Punit Goenka Cannot Hold Office in Merged Sony-Zee Company Until Investigation Concludes, Indian Regulator Rules

Zee Entertainment Enterprises (ZEEL) MD-CEO Punit Goenka will not be able to hold any office in the merged Sony-Zee entity for now, market regulator Securities and Exchange Board of India (SEBI) has said.

In June, SEBI had barred Goenka and ZEEL chair emeritus Subhash Chandra from holding any managerial or directorial positions in listed companies while it carried out investigations into allegations of insider trading.

The merger cleared a key regulatory hurdle last week. Under the original terms of the deal Goenka would lead the merged outfit, while Sony would own a 51% controlling stake.

On Monday, SEBI upheld the June order and barred Goenka and Chandra from joining the management of  ZEEL, Zee Media Corporation, Zee Media Corp and Zee Aakash News and “any resultant company that is formed pursuant to a merger or amalgamation of the above named companies with any other company, wholly or in part” and also “any company, which is formed pursuant to demerger of any of the above named companies.”

SEBI’s detailed 91-page order states: “Post-merger, Entity No. 2 [Goenka] would be appointed as Managing Director of the merged company. The same means that he would be entrusted with substantial powers of management of the affairs of the merged company. That very role in ZEEL is under question and therefore, till the final outcome of the proceedings in the instant matter, it would be appropriate that he is not part of the management of ZEEL or any corporate avatar of it.”

The SEBI investigation into the matter will be completed within eight months of the order, which is dated Aug. 14.

SEBI is set up to “protect the interests of investors in securities and to promote the development of and to regulate the securities market.” 

Goenka declined to comment when Variety reached out.

The Variety analysis of the merger can be read here.

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