SEBI slaps Rs 27 cr fine on NDTV’s Prannoy and Radhika Roy

The fine was imposed by the regulator for non-disclosure of certain loan agreements, which was unfavourable to NDTV shareholders.
SEBI slaps Rs 27 cr fine on NDTV’s Prannoy and Radhika Roy
SEBI slaps Rs 27 cr fine on NDTV’s Prannoy and Radhika Roy
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Prannoy and Radhika Roy, the founders of media company New Delhi Television (NDTV), have been slapped with a fine of Rs 27 crore by the Securities and Exchange Board of India (SEBI) for non-disclosure of certain loan agreements. The fine was also imposed on RRPR Holding, a promoter entity of NDTV.

According to SEBI, certain loan agreements had clauses that have an adversarial effect on NDTV shareholders. Prannoy, Radhika and RRPR Holding have said that they will be appealing against the order.

“I am of the firm opinion that any fraudulent act directly designed to defraud the investors of the company cannot be treated as good for the securities market and for the interest of investors,” Amit Pradhan, the SEBI Adjudicating Officer, said in an order. “The law does not permit any allowance to be made for such fraudulent act as found in the case. No lenient view should be taken in this matter and the case deserves imposition of deterrent monetary penalty to the fraudulent act found in this case,” it added.

According to SEBI, one of the loan agreements was with ICICI Bank and two were with Vishvapradhan Commercial Private Ltd (VCPL). SEBI said an agreement was signed in 2009 with VCPL for a loan of Rs 350 crore, which was going to repay the loan taken from ICICI Bank. A second loan agreement was signed for Rs 53.85 crore a year later. These loan agreements, SEBI said, included clauses and conditions that substantially affected the functioning of NDTV.

In a filing with the stock exchanges, Prannoy Roy, Radhika Roy and RRPR Holding said that they have never, directly or indirectly, allowed for a transfer of control of NDTV. They said they continue to own and hold 61.45% of the total paid up share capital of NDTV.

In its 52-page order, SEBI said it received a complaint from NDTV shareholder Quantum Securities and began investigating in 2017. The complaint was regarding an alleged violation of rules by non-disclosing material information to shareholders about loan agreements with VCPL.

The regulator said that the way the loan agreement was structured had clauses that were material and price sensitive information, which was concealed from the minority shareholders. According to the Roys, NDTV was not a party to these agreements, and hence there was no requirement for them to make disclosure of the agreement to the stock exchanges.

“I admit this position that NDTV was not a party to these loan agreements, however, contents and clauses of loan agreement clearly demonstrates that the scheme was devised by the noticees in such a way that though NDTV would not be a party to the said loan agreements, yet the loan agreements would contain certain crucial, onerous and hostile stipulations pertaining to NDTV,” the SEBI order read.

NDTV told the stock exchanges that the Roys will “urgently appeal” against the order.

NDTV said the core issue of the alleged surrender of control is pending adjudication at the Securities Appellate Tribunal, which, in 2019, which granted a stay in favour of the founders of NDTV.

“The founders have informed the company that their lawyers, led by Fereshte Sethna, Senior Partner at DMD Advocates, hold that the SEBI order is inter alia based on an inaccurate assessment of facts and will not withstand scrutiny in appeal. The appeal will be filed immediately,” it added.

In November, SEBI found Prannoy and Radhika Roy guilty of insider trading and barred them from the securities markets. It had also directed them to disgorge the amount wrongfully gained – over Rs 16.97 crore – along with 6% interest per annum from April 17, 2008.

With inputs from agencies

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