Sebi summons ex-Zee directors over alleged funds diversion: Report

Securities and Exchange Board of India (Sebi) summoned several former directors of Zee Entertainment Enterprises Ltd (ZEEL) as part of its probe over alleged diversion of company funds through related-party transactions, Moneycontrol reported citing people in the know.

“So far, two former independent directors have been asked to appear before Sebi and testify. Both these directors had left the company’s board around 2021,” a person was quoted as saying. The regulator has widened the scope of the investigation and is “looking into a wider pool of entities that have done business with ZEEL in recent years”, the report added. Sebi is looking into the role of two prominent Mumbai-based production houses as possible “conduits which were used to siphon off funds,” another person was quoted as saying.

“Some of the former directors, including the independent directors, have received communication to appear before Sebi. They have also been asked to provide certain documents pertaining to the period when they were on the board of the company,” the first person said as per the report.

Although a Zee spokesperson denied reports about accounting issues at the company as incorrect and false saying, “Pursuant to the SAT order, which granted relief to the current key managerial personnel, the company has been in the process of providing all the comments, information or explanation requested by Sebi and has extended complete cooperation on all aspects.”

Shares of Zee Entertainment fell more than 10% after reports that Sebi found that about $241 million might have been diverted by promoters of the company.