Zee Entertainment Shares Surge 8% After SAT Grants Interim Relief In SEBI Case

Shares of Zee Entertainment Enterprises rallied as much as 8% to a day's high of ₹105 on Friday, after the Securities Appellate Tribunal (SAT) granted the company interim relief in its dispute with the Securities and Exchange Board of India (SEBI).

Zee Entertainment shares ended the session 5.52% higher at ₹102.09.

The tribunal stayed SEBI's order against Zee Entertainment and permitted the company to proceed with its proposed ₹3,143 crore preferential warrant issue to promoters, while also allowing it to use its mutual fund units for dividend distribution. The relief has been made subject to the company depositing the penalty imposed by SEBI.

Background To The SEBI Order

The tribunal had reserved its order on Wednesday on the interim relief pleas filed by Zee Entertainment and its CEO Punit Goenka against SEBI's order dated 31 July, which barred them from accessing the securities market. SEBI's action stemmed from allegations relating to title documents linked to a Hyderabad property owned by the company, with the regulator alleging that these documents were provided to Indiabulls Housing Finance as security for loans taken by private entities connected to the promoters, without the necessary corporate approvals.

Zee Entertainment has disputed the allegations, stating that the documents were obtained without authorisation and that no direct finding had established the company's awareness of the arrangement, while also maintaining that it had not itself engaged in any fraudulent activity in the securities market.

Company’s Case Before The Tribunal

Zee Entertainment had moved the tribunal seeking permission to proceed with its proposed preferential warrant issue, saying there was a limited window for the fund raise. The company said the issue had been approved by shareholders and it has received in-principle approval from stock exchanges. The warrants are proposed to be issued to Sunbright Mauritius Investments, a promoter group entity.

During the hearing, the tribunal asked SEBI to explain why the regulator had prevented the company from completing the fundraise during the two-month market access ban, when it could have done so after the ban was lifted.

SEBI's Objections

SEBI had argued that permitting the preferential issue while the market-access restriction remained in force would dilute the impact of the ban imposed following the alleged regulatory violations.

The regulator also opposed Goenka's participation in the issue, contending that he is the ultimate beneficial owner of Sunbright Mauritius Investments and is separately subject to a one-year securities-market ban. According to SEBI, allowing the allotment to proceed through the Mauritius-based entity could effectively grant Goenka indirect access to the securities market.

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