Sony Pictures Entertainment said on Wednesday it took the Indian markets regulator's order banning Zee Entertainment founder and chief executive officer from holding board positions 'seriously' and will continue to monitor developments that may affect its deal with Zee.
This is Sony's first comment post the Securities and Exchange Board of India's (SEBI) ban last week against Zee Group Chairman Subhash Chandra and CEO Punit Goenka for a year, saying they were actively involved in diverting company funds to the group's related entities.
“There have been several erroneous press reports recently speculating about the future of Zee’s planned merger with SPNI (Sony Pictures Networks India) following SEBI’s interim order against Subhash Chandra and Punit Goenka. We take very seriously the SEBI interim order and will continue to monitor developments that may affect the deal,” Sony Pictures Entertainment said in a statement on June 21.
It was reported that Sony is committed to the merger in its original shape and that nothing has changed for SPNI. While SPNI has a plan for the worst case scenario if Goenka does not get a relief from courts, the company is not having discussions on the matter currently, a news report said.
Legal experts note that as Goenka was supposed to be the MD and CEO of the merged entity there could be a scenario where the two companies will have to amend the scheme and propose a new CEO and MD if the SEBI order is not overturned.
Chandra and Goenka filed a plea against the SEBI order in the Securities Appellate Tribunal (SAT), challenging the ban. The matter has been posted for hearing on June 26. Goenka's counsel during the hearing in SAT had asked for a stay on on Sebi's interim order.
In its interim order on June 12, SEBI banned Essel Group chairman Subhash Chandra and his son Goenka from holding any directorial or key managerial position for siphoning funds from Zee for their own benefit.
Additionally, the National Company Law Tribunal hearing on the Zee-Sony merger matter is also posted for June 26.
The ban comes as worries over a potential delay on the merger of Zee Entertainment with the local unit of Japan's Sony Corp have resurfaced.
SEBI’s order is likely to further delay the already dragged-out merger, according to a legal expert.
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