Sony has issued a response in the aftermath of the India Securities and Exchange Board’s (SEBI) decision to temporarily bar Zee Entertainment Enterprises’ (ZEEL) top executives from holding any managerial or directorial roles.
On June 12, SEBI took action against Punit Goenka and Subhash Chandra, who hold the positions of MD-CEO and Chairman Emeritus respectively at the media behemoth ZEEL, prohibiting them from assuming any managerial or directorial roles in publicly listed companies. This suspension comes as SEBI conducts an investigation into allegations of insider trading leveled against them.
ZEEL has contested SEBI’s ruling and the Securities Appellate Tribunal is set to hear the case on June 26.
In 2021, ZEEL entered into definitive agreements with Sony Pictures Networks India (which was later rebranded as Culver Max Entertainment) to merge the two companies, aiming to create a major broadcasting powerhouse in India. According to the agreement, Goenka was designated to head the merged entity as MD and CEO. The merger is currently awaiting approval from India’s National Company Law Tribunal.
The SEBI’s recent action has sparked widespread speculation among Indian media regarding the potential impact of this development on the proposed merger. There is a division in opinion – while some suggest that the merger might fall through, others believe it will proceed as planned.
On Wednesday, Sony Pictures Entertainment’s headquarters in the U.S. addressed the speculation by releasing a statement: “In the wake of several inaccurate press reports speculating on the ramifications of ZEE’s intended merger with SPNI, following SEBI’s provisional order against Subhash Chandra and Punit Goenka, we wish to emphasize that we are treating the SEBI interim order with utmost seriousness and will continue to closely monitor any developments that could influence the transaction.”
The order issued by SEBI highlights that there is a “prima facie case of Mr. Subhash Chandra and Mr. Punit Goenka having misused their positions as directors/key managerial personnel of a listed company by diverting funds for their personal gain.”
