Both directors stated that management of Zee did not seemingly act on a large outstanding from Dish TV and Siticable for the content supplied by Zee.
A day after it came to light that two independent directors had quit over governance issues, stock exchanges tightened the noose around Zee Entertainment Enterprises. In the interest of investors, exchanges on Thursday asked the company to submit copies of resignation letters of all the three resigning directors.
“In order to ensure that adequate, accurate, explicit disclosure of information and enabling access to relevant and sufficient information for all stakeholders, you are requested to submit, as announcement to the exchange, the copies of resignation letters of all the three resigning directors,” read a notification from Bombay Stock Exchange to Zee.
After the company said on Tuesday that it has undertaken reconstitution of its board and appointed new directors in place of three independent directors who had tendered their resignations, stock exchanges had sought clarification from Zee pertaining to directors’ resignation.
In response, Zee put out seven reasons listed out by Subodh Kumar and Neharika Vohra, who both resigned on November 22. Sunil Sharma in his resignation letter dated November 24 said that subsequent to sale of shares by the promoter group, and reconstitution of the Board, he has tendered his resignation.
Kumar and Vohra have alleged related party transactions along with laxity in spending of CSR (corporate social responsibility) amounts given to a related party foundation/trust, among other reasons. Zee has responded to each of the seven reasons given by the independent directors.
Both directors stated that management of Zee did not seemingly act on a large outstanding from Dish TV and Siticable for the content supplied by Zee. To this Zee’s response is “The same have been secured by definitive plan and situation is being strictly monitored as instructed by the Board and also discussed in various analyst calls”.
Concerns were also raised over a letter written by a PMS entity over build up of related party balances and advances for content acquisition. Zee has said, “Audit of the issues pertaining to related party transactions and advances is underway by auditors”.
In another allegation the directors have accused Zee’s management of not taking legal action when a scheduled bank appropriated Rs 200 crore of the Zee’s fixed deposits towards promoter loans. However, Zee has responded that, “Issues pertaining to the wrongful revocation of the bank guarantee stand resolved with the company having being secured by the promoter companies and appropriate legal notices were sent to the bank at the relevant time”.
Questions were also raised on film advances given in 2018-19 to the tune of Rs 2,200 crore, and non implementation of certain decision of the Board meeting held on October 17, 2019 relating to treasury operations.
Earlier on Monday, Subhash Chandra, founder of Zee Entertainment Enterprises, stepped down as chairman of the company after the promoter group sold a majority of its pledged stake in the company to a clutch of marquee investors from India and overseas. The board accepted Chandra’s resignation but stated it is yet to appoint a new chairman.
The company also announced appointment of R Gopalan, Surendra Singh and Aparajita Jain as the three new independent directors. These three, the company stated have replaced Neharika Vora, Sunil Sharma and Subodh Kumar on the board of Zee.