SAT questions logic of Zee’s two-month market ban, reserves interim order

The Securities Appellate Tribunal (SAT) has reserved its decision on interim relief petitions filed by Zee Entertainment Enterprises and its CEO, Punit Goenka, against a recent SEBI ruling that barred them from accessing the securities market. In their plea, Zee and Goenka sought to temporarily halt market restrictions so they could proceed with a ₹3,143.5 crore preferential issue of fully convertible warrants to Sunbright Mauritius Investments.

The company has a limited timeframe to finalize the fundraise, and SEBI's July 31 order, which banned Zee from the securities market for two months and Goenka for a year, has raised concerns about the timing of the issue. Senior Advocate Ravi Kadam, representing Zee, highlighted a 15-day window under SEBI regulations to complete the resolutions approved by shareholders and stock exchanges, starting from August 12.

If the issue is delayed, it could impact the warrant price, which is tied to the market price, potentially reducing the premium that the promoter entity is willing to pay. The SAT questioned SEBI's rationale for the two-month market ban and sought an explanation for why the restriction was implemented on July 31. SEBI argued that allowing the preferential issue during the debarment would weaken the impact of the market-access restriction imposed due to violations.

Kadam countered that the warrants would be issued to Sunbright, not directly to Goenka, and that the transaction would inject ₹3,143 crore into the company from the promoters at a premium. The tribunal has asked both parties to file their replies within six weeks and has reserved its final order on the interim relief.