Zee's Subhash Chandra, Punit Goenka fined by SEBI, barred from markets for one year

India's Securities and Exchange Board of India (SEBI) has imposed significant penalties on Zee Entertainment Enterprises (ZEEL), its founder Subhash Chandra, and CEO Punit Goenka for alleged securities law violations.

The market regulator levied fines totaling ₹14.8 million (approximately $177,000 USD). Punit Goenka faces a ₹5.8 million fine, while Subhash Chandra is fined ₹6 million. Both Goenka and Chandra have also been barred from the securities market for one year. ZEEL itself received a ₹3 million fine and a two-month market ban.

These actions stem from a SEBI investigation that revealed ZEEL's property in Hyderabad was used as security for loans taken by entities linked to major shareholders. SEBI found that this arrangement, which benefited related entities, was not disclosed to the company's board, audit committee, shareholders, or investors. The regulator emphasized that a listed company's assets are held in trust for all shareholders and cannot be used for the benefit of promoter-controlled entities without proper authorization and governance.

SEBI's order detailed that four Essel Group entities borrowed ₹726 crore from Indiabulls Housing Finance Limited in December 2016. While ownership was layered through corporate structures, the investigation traced ultimate control to Ms. Sushila Goenka and Essel International Limited. SEBI concluded that the unauthorized use of company assets as collateral constituted a fraudulent practice that harmed investor interests and violated securities regulations.

This development adds to a series of recent scrutiny ZEEL has faced from SEBI concerning allegations of fund diversion, related-party transactions, and corporate governance issues.