Legal experts believe the market regulator’s directions barring the company from accessing the securities market for two months could delay or complicate the exercise unless appellate relief is obtained.
Brajesh Kumar
August 03, 2026 / 09:22 IST
SEBI order clouds Zee Entertainment’s planned fund raise; legal experts see regulatory hurdles
- SEBI bars ZEEL from securities market for 2 months.
- Order casts uncertainty on ZEEL’s fundraising plans.
- Subhash Chandra, Punit Goenka barred for one year.
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The recent order passed by the Securities and Exchange Board of India (SEBI) against Zee Entertainment Enterprises Ltd (ZEEL) has cast uncertainty over the company’s proposed fund-raising plans, with legal experts saying the market regulator’s directions could make it difficult for the company to proceed unless the order is stayed or modified by the Securities Appellate Tribunal (SAT).
The development assumes significance as ZEEL had already secured approvals from its shareholders and stock exchanges to raise funds. However, legal experts believe the regulatory restrictions imposed by SEBI could outweigh these approvals.
One person familiar with the regulatory matters said the order leaves little room for the company to proceed immediately with the issue.
“It is very clear that fund raising cannot be undertaken once the order is in force and the company itself has been barred from accessing the securities market. At least for the next two months, the company cannot raise funds unless it secures relief,” the person said.
Sumit Agarwal, Founder and Partner at RegStreet Law Advisors, said the order creates a significant implementation risk for the proposed capital raise.
“SEBI’s order creates a serious implementation risk. ZEEL itself cannot access the securities market for two months, while Subhash Chandra and Punit Goenka face a one-year prohibition extending to direct and indirect dealings in securities”.
Agarwal further added that even if the company’s restraint ends in two months, the vulnerability may remain. He said, “Even after ZEEL’s restraint ends, a promoter-controlled entity’s subscription may remain vulnerable unless SAT grants relief or SEBI clarifies the position. The fund raise may consequently be delayed, restructured or require fresh approvals and pricing”.
Anand Kankani, a company Secretary and Securities law practitioner, says, “SEBI’s power to pass the debarment order is preventive in nature and must be exercised only to protect investors”. He says Zee Entertainment is almost 96 percent publicly held and the promoters were trying to infuse capital through preferential allotment that has already been approved by shareholders.
Kankani further says, “It is an unusual situation because the order has been passed on the very day the EGM voting results were announced. If the effect of the restraint is to prevent the company from raising funds, the public shareholders may ultimately be the ones adversely affected”
Company claims order has no direct impact
ZEEL, however, maintained that it does not believe the regulator’s order directly affects the proposed fundraising exercise. “The company is in receipt of the order issued by the Securities and Exchange Board of India (SEBI) and is seeking advice from legal experts on the same. The company firmly believes that the order from SEBI has no direct bearing on the fundraising exercise,” a company spokesperson told PTI.
In a separate stock exchange filing on Sunday, the company said it became aware of media reports on July 31 and August 1, but a complete copy of the order was available only after it was uploaded on SEBI’s website on August 1. The company added that the order was formally served on it only at 8:00 PM on August 1. “The Company is evaluating the contents and impact of the Order and
exploring the relevant options in that regard”, ZEEL said.
What did SEBI order?
In an order issued on July 31, SEBI barred ZEEL from accessing the securities market for two months, while Subhash Chandra, Chairman Emeritus and Punit Goenka, Chief Executive Officer, have been prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, for one year. The regulator also imposed monetary penalties on the company and its promoters totalling Rs 1.48 crore.
SEBI held that the company’s Hyderabad property was mortgaged to secure loans raised by Essel Group entities without the requisite corporate approvals.
Brajesh Kumar is Associate Editor at Moneycontrol with over two decades of experience in financial journalism. He primarily covers capital markets, with a strong focus on SEBI and regulatory developments. Interest in tax, healthcare, and pharmaceutical-related issues. Previously, he has worked with Zee Business, CNBC Awaaz, and News18 India.
X( (Twitter): @BrajeshKMji
Email: Brajesh.kumar@NW18.com
first published: Aug 3, 2026 09:06 am
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