The Securities Appellate Tribunal (SAT) has stopped the restraining order issued by the Securities and Exchange Board of India (Sebi) against Punit Goenka, allowing him to assume the position of Managing Director and CEO in the merged entity of Zee Entertainment and Sony. The SAT's decision came in response to allegations that Goenka and his father, Subhash Chandra Goenka, had transferred funds from Zee to other Essel Group companies without proper board approval.
In this case, Sebi had issued a restraining order against Goenka, prohibiting him from taking charge of the combined company while Sebi investigated the alleged fund transfers. The investigation, according to Sebi, was expected to take approximately eight months to complete.
With SAT dismissing Sebi's restraining order, Goenka can now move forward with his appointment as the Managing Director and CEO of the amalgamated Zee Entertainment and Sony entity. However, the tribunal's decision also requires Goenka to cooperate with SEBI's ongoing investigation into the matter.
However, it's essential to note that this development hinges on whether SEBI chooses to challenge the SAT's order before the Supreme Court. If such a challenge occurs, the Supreme Court will have the final say on Goenka's appointment as the Managing Director and CEO. Until the Supreme Court provides further direction, the situation remains fluid.
The merger between Sony and Zee is expected to proceed in January 2024 if it moves forward without Supreme Court intervention. However, if the Supreme Court becomes involved, potential delays in the merger might transpire, especially if Goenka opts to wait for the investigation's outcome before making any decisions.
If the Sony - Zee merger takes place without any involvement of the Supreme Court, the merger is expected to take place in January 2024 whereas if the involvement of the Supreme Court occurs, there may be a delay in the merger if Goenka changes his stance and waits for the outcome of investigation.
Why SEBI Barred Goenka?
Earlier in August, Sebi chief Madhabi Puri Buch passed an order that restrained Goenka and his father, Subhash Chandra, from holding key positions in publicly listed companies.
Goenka challenged SEBI's order before the SAT, which alleged that Goenka and Chandra were involved in diverting huge public money from Zee Entertainment Enterprises Ltd to private entities, which are owned and controlled by them.
The dispute between the Goenkas and Sebi has been ongoing since June, which has become an obstacle to Zee's proposed merger with Sony Pictures Networks India. The merger is expected to be one of the largest in India's media and entertainment sector. On 10 August the National Company Law Tribunal approved Zee's merger with Sony. Later SEBI orders sparked a debate on merger. Now SAT order will provide relief to the Goenkas.