NDTV promoters to appeal against SEBI order imposing Rs 27 cr fine
The SEBI contended that certain loan agreements had clauses that have an adversarial effect on NDTV shareholders
Markets regulator SEBI has imposed a penalty of Rs 27 crore on NDTV promoters Dr. Prannoy Roy and Mrs. Radhika Roy and RRPR Holding Pvt Ltd, the promoter company of NDTV, for alleged non-disclosure of certain loan agreements.
The SEBI contended that certain loan agreements had clauses that have an adversarial effect on NDTV shareholders.
In a regulatory filing, the company informed that Dr. Prannoy Roy and Mrs. Radhika Roy, the Founders and Promoters of NDTV, will appeal against the SEBI order.
The SEBI order issued on December 24, 2020, states that the Founders and Promoter Group Company have violated the provisions of Section 12A (a) and (b) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulations 3 (a), (b), (c), (d) and 4 (1) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
The order also noted that the founders have violated Clause 49 (1) (D) of the Equity Listing Agreement read with Section 21 of the Securities Contracts (Regulation) Act, 1956.
SEBI imposed a penalty of Rs 25 crores on the Founders and Promoter Group Company under Section 15HA of the SEBI Act, to be paid jointly and severally within 45 days of the receipt of the order. Further, a penalty of Rs. 1 Crore each has been imposed on the Founders under Section 23H of the Securities Contracts (Regulation) Act, 1956, to be paid within 45 days of the receipt of the order.
Dr. Prannoy Roy and Mrs. Radhika Roy, Founders and Promoters of NDTV and RRPR Holding Private Limited (Promoter Group Company), have repeatedly said, including in disclosures to the stock exchanges, that they have never directly or indirectly, through any transactions or agreements, allowed for a transfer of control of NDTV and they continue to own and hold 61.45% of the total paid-up share capital of NDTV.
"They have today informed the Company that an order by the Securities and Exchange Board of India (SEBI), dated December 24, 2020, has found otherwise. They will urgently appeal against this order, which is based on the alleged non-disclosure of the loan agreements entered into in 2008-2010 by the Founders and the Promoter Group Company with Vishvapradhan Commercial Private Limited and ICICI Bank Limited," the company said.
It further added that the core issue of the alleged surrender of control is pending adjudication at the Securities Appellate Tribunal, which, in 2019, granted a stay in favor of the Founders of NDTV, which is still in operation.
"The Founders have informed the Company that their lawyers, led by Ms. 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
Meanwhile, NDTV and its subsidiary NDTV Convergence are collectively selling a 48.44 % stake in their subsidiary Red Pixels Ventures Limited (RPVL) to A R Chadha and Co India Pvt Ltd and its Affiliates for Rs 11,483.18 per equity share.
In a regulatory filing, the company said that the deal is subject to the parties entering into definitive agreements to the satisfaction of the Board. RPVL operates Gadgets360.com, one of the world’s largest tech sites.
The stake sale, as approved by the Board of Directors, will comprise of 1) NDTV divesting its entire holding and 2) NDTV Convergence divesting 11.40% of its current holding. RPVL's turnover in FY20 was Rs 7.28 crore contributing 1.85% of the total turnover of the company. RPVL's net worth stood at Rs 16.95 crore attributing 19.22% of the net worth of the Company for the FY 2019-20.
Following the sale of the 48.44% stake in RPVL, the entity will cease to be a subsidiary of NDTV.
The company also informed that in continuation of the disclosure dated August 2, 2020, the Ministry of Information and Broadcasting (MIB) has approved the appointment of Darius Taraporvala as Non-Executive Non-Independent Director of the Company, and the appointment is effective December 24, 2020.
