SEBI imposes fine on ZMCL for non-compliance of shareholding disclosure norms

MUMBAI: Markets regulator SEBI has imposed a Rs 9 lakh on Zee Media Corporation Ltd (ZMCL) and its promoter entity 25FPS Media for non-disclosure of invocation of pledged shares. In the order, the regulator that a fine of Rs 6 lakh has been levied on 25FPS Media while Rs 3 lakh fine has been imposed on ZMCL.

The two companies will have to pay the penalty within 45 days of receipt of this order through online payment facility available on the website of SEBI. In the event of failure to pay the said amount of penalty within 45 days of the receipt of this Order, recovery proceedings may be initiated under Section 28A of the SEBI Act for realisation of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties.

SEBI had received a reference from ZMCL informing SEBI regarding non-compliance of SEBI (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as ‘PIT Regulations’) by 25FPS Media Private Limited (hereinafter referred to as ‘25FPS’/‘Noticee 1’) during the period April 08 to April 23, 2019.

Subsequently, SEBI conducted an examination in the scrip of ZMCL from 8th-26th April 2019 to ascertain whether there was any disclosure violation of PIT Regulations and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 by 25FPS and/or ZMCL. During the examination, it was observed by SEBI that IFCI Ltd. (pledgee) had invoked pledge in respect of 1,07,15,825 equity shares of the company pledged by 25FPS (pledger).

It was observed during the examination that ZMCL and 25FPS Media have allegedly failed to make the necessary disclosures on time, which were required to be made by them under the relevant provisions of PIT Regulations.

Further, it was alleged that ZMCL, by making delayed disclosure regarding certain transactions, had also violated the relevant provisions of SAST Regulations. In view of the above, adjudication proceedings were initiated against the Noticees under the provisions of section 15A(b) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’).

During the examination, it was observed by SEBI that IFCI Ltd (pledgee) had invoked pledge in respect of 1,07,15,825 equity shares of the company pledged by 25FPS (pledger).

It further observed that, cumulatively, a total of 1,07,15,825 shares of ZMCL were invoked by IFCI Ltd. Therefore, the shareholding of 25FPS in ZMCL reduced from 29.92% to 27.65% of the total share capital of ZMCL; resulting in a reduction of shareholding by 2.28% (1,07,15,825 shares out of the total paid-up share capital of 47,07,89,505 of ZMCL).

“In the present matter, the fact that the pledged shares of Noticee 1 were regularly getting invoked due to the stressed financial condition of the promoter group of ZMCL, therefore, timely disclosure of change in shareholding of the promoters due to invocation of pledge assumes added importance to investors. However, by not making the relevant disclosures on time, both the Noticees have conveniently kept the general investors in dark regarding the change in the shareholding of one of the promoters,” SEBI said in its order.

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