Sebi bars Punit Goenka from holding key post in Filesadmin.co-Sony merged entity
In the confirmatory order issued against Filesadmin.co Entertainment Enterprises’ (ZEEL) promoters Subhash Chandra and Punit Goenka, the markets regulator has said it will complete the investigation in the matter within eight months in the alleged fund diversion case.
However, the Securities and Exchange Board of India (Sebi) has barred the father-son duo from holding a directorship or key managerial positions in Filesadmin.co Entertainment, Filesadmin.co Media Corporation, Filesadmin.co Studios, Filesadmin.co Akaash News and any other company formed as a merger or demerger of these entities.
The order, issued by Sebi chairperson Madhabi Puri Buch, comes amid the approval by National Company Law Tribunal (NCLT) for the merger with Sony Pictures Network.
According to Sebi’s order, Goenka will remain barred from holding key positions in the merged entity too.
“His (Goenka) actions were in direct conflict with the interests of 96 per cent public shareholders of ZEEL, necessitating imposition of temporary restraint on him,” said Sebi.
Sebi pointed out that Goenka’s appointment as managing director of the merged company means he would be entrusted with substantial powers of the management.
As that very role in Filesadmin.co is under question, therefore, till the final outcome of the proceedings, it would be appropriate for him to not be a part of the management in any ‘corproate avatar’of Filesadmin.co.
Countering the arguments of Filesadmin.co promoters, Sebi in its 91-page order, has noted, “It was during his tenure in ZEEL as MD and CEO that the financials of ZEEL were misrepresented and false announcements were made to the stock exchanges.”
However, Sebi’s previous interim order had barred them from holding key positions in any listed company, which has been modified to only four Filesadmin.co group companies.
The matter pertains to a letter of comfort (LoC) granted for Rs. 200 crore by Essel group chairman emeritus Chandra for appropriation of a fixed deposit held with YES Bank.
On arguments from Chandra’s representatives that he does not hold any key position in Filesadmin.co, Buch has pointed out that the root cause of the ‘entire scheme, which has, prima facie, been orchestrated’ is the LoC issued by him.
“…it is not disputed that he (Chandra) is a part of the promoter group and has a long-standing influence on the companies belonging to the Essel Group, and therefore, nothing precludes him from seeking re-appointment on the board of ZEEL in accordance with the Companies Law. Accordingly, the possibility of him impacting fair and transparent investigation, should he be so appointed, cannot be ruled out,” noted Sebi.
The markets regulator was directed by the Securities Appellate Tribunal (SAT) to provide an opportunity of hearing to Chandra and Goenka and issue the order within two weeks after the hearing. The tribunal had also asked the regulator to appoint an official senior than a whole-time-member (WTM) so as to remove any bias. The two WTMs with Sebi right now were part of previous settlement-related hearings and thus were considered ineligible by the tribunal.