SEBI bans Zee promoters from markets for one year over unapproved land mortgage
India’s market regulator has barred Zee Entertainment’s top promoters from trading and fined the company over an unapproved ₹726 crore mortgage, casting a shadow over its freshly approved capital-raising plans.
The Securities and Exchange Board of India (Sebi) has banned Zee Entertainment Enterprises Limited (ZEEL) promoters Subhash Chandra and Punit Goenka from the securities market for one year. The regulator also imposed a ₹30 lakh fine on the broadcaster and barred it from accessing capital markets for two months.
The enforcement action stems from an FY19 audit by Deloitte Haskins & Sells LLP, which flagged missing title deeds for certain immovable properties. Sebi’s investigation revealed that ZEEL’s Hyderabad land deeds were deposited with Indiabulls Housing Finance in December 2018 to secure loans.
These loans, totaling ₹726 crore, were availed by four Essel Group companies with Essel Home acting as co-borrower. Sebi found that Chandra signed declarations asserting all corporate approvals were obtained, yet the investigation uncovered no prior consent from ZEEL’s audit committee, board, or shareholders for the mortgage.
The regulator emphasized that the borrowing entities were ultimately controlled by Chandra, Goenka, and their family through multiple shareholding layers. This structure rendered the arrangement a related party transaction under accounting standards, bypassing mandatory corporate governance checks.
This regulatory crackdown arrives just after ZEEL secured narrow shareholder approval to raise ₹3,144 crore via convertible warrants issued to its promoter group. The resolution passed with 76.64 percent support, barely clearing the mandatory 75 percent threshold required by law.
The vote marks a sharp reversal from a year ago, when investors blocked a similar ₹2,237 crore warrant proposal with only 60 percent backing. The recent approval signals a temporary restoration of investor confidence in the promoter group’s restructuring efforts.
However, the fresh Sebi curbs introduce potential regulatory ambiguity around the newly approved capital raise. Ashish K Singh, managing partner at Capstone Legal, noted that the restrictions on market access could complicate the warrant issuance process.
Despite this, Singh assessed that the regulator’s order does not automatically invalidate the shareholder vote. "In the absence of a specific Sebi directive on the preferential warrant issue, the outcome of the EGM would stand," he said.
