Zee rises after SAT sets aside Sebi order against Punit Goenka

The shares of Zee Entertainment Enterprises Limited (ZEEL) soared 3 per cent to an intraday high of Rs 258.30 apiece after the Securities Appellate Tribunal (SAT) ruled in favour of the media conglomerate on Monday, October 30.

The tribunal has set aside an order by the Securities and Exchanges Board of India (Sebi) that barred Zee Entertainment Enterprises' Punit Goenka from holding key managerial positions in the company and other firms. Goenka can now resume as the managing director and CEO of Zee and head the Zee-Sony merged entity.

The Sebi is likely to appeal the tribunal’s order before the Supreme Court. After hearing both parties, the order was reserved on September 27.

“In view of the aforesaid the Sebi order cannot be sustained and is quashed. The confirmatory order passed by Sebi on 14 August is set aside. The appeal is allowed. The appellants however will co-operate in the ongoing investigation," said a bench led by Justice Tarun Agarwala.

On 14 August, Sebi chief Madhabi Puri Buch passed a strongly worded order that restrained Goenka and his father, Subhash Chandra, from holding key positions in publicly traded companies until further notice. The former head of Zee Entertainment Enterprises approached the SAT, challenging Sebi’s order.

What was the Sebi order against Goenka

Sebi chief Madhabi Puri Buch on August 14 passed a strongly worded order that restrained Goenka and his father, Subhash Chandra, from holding key positions in publicly traded companies until further notice. The Sebi order was challenged by the Goenkas at the SAT.

According to Sebi, Goenka and Chandra were involved in schemes and transactions through which vast amounts of public money from ZEEL was diverted to private entities owned and controlled by these people.

Sebi also said that the father-son duo would not be allowed to hold key managerial positions in the entity formed by the proposed Zee-Sony merger. In August the regulator asked its officials to complete the investigation within eight months. The SAT, however, strongly criticised Sebi for the time it has taken to investigate the case.

Since June, the Goenkas have been locked in a legal battle with Sebi. The proposed Zee-Sony merger, which would be one of India's biggest media and entertainment spaces, faced a significant hurdle following the Sebi order. On 10 August the National Company Law Tribunal approved Zee's merger with Sony.