The Securities and Exchange Board of India (SEBI) issued a show cause notice to Zee Entertainment Enterprises Ltd (ZEEL), a current Key Managerial Personnel (KMP), and an ex-director. The notice relates to alleged violations of SEBI regulations concerning a lien on a property for the financial year 2018-19.
ZEEL stated that it received legal advice confirming a strong case against the notice, issued on August 7. To avoid prolonged litigation, the company submitted a detailed reply denying all allegations. “Further, the Company has also filed a settlement application in the said matter with SEBI in terms of the provisions of SEBI (Settlement Proceedings) Regulations, 2018, which is under consideration,” the company added.
To address uncertainties linked to SEBI’s ongoing investigation and the inspection by the Ministry of Corporate Affairs (MCA) regarding transactions with vendors and a subsidiary, ZEEL constituted an Independent Investigation Committee (IIC). The IIC completed its review and presented its findings to the Board of Directors, noting no material irregularities. The report confirmed that the transactions under investigation were part of normal business operations.
The Board and management, after reviewing company and subsidiary records, determined that all transactions, including refunds, were exchanged for valid goods and services from vendors.
SEBI issued an ex-parte interim order on June 12, 2023, followed by a Confirmatory Order on August 14, 2023. These orders accused a current KMP of violating Section 4(1) and 4(2)(f) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices in Securities Market) Regulations, 2003. On October 30, 2023, the Securities Appellate Tribunal (SAT) set aside SEBI’s order, granting relief to the KMP while noting that the investigation by SEBI would continue.
Subsequently, SEBI issued summons seeking information and explanations from the company, its subsidiary, directors, and KMPs. The company has been cooperating with SEBI by providing requested documents and comments.
An ex-director also filed a writ petition against SEBI in the Bombay High Court during the quarter ending March 31, 2024. ZEEL was impleaded as a respondent and filed its reply. The High Court provided certain reliefs to the petitioner on June 26, 2024. The court’s order carries no implications for the company.
During the previous year, MCA issued a follow-up communication regarding ongoing inspections under Section 206(5) of the Companies Act, 2013. ZEEL responded, confirming that the transactions reviewed were for valid goods and services.
On February 23 of the previous year, the Board formed an Independent Investigation Committee led by a former Allahabad High Court judge and two independent directors. After extensive verification with external experts, the Committee reported in October that the transactions were normal business operations. No corrective measures, policy changes, or legal steps were recommended.
Based on Board approval, ZEEL submitted a settlement application with SEBI. However, during the quarter ending June 30, 2025, the application was rejected. The company continues to engage with SEBI while arguing that it complied with all regulatory and legal requirements. |
