court further directed the parties to file their replies within two weeks and asked the regulator to pass an order within two weeks of a hearing. The deadline ended on Monday today, as an opportunity for a personal hearing was given on July 31.