- The Securities Appellate Tribunal (SAT) has granted Zee Entertainment Enterprises Limited (ZEEL) partial relief by allowing the company to proceed with its proposed capital-raising exercise, while refusing to stay the Securities and Exchange Board of India’s (SEBI) order barring the broadcaster from accessing the securities market.
- In an interim order, SAT permitted Zee to move ahead with its planned issuance of warrants, a key part of the company’s fundraising strategy. The decision removes a major obstacle to the proposed capital infusion and was welcomed by investors, with Zee shares gaining sharply after the ruling.
- The fundraising proposal is linked to a promoter-backed capital infusion estimated at more than ₹3,100 crore. Questions over its future had emerged after SEBI’s recent action against the company and its promoters.
- The tribunal’s order means the regulatory restrictions will continue until further proceedings, even as the company secures relief for its capital-raising plans.
- The appeal against SEBI’s order will continue before SAT. For now, Zee has secured permission to proceed with its fundraising exercise, but the company and its promoters remain subject to the regulator’s market restrictions.
- The Securities Appellate Tribunal (SAT) allowed Zee Entertainment Enterprises (ZEEL) and its MD and CEO Punit Goenka to proceed with the proposed issue of fully convertible warrants to a promoter group entity, providing temporary relief from the securities market debarment imposed by SEBI.
- A three-member SAT bench headed by Presiding Officer Justice P S Dinesh Kumar stayed the relevant portion of SEBI’s July 31 order to the limited extent necessary for ZEEL and Goenka to complete the preferential warrant issue, subject to both depositing the full penalty within a week.
- SEBI has been directed to keep the deposits in an interest-bearing account.
- The relief came after ZEEL argued that its shareholders had already approved the warrant issue with a 76.64% majority at an extraordinary general meeting held on July 31.
- The company told SAT that the issue could raise about ₹3,100 crore and that failure to complete the allotment within the prescribed timeline could jeopardise the fund-raising exercise.
- SAT noted that around 96% of ZEEL’s shareholders are public shareholders and held that the proposed preferential issue would be beneficial to public shareholders. It also observed that SEBI had no objection to the proposed investment being brought in after the two-month debarment period.
The Securities Appellate Tribunal (SAT) granted Zee Entertainment Enterprises Limited (ZEEL) permission to proceed with a Rs 3,100 crore warrant issue, a crucial part of its fundraising strategy.16
While this decision allows Zee to move forward, it does not lift the Securities and Exchange Board of India’s (SEBI) restrictions on the company.81112
SEBI had previously barred Zee from accessing the securities market for two months and imposed a one-year prohibition on its managing director, Punit Goenka, from participating in the market.
“The ruling offers Zee access to fresh capital at a time when the company is attempting to strengthen its financial position,” said a market analyst.
The SAT's decision comes after ZEEL argued that its shareholders had approved the warrant issue with a 76.64% majority at an extraordinary general meeting held on July 31.9
“Failure to complete the allotment within the prescribed timeline could jeopardise the fundraising exercise,” ZEEL warned.
The tribunal noted that around 96% of ZEEL’s shareholders are public shareholders, indicating that the proposed preferential issue would be beneficial to them.
“SEBI had no objection to the proposed investment being brought in after the two-month debarment period,” SAT observed.
The tribunal has also mandated that Goenka deposit the full penalty within a week, with SEBI required to keep these funds in an interest-bearing account.
The ongoing appeal against SEBI’s order will continue before SAT, leaving the larger regulatory battle unresolved.35
“The relief follows shareholder approval with a 76.64% majority at an EGM on July 31, and SAT noted that 96% of ZEEL's shareholders are public. SEBI must hold the deposits in an interest-bearing account while the appeal continues.”
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