SAT stays SEBI order restraining NDTV promoters from accessing securities market

MUMBAI: The Securities Appellate Tribunal (SAT) has issued a stay on Securities and Exchange Board of India’s (SEBI) order restraining NDTV promoters RRPR Holdings, Prannoy Roy, and Radhika Roy from accessing the securities market for two years.

The SEBI had also restrained Prannoy Roy and Radhika Roy from holding or occupying a position as Director or any key managerial personnel in NDTV for a period of two years and in any other listed company for a period of one year.

The tribunal has granted six-week time to SEBI to file its reply and three weeks thereafter to RRPR to file a rejoinder. The matter has been listed for admission and for final disposal on 16th September.

The tribunal in its order said, “We are of the opinion that a listed company which is managed by the appellants holding more than 61% of the total shares cannot remain headless.”

It further said, “The impugned order has been passed restraining the appellants, Dr. Prannoy Roy, and Ms. Radhika Roy from occupying a position as a Director or in any Key Managerial personnel in NDTV for a period of two years. Such orders prima facie would not be in the interest of the shareholders of the NDTV or for that matter the investors at this stage.”

SEBI had issued the order on 16th June following a complaint filed by Quantum Securities, a shareholder of NDTV violating the provisions of Securities and Exchange Board of India Act, 1992 by omitting to disclose material information to the shareholders of NDTV about loan agreements entered into by them with Vishvapradhan Commercial Private Limited (VCPL).

Based on the complaints, an investigation was conducted by SEBI into the matter. The period of investigation was from 14th October, 2008 to 22nd November, 2017. The aggregate promoters’ shareholding in NDTV was 63.17% at the end of quarter ending on June, 2009.

SEBI in its investigation found that a corporate rupee term loan facility agreement was entered into between RRPR Holdings and ICICI Bank on 14th October 2008 and an amended agreement, for pre-payment of the aforementioned loan, was entered into between the promoters and ICICI on 6th August 2009.

The investigation further found that a loan of Rs. 350 crore was taken by the RRPR Holdings from VCPL for which a loan agreement dated 21st July 2009 was entered into between the two to repay the loan taken by RRPR Holdings from ICICI.

In its order, SEBI noted that the two agreements were not in public domain and the said information was alleged to have been concealed by RRPR Holdings, Prannoy Roy, and Radhika Roy from the public shareholders of NDTV.

The SEBI also stated that the Roys transferred/received shares of NDTV to/from RRPR Holdings in off-market transactions while having knowledge of the said agreements and its covenants pertaining to NDTV.

According to SEBI, in the absence of material information relating to ICICI and VCPL loan agreements in the public domain, investors were not in a position to make an informed decision with respect to dealing in the scrip of NDTV.

“Therefore, by concealing such material information from the public shareholders while the promoters themselves continued to deal in shares of the company in off-market, Noticees were alleged to have committed fraud on the minority public shareholders of the company,” the SEBI order stated.

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