The Securities Appellate Tribunal (SAT) has partially relaxed the market-access restrictions imposed by the Securities and Exchange Board of India (SEBI) on Zee <a href="https://comicvibe.com/zee-entertainment-shares-jump-over-8-here-is-why/” title=”Zee Entertainment shares jump over 8%; here is why”>Entertainment Enterprises Limited (ZEEL) and its former Managing Director and CEO Punit Goenka.
A coram comprising Presiding Officer Justice P.S. Dinesh Kumar and Technical Members Meera Swarup and Dr. Dheeraj Bhatnagar passed the order on Friday.
The Tribunal has permitted ZEEL and Goenka to complete a preferential issue of fully convertible warrants to a promoter group entity, subject to their depositing the respective penalties imposed by SEBI, Rs30 lakh for ZEEL and Rs58 lakh for Goenka, within one week.
SAT has also extended by one week the deadline for completing the warrant issue, which was originally set to expire on August 14.
Subject to paying the full penalty within one week, Punit Goenka and the company have been granted a limited stay on direction (a) of paragraph 438 to complete their preferential warrant issuance to the promoter group.
SAT clarified that the market-access restrictions have not been lifted entirely. It said the debarment under paragraph 438(a) would continue in respect of the appellants’ access to the securities market, except to the limited extent permitted by the Tribunal.
The Tribunal also permitted ZEEL to undertake mutual fund transactions for its day-to-day business requirements in the ordinary course. However, such transactions cannot be undertaken for any other purpose.
The matter arises from SEBI’s action against ZEEL, Goenka and former Chairman Subhash Chandra over the alleged unauthorised use of ZEEL’s Hyderabad property as security for loans obtained by four Essel Group entities.
According to SEBI’s order, the four entities had obtained loans aggregating approximately Rs 726 crore, against which ZEEL’s Hyderabad property was offered as security. The regulator found that the security was created without prior approval from ZEEL’s Audit Committee, Board of Directors or shareholders.
SEBI further held that the transaction was not disclosed as a related-party transaction. It also found deficiencies in ZEEL’s disclosures relating to the contingent liability arising from the transaction and material developments in subsequent proceedings before the Delhi High Court.
ZEEL and Goenka subsequently approached SAT challenging the SEBI order and seeking interim relief.
Before the Tribunal, ZEEL argued that the market-access restriction would prevent it from completing a fundraise of more than Rs 3,000 crore. The company submitted that the fundraise had already received shareholder and stock exchange approvals and was required to be completed by August 14, 2026.
SAT has now permitted ZEEL and Goenka to proceed with the preferential issue of fully convertible warrants despite the continuing market-access restriction. The permission, however, is conditional upon payment of their respective penalties within one week.
