Market regulator SEBI has barred NDTV promoters Prannoy Roy and Radhika Roy from accessing the securities market for two years after it found them guilty of not disclosing information to the stock market about the loan agreements they entered into. It has also restrained them from holding or occupying any key managerial position in NDTV for two years or in any other listed company for one year.
What this means is that Prannoy and Radhika will have to step down from their current positions in NDTV and cannot buy, sell or deal in the securities market for two years and all the existing shares they may hold, including all units of mutual funds will be frozen.
These directions shall come into force with immediate effect, the SEBI order said.
SEBI was hearing a representation made by Quantum Securities, which is a shareholder in the TV channel NDTV. In 2017, Quantum Securities filed a complaint with SEBI alleging that RRPR Holdings Pvt Ltd, Prannoy and Radhika Roy, who are the three promoters of NDTV, violated the provisions of the SEBI Act, 1992 by not disclosing information to the shareholders about loan agreements entered into by them with Vishvapradhan Commercial Private Limited.
An investigation into the complaint revealed that Prannoy and Radhika entered into a corporate rupee term loan facility agreement with ICICI bank in 2009. The same loan agreement also stated that any form of restructuring of NDTV would require prior written approval from ICICI.
However, SEBI says this agreement was not disclosed by them to either the stock market or the shareholders of the company. Any listed company is required to disclose such agreements to the stock market and the shareholders of the company.
SEBIâ€™s investigation also found that Radhika and Pronnoy also transferred shares of NDTV and in turn received shares from RRPR in the off-market.
â€śIn view of the observations and findings recorded..., it can be deduced that Noticee no. 2 (Prannoy Roy) and 3 (Radhika Roy) have failed to comply with all applicable laws and have also engaged in a conduct which is not honest and ethical and not free from fraud or deception, as required under the Code of Conduct of the NDTV,â€ť the SEBI order states.
Responding to the order, Prannoy and Radhika said in a statement that the SEBI order asking them to step down as directors and to not hold any management positions in NDTV is outrageous, bad in law and against all procedures. "It is, for example, unheard of that the order contains false decisions on issues that were not even mentioned in the show cause notice," they said, adding that they will challenge the SEBI order in the courts as advised within the next few days.
Earlier this year, SEBI had fined NDTV as well as Prannoy Roy, Radhika Roy and two others for lapses in mandatory disclosure. According to a SEBI order dated March 16, NDTV had been fined Rs 10 lakh. The order came after SEBI conducted an investigation based on a complaint received from Quantum Securities that the firm did not disclose the order of "Dispute Resolution Panel-II (DRP-II) of the Income Tax Department, within 2 days of receipt of information, to the stock exchanges."