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SEBI bars Zee founders for a year over unauthorised land pledge
Sebi also fined Zee Entertainment Enterprises ₹ 1.48 crore for the Hyderabad land pledge and imposed a separate ₹ 30 lakh penalty that bars the company from the market for two months.
Zee Entertainment Enterprises Ltd. shares are set to stay in focus on Monday, August 3, after India’s market regulator, SEBI, barred founder Subhash Chandra and Managing Director and CEO Punit Goenka from accessing the securities market for one year each, according to LiveMint Markets.
The regulator also imposed penalties tied to what it found was unauthorised use of the company’s land in Hyderabad to secure loans raised by promoter-linked Essel Group entities. SEBI fined the company a combined ₹ 1.48 crore, and separately levied a ₹ 30 lakh penalty on ZEEL, also barring the company from accessing the securities market for two months.
SEBI said its investigation was triggered after Deloitte Haskins & Sells LLP flagged in ZEEL’s FY19 audit report that title deeds for certain immovable properties were missing. The regulator found that the original title deeds for ZEEL’s Hyderabad land were deposited with Indiabulls Housing Finance on December 27, 2018, to create a first-ranking mortgage against loans taken by four Essel Group companies that collectively borrowed ₹ 726 crore, with Essel Home named as a co-borrower.
The regulatory action arrives as shareholders approved ZEEL’s plan to raise ₹ 3,144 crore through the issuance of convertible warrants to the promoter group, winning 76.64% of votes, above the 75% approval threshold. LiveMint Markets said that if the warrants convert into equity, the promoter group’s stake is expected to rise from 4% to 24%, which would dilute other shareholders by 21%, after ZEEL shares closed up 2.85% at ₹ 115.45 on July 31.