Zee-Sony merger in advance stage; Sebi ban not a problem for company: Goenka to employees

New Delhi: The merger of ZEE Entertainment and Sony has reached an advanced stage of completion, and the issues faced by promoters with Sebi should not become a problem for the company, debarred ZEEL MD Punit Goenka has said in a letter to employees, according to sources.

Goenka, who along with his father Subhas Chandra, was denied any interim relief against a Sebi order that barred them from holding the position of director or key managerial post in any listed company, in the letter ZEE Entertainment Enterprises Ltd (ZEEL) staff asserted that the merger of Culver Max (earlier known as Sony Pictures Networks India) is at a very important juncture.

With the Securities Appellate Tribunal (SAT) restricting him from holding a directorial or key managerial position in a listed company, Goenka told the employees that the ZEEL board has constituted an interim committee of senior executives to ensure smooth operations and day-to-day functioning.

The interim committee will function under the supervision of ZEEL's Board and will seek its guidance on all matters about the company, he said.

Touching on the matter of the proposed merger with Sony, he told the employees that it has reached at a very important juncture although the Mumbai Bench of the National Company Law Tribunal (NCLT) reserved its order pertaining to the approval.

In his letter, Goenka reminded the employees that the merger has already been cleared by the Competition Commission of India (CCI), Bombay Stock Exchange (BSE), and National Stock Exchange (NSE), besides the shareholders of the company, a person aware of the development said.

He asserted that the problems Goenka is facing at a promoter family level are for him to deal with and should never be the problem of the company and informed the employees that he is taking the next steps in accordance with the law while asking them to focus on their work and not on negativity.

Goenka also reiterated that the merger with Sony is in the interest of all stakeholders of the company and its completion has been his top priority.

ZEEL board has formed an "interim committee" to run day-to-day operations on July 14.

"The Board of ZEEL in a meeting conducted on July 14, 2023, evaluated and discussed all the necessary steps, in light of the interim order passed by the Securities and Exchange Board of India (SEBI) and the subsequent judgement by Securities Appellate Tribunal (SAT)," a ZEEL spokesperson said.

"Since the order restricts Punit Goenka from holding the position as director or key managerial position in a listed company, the Board of the Company has constituted an Interim Committee of senior executives to ensure smooth operations of the Company." The interim committee will be under the supervision of the Board and will seek its guidance on all matters pertaining to the company.

The Board continues to have immense faith in the value-building leadership skills showcased by Punit Goenka and will monitor the progress of the matter. The Board also remains confident that the company will deliver robust growth consistently and generate higher value for all shareholders, the spokesperson said.

Market regulator Sebi took action against Chandra and Goenka on June 12 for allegedly siphoning off funds of ZEEL. Following this, they challenged the Sebi order at SAT.

In its interim order, Sebi noted that Chandra and Goenka alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them.

In 2021, ZEEL announced that it will merge with Culver Max Entertainment (earlier known as Sony Pictures Networks India).