In light of a recent order by SEBI against an Essel Group entity, the NSE and BSE may have to reconsider their approvals of the Sony-Zee merger, the exchanges informed the company law tribunal on Thursday.
The Securities and Exchange Board of India issued a directive against Shirpur Gold Refinery Ltd. on April 25. This order was filed with the tribunal at the instruction of the market regulator in an effort to draw to the court’s attention the operations of companies managed by the Essel Group.
Shirpur is a publicly traded corporation promoted by Jayneer Infrapower and Multiventures Pvt., a company owned by family members of Essel Group company promoter Subash Chandra. On the list of Jayneer’s proprietors are several Goenka family members, including Punit Goenka, the chief executive officer of Zee Entertainment Enterprises Ltd.
Shirpur and its promoters were forbidden from selling their interest by SEBI for bankruptcy law violations.
According to the SEBI order, Shirpur transferred assets worth over Rs 400 crore to its affiliated entities between 2019 and 2021. Approximately 99.9% of its receivables could be attributed to three affiliated companies: Altrarex Traders Pvt., Balmukh Goldjewel and Multitrading Pvt., and Magicstone Traders Pvt.
This sum was ultimately advanced to Jayneer, the promoter of Shirpur, by other corporations.
Ekmart Trading Pvt. Ltd. subsequently initiated insolvency proceedings against Altrarex for Rs 50 crore owed by Altrarex. Although Shirpur had a Rs 242 crore claim against Altrarex, it did not submit a claim.
This means that Shirpur will receive nothing from Altrarex’s bankruptcy proceedings despite its claim. According to the regulatory agency, this is part of Shirpur’s elaborate plan to divert funds to promoter-owned entities.
SEBI has accused Shirpur and its promoters of violating insolvency law and prohibited them from selling their stake in the company.
The National Company Law Tribunal has requested that the exchanges reconsider their approvals in light of SEBI’s directive.
“We rely on the NSE and BSE to approve the merger, and they have done so. The court remarked, “In light of this order, they should review it.”