REPETITIVE INVESTIGATIONS MAY HIT SONY-ZEE MERGER: ZEE TO SEBI | 19 June, 2023

Continuous and repetitive investigations by the Securities and Exchange Board of India (SEBI) could affect the merger of Zee Entertainment Enterprises Ltd. and Sony Pictures Networks India (now known as Culver Max Entertainment), the former has said. In a letter to the market regulator, Zee said that these probes create “prejudice for the company and its shareholders, and can potentially impact the merger process”. The letter dated June 11, 2023 is part of SEBI’s 197-page reply to the Securities Appellate Tribunal (SAT) which will hear the Zee-SEBI matter today (June 19).

On June 12, SEBI had barred Zee’s Subhash Chandra and his son, Punit Goenka, from holding key managerial positions in listed companies due to a case of fraud against them. Both approached SAT the next day (June 13), challenging SEBI’s order.

It may be mentioned here that SEBI had previously approved Zee’s merger with Sony, but the recent turn of events could delay the deal. Zee had announced the merger in September 2021. According to the terms of the merger, Punit Goenka, managing director of ZEEL, will be the managing director of the merged entity and his family could hold up to 20% in it. Unless set aside by the SAT, the SEBI order will make it impossible for Punit to hold directorship in the merged entity.

In its letter dated June 11 to SEBI, Zee said, “The transactions in the present matter pertain to the year 2019 and a detailed explanation has already been provided to stock exchanges and SEBI… It is beyond our comprehension as to why the present matter is being re-investigated/re-examined, when the cause of action pertaining to the matter is around four years old.”

The matter relates to possession of Zee’s fixed deposits by Yes Bank in lieu of its loans to sister concerns. According to SEBI, Zee’s disclosures about the loan transactions and fixed deposits were misleading.