Mumbai: A week before Japan’s Sony Group Corp. called off the merger of its local unit with Zee Entertainment Enterprises Ltd, Subhash Chandra, founder-promoter of the Indian entertainment giant, wrote to Union finance minister Nirmala Sitharaman, accusing the country’s markets regulator of attempting to scuttle the $10-billion merger.

On Monday, Sony sent a termination notice to Zee, pulling the plug on the $10-billion mega-merger two years after the two parties signed a definitive agreement. (Representational Image)(Reuters)

At the same time, many minority investors of Zee too have written to the regulator and institutional investors, expressing their outrage at the promoters. While pointing out that the firm’s financial performance has deteriorated over the last two years, they urged Sebi and the bigger investors to take immediate action against the board and investigate the matter.

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In his 16 January letter, a copy of which Mint has seen, Chandra said the Securities and Exchange Board of India (Sebi) has been acting with a predetermined mind, and sought the minister’s intervention to safeguard minority investors. Chandra cited excerpts from an order by the Securities Appellate Tribunal (SAT), which had overturned a Sebi order barring him and son Punit Goenka from holding any key position in the merged entity.

Chandra quoted SAT presiding officer Justice Tarun Agarwalla’s 30 October order, which stated, “The (Sebi) chairperson committed a manifest error in confirming the ad interim order on the ground of presumptions, assumptions/preponderance of probability. The Supreme Court has categorically held in a catena of cases that foundational facts must be established first before a presumption is made.”

Justice Agarwalla had also pointed out that Goenka has been cooperating with Sebi and supplying whatever information was sought. “On one hand, the chairperson has based its finding on a preponderance of probability while on the other hand has refused to accept the evidence filed by the appellant and has rejected the same on the ground that the documents do not prove the genuineness of the transaction beyond a reasonable doubt. This contrary stand taken by the chairperson is, in our opinion, arbitrary,” the order had said.

On Monday, Sony sent a termination notice to Zee, pulling the plug on the $10-billion mega-merger two years after the two parties signed a definitive agreement. While Sony has dragged Zee to the Singapore International Arbitration Centre, seeking $90 million in termination fees, Zee is also weighing legal options.

The letter also highlighted concerns over the timing and urgency of Sebi’s investigation, given the Zee-Sony merger completion timeline.

“I am not suggesting that Sebi should not investigate if they have doubts of any kind. The company and all other people are cooperating in the investigation,” he wrote. “The department has also summoned an ex-director, questioning him for over four hours. My concern is the timing of this new notice, and the urgency of the same since it matches with the merger completion timeline. The mentioned notice does not contain any point that is not already a part of the company’s records, that have already been provided to Sebi.”

A query emailed to a Sebi spokesperson seeking comment remained unanswered.

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