The Securities Appellate Tribunal (SAT) on Monday set aside the order issued by the Securities and Exchange Board of India (SEBI) in August against Punit Goenka, that had barred the CEO of Zee Entertainment Enterprises (Zee) from holding the position of director or key managerial personnel (KMP) in the company and other group entities.
In the order released on August 14, SEBI confirmed that Goenka (along with his father Subhash Chandra) will not be allowed to hold a KMP in ZEEL or any of its subsidiaries, while the market regulator completes its investigation on the matter. Eight months from the date of the order is the time frame given to complete the investigation but given SEBI’s track record in these matters no one in the know would be willing to take a wager on that happening.
But what the SAT ruling unequivocally does is enable Goenka to return as managing director (MD) and CEO of Zee.
Which brings up the key question. Will the SAT ruling lead to a similar result as far as the ongoing Sony-Zee merger process is concerned? To rewind to December 2021 when the merger agreement was first announced, Goenka was to lead the merged entity.
Speaking of the merged entity, it bears noting that the merger of Zee and Sony was approved by the National Company Law Tribunal (NCLT) in August this year. So while the merger announcement is expected any time now (the record date is expected within the next 15 days, SportzPower understands), the only question is around whether there will also be a confirmation that Goenka will helm the new company.
Seen from this perch, the answer is no. Why so? For that refer to the note issued by Karan Taurani, senior vice-president, research at Mumbai-based brokerage Elara Capital, on Monday. Taurani said that the merger would likely go through WITHOUT Goenka at the helm, since the SEBI investigation was still on in the matter pertaining to alleged fund diversion.
“If Sebi gives a go-ahead to Punit Goenka, there will no impediment to the proposed merger, whose record date could be announced in the last week of November. The merged entity will be relisted on the stock exchanges in January 2024,” Taurani said.
Which is really the operative principle here. There is no way that Sony Pictures Entertainment (SPE), which will indirectly hold a majority of 50.86 per cent of the combined company, while Zee will hold a 45.15 per cent, will agree to Goenka heading the company till such time as he is cleared by SEBI.
So when the record date of the Sony-Zee merger is announced, SportzPower expects that an interim CEO will be named. And who might that be? NP Singh, Sony Pictures Networks India CEO and managing director, seems a good bet.
