On Thursday, the Securities and Exchange Board of India (SEBI) markets regulator imposed a penalty of Rs 25 crore on the controversial news channel NDTV and Rs 1 crore each on its promoters. SEBI fined NDTV and its promoters Prannoy Roy and Radhika Roy for “violating various securities rules” by withholding information from shareholders about certain loan agreements.
According to reports, RRPR Holding, the promoter of New Delhi Television Ltd (NDTV), was fined by SEBI after hiding information on loan agreements that contained clauses with contradictory effect on NDTV shareholders.
Ordering the Roys to pay the fine for the infringement, the SEBI said it had initiated an investigation after receiving complaints from Quantum Securities Pvt Ltd, a shareholder of NDTV in 2017, about the violation of the rules for non-disclosure of material information to shareholders on loan agreements with VCPL. One loan agreement was with ICICI bank and two with Vishvapradhan Commercial Private Ltd (VCPL).
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According to the regulator, the agreement was signed in 2009 with VCPL for a loan of Rs 350 crore to repay the ICICI Bank loan and a second loan agreement with VCPL was signed for Rs 53.85 crore, a year later. These loan agreements included terms and conditions that substantially affected the functioning of NDTV.
One of the terms of the loan agreements allowed VCPL to indirectly acquire 30% of NDTV’s stake through the conversion of warrants into RRPR Holding shares.
The loan agreements were structured in such a way as to hide the clauses on matters pertaining to NDTV, which contained price sensitive information, from the minority shareholders.
Meanwhile, the promoters – Prannoy Roy and Radhika Roy, who are also accused of committing millions in tax fraud, said NDTV was not one of the parties, so they didn’t need to disclose the deal to the stock exchanges.
SEBI fines NDTV, here’s why: Roys entered into loan agreements creating a conflict of interest, violated provisions
SEBI adjudicator Amit Pradhan said that, believing that NDTV was not a party to these loan agreements, however, the contents and clauses of the loan agreement clearly demonstrate that the scheme was designed from the notices in such a way that although NDTV would not be a party to the loan agreement said loan agreements, but the loan agreements would contain some crucial, burdensome and hostile clauses relating to NDTV.
“These agreements included the capital restructuring of NDTV, which had been agreed to be undertaken by Prannoy Roy and Radhika Roy, only with the prior consent of ICICI Bank / VCPL,” he added.
Through such acts, Prannoy Roy, Radhika Roy and RRPR Holding violated the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules, SEBI claimed in its order.
Defendant Roys also entered into loan agreements that created a personal conflict of interest with NDTV’s interests, however they failed to provide disclosure as required by the company’s code of conduct. They violated NDTV’s code of conduct and the provisions of the stock listing agreement.
“As a result, a fine of Rupees 25 crore was imposed on Roys and RRPR Holding, which must be paid jointly and separately. In addition, a penalty of Rs 1 crore each was applied to Prannoy Roy and Radhika Roy, ”the SEBI said in its order.
NDTV promoters accused of “insider trading”
In November of this year, in yet another blow to the controversial media network NDTV, the Securities and Exchange Board of India (SEBI) had found its promoters Prannoy Roy and Radhika Roy guilty of making undue gains from insider trading. As a sanction for financial crime, SEBI banned them from trading in the securities market for two years and ordered them to return the illegal gain of Rs 16.97 crore they had gained from insider trading more than 12 years ago.
In addition to Pranoy Roy and Radhika Roy, former NDTV CEO Vikramaditya Chandra, senior advisor Ishwari Prasad Bajpai, Group CFO Saurav Banerjee were found guilty of insider trading.
According to an investigation conducted by SEBI, Pranoy Roy and his wife Radhika Roy have violated the regulations on the prohibition of insider trading (PIT). They are accused of having unpublished information on sensitive pricing (UPSI) in the 2007-2008 period relating to the discussion of the reorganization of New Delhi Television Ltd.
NDTV accused of tax fraud, financial irregularities
The controversial alleged far-left news channel – NDTV has recently been embroiled in litigation over alleged financial irregularities. NDTV is addressing several cases related to FDI violation, income tax violation, and non-compliance with disclosure regulations. The CBI is investigating a case against NDTV in connection with a loan of Rs 375 crore from ICICI Bank and a corresponding illicit loss of Rs 46 crore to the bank.
There is a chain of loans, repayments and loans in which Roys took out a series of loans in 2008 while trying to buy back a large chunk of NDTV stock from the market, presumably violating foreign direct investment (FDI) rules in a 2007 investment. -2009, charge denied by the company.
In August 2019, NDTV founders Prannoy Roy and his wife, Radhika Roy, were barred from leaving the country after authorities suspected defendant Roys might flee the country amid massive tax fraud allegations against him. their.