Zee Entertainment Seeks Resolution with Sebi Over Alleged Corporate Governance Issues

Zee Entertainment Enterprises has filed a settlement application with the Securities and Exchange Board of India (Sebi) to resolve ongoing investigations into claims of corporate governance failures and financial irregularities involving the company’s promoters.

The application, submitted on Thursday, does not admit or deny the allegations and is part of a process that allows companies to negotiate with Sebi. This could involve paying a fine or making changes to close the investigation.

In its application, Zee stated that Sebi believes the company’s handling of financial information and business transactions may have harmed investors during the investigation. To address concerns raised by Sebi and restore investor confidence (which includes about 96% public investors), the company’s board decided to pursue this settlement for a friendly resolution.

Sebi began its investigation into Zee after receiving complaints about corporate governance issues, financial mismanagement, and potential violations of securities laws. The focus has primarily been on Zee’s promoter family, including CEO Punit Goenka and chairman emeritus Subhash Chandra, who are accused of misusing company funds and failing to disclose related-party transactions.

In 2023, Sebi issued orders that prevented the father-son duo from holding key positions in any listed company, including Zee Entertainment. However, Punit was granted relief by the securities appellate tribunal (SAT), allowing him to keep his role as MD and CEO, while Chandra has also challenged Sebi’s orders in the SAT.

A spokesperson for Zee mentioned that the board advised settling any ongoing proceedings with Sebi promptly to prioritize the interests of shareholders and stakeholders. This advice followed a report from the company’s independent investigation committee, which found no wrongdoing by the promoters.