![](\"https:\/\/im.rediff.com\/money\/2023\/may\/26zee-sony.jpg?w=670&h=900\")
<\/p>\nJapan’s Sony Corporation, which is merging its Indian television content company with Zee Entertainment Enterprises, is likely to seek a fresh forensic audit of the company after market regulator Sebi levelled fund diversion charges against Zee promoters, top lawyers said.<\/p>\n
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The Sebi also barred Zee founder Subhash Chandra and its Chief Executive Officer (CEO) Puneet Goenka from holding any position as director.<\/p>\n
“As the Sebi has made fund diversion charges, which may change the nature of audited reports already filed, the acquirer (Sony) can seek a fresh forensic audit,” said H P Ranina, a corporate lawyer.<\/p>\n
Sony is a listed entity in Japan and its shareholders might raise queries on the valuation based on faulty audited reports, lawyers said.<\/p>\n
“As the audited accounts itself will now change, the valuation of Zee will change and Sony may renegotiate the entire transaction,” Ranina said.<\/p>\n
As a domino impact, the stock exchanges and other regulatory bodies will also seek additional information on the accounts, he said.<\/p>\n
Another lawyer said Sony might renegotiate the deal and get its own CEO instead of the earlier announcement of Puneet Goenka till his name is cleared by the courts.<\/p>\n
The National Company Law Tribunal (NCLT) Mumbai will hear the merger petition next week.<\/p>\n
Zee had challenged the NCLT order directing review of clearance by the stock exchanges.<\/p>\n
Emails to Zee and Sony Corporation did not elicit any response till the time of going to press.<\/p>\n
Analysts said the valuation of Zee has declined by 44 per cent since December 2021 when the deal was announced.<\/p>\n
On Tuesday, Zee shares closed at Rs 194 a share with a market valuation of Rs 18,634 crore.<\/p>\n
The merger was first announced in September 2021 to commence due diligence.<\/p>\n
Later in December, both companies said Sony will hold 50.86 per cent stake in the merged entity while other Zee shareholders will hold 45.15 stake.<\/p>\n
Zee promoters were to get 2 per cent stake in the merged entity.<\/p>\n
Sony was to pay a non-compete fees to Subhash Chandra in a Mauritius entity in which the Chandra family was planning to increase its stake to 4 per cent from 2 per cent.<\/p>\n
JC Flowers Asset Reconstruction Company has asked the NCLT to use non-compete fees to be received by Essel group founder Subhash Chandra from Sony to repay its Rs 377-crore dues.<\/p>\n
Chandra had given personal guarantees to the loans extended by YES Bank to Essel Infrastructure that later turned bad. JC Flowers had acquired the loans from YES Bank.<\/p>\n
In its order on Monday, the Sebi said the siphoning of funds appears to be a “well-planned scheme” since, in some instances, the layering of transactions involved using 13 entities as (pass-through) entities within a short period of two days only.<\/p>\n
The market watchdog had initiated the probe following the resignation of two independent directors from Zee in November 2019.<\/p>\n
One of them had alleged the squaring off of loans was done without the board’s approval.<\/p>\n
Sebi has pointed out the entities used in these layers were common to the ones used for fund diversion in Shirpur Gold Refinery, another Essel Group-listed company. On Tuesday, the promoters moved the Securities Appellate Tribunal to appeal against the Sebi order.<\/p>\n