The Securities and Exchange Board of India (SEBI) today barred NDTV promoters Radhika Roy and Prannoy Roy from accessing securities markets for two years..SEBI held that Roys acted fraudulently in a manner detrimental to the interests of NDTV and its shareholders by omitting to disclose material information to the shareholders about loan agreements entered into by them with Vishvapradhan Commercial Private Limited (VCPL) and ICICI..“in the present case, the Noticees i.e. the promoters and Directors of NDTV have been found to have indulged in fraudulent acts wherein they have bartered away the interests of NDTV by making them subject to prior written consent of ICICI/VCPL without disclosing the same to the company (NDTV). Noticee no. 2 and 3 have also opted to violate the Code of Conduct of NDTV which they were supposed to abide by, being the Chairman and Managing Director of the company.”.The loan agreements entered into by them were not plain vanilla secured inter-corporate loan agreements. Instead, the agreements were extremely biased in favour of the VCPL and ICICI as it agreed to a host of conditions pertaining to the capital structuring of NDTV, which were unwarranted and had no bearing whatsoever with the loan, SEBI held..VCPL Loan Agreements were very material and price sensitive information as they effectively involved passing of controlling stake of 30 percent share capital of NDTV and stipulated various conditions binding the promoters of NDTV with respect to their dealing in the shares, capital restructuring of the comnpany etc..“Thus, by agreeing to transfer a substantial controlling stake in NDTV to the VCPL behind the back of the shareholders of NDTV, Noticees – promoters cannot claim that the loan agreement merely involved their personal property and did not involve the interest of NDTV in any manner whatsoever.”.Although various clauses in the loan agreements deceitfully created binding obligations on the company, Roys consented to such clauses behind the back of the shareholders to further their own private interests..“Having held the dominant position and being majority shareholders of NDTV, Noticees have manifestly assured VCPL to ensure swift compliance of such clauses of the loan agreements pertaining to NDTV, thereby taking all other shareholders for granted and also compromising the interest of shareholders of NDTV”.The minority shareholders of the company and general investors of securities market were entitled to know such crucial transactions carried out by the promoters which involved transferring the rights over a substantial stake by the promoters to a third party, ruled SEBI..By not disclosing the same to the shareholders, SEBI concluded that Roys bartered away the interests of NDTV by making them subject to the prior written consent of ICICI/VCPL without disclosing the same to the company..SEBI, therefore, concluded that the conduct of Prannoy Roy and Radhika Roy failed to conform to the fair and transparent principles of trades in the securities market. The way loan agreements were used to deceitfully transfers shares of NDTV upto 30 percent to VCPL without the knowledge of Board or its shareholders, amounted to unfair trade practice and was in stark violation of Regulation 4(1) of PFUTP Regulations..Further, as the Chairman and the Managing Director, respectively, Prannoy Roy and Radhika Roy were also actively running the day to day management of NDTV. Under the circumstances, they had this avowed duty to act in a fair and transparent manner to protect the interest of their minority shareholders and not to indulge in any fraudulent activity or any activity detrimental to the interest of the shareholders. By failing to do so, they also acted in violation of the Code of Conduct of NDTV..SEBI, therefore, ordered the following:.RRPR Holdings, Prannoy Roy and Radhika Roy are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two (2) years. It is also clarified that during the said period of restraint/prohibition, the existing holding, including units of mutual funds, of the Noticees shall remain frozen;.Roys are restrained from holding or occupying position as Director or any Key Managerial personnel in NDTV for a period of two (2) years; and.Roys are restrained from holding or occupying position as Director or any Key Managerial personnel in any other listed company for a period of one (1) year..[Read Order].Bar & Bench is available on WhatsApp. For real-time updates on stories, Click here to subscribe to our WhatsApp.
The Securities and Exchange Board of India (SEBI) today barred NDTV promoters Radhika Roy and Prannoy Roy from accessing securities markets for two years..SEBI held that Roys acted fraudulently in a manner detrimental to the interests of NDTV and its shareholders by omitting to disclose material information to the shareholders about loan agreements entered into by them with Vishvapradhan Commercial Private Limited (VCPL) and ICICI..“in the present case, the Noticees i.e. the promoters and Directors of NDTV have been found to have indulged in fraudulent acts wherein they have bartered away the interests of NDTV by making them subject to prior written consent of ICICI/VCPL without disclosing the same to the company (NDTV). Noticee no. 2 and 3 have also opted to violate the Code of Conduct of NDTV which they were supposed to abide by, being the Chairman and Managing Director of the company.”.The loan agreements entered into by them were not plain vanilla secured inter-corporate loan agreements. Instead, the agreements were extremely biased in favour of the VCPL and ICICI as it agreed to a host of conditions pertaining to the capital structuring of NDTV, which were unwarranted and had no bearing whatsoever with the loan, SEBI held..VCPL Loan Agreements were very material and price sensitive information as they effectively involved passing of controlling stake of 30 percent share capital of NDTV and stipulated various conditions binding the promoters of NDTV with respect to their dealing in the shares, capital restructuring of the comnpany etc..“Thus, by agreeing to transfer a substantial controlling stake in NDTV to the VCPL behind the back of the shareholders of NDTV, Noticees – promoters cannot claim that the loan agreement merely involved their personal property and did not involve the interest of NDTV in any manner whatsoever.”.Although various clauses in the loan agreements deceitfully created binding obligations on the company, Roys consented to such clauses behind the back of the shareholders to further their own private interests..“Having held the dominant position and being majority shareholders of NDTV, Noticees have manifestly assured VCPL to ensure swift compliance of such clauses of the loan agreements pertaining to NDTV, thereby taking all other shareholders for granted and also compromising the interest of shareholders of NDTV”.The minority shareholders of the company and general investors of securities market were entitled to know such crucial transactions carried out by the promoters which involved transferring the rights over a substantial stake by the promoters to a third party, ruled SEBI..By not disclosing the same to the shareholders, SEBI concluded that Roys bartered away the interests of NDTV by making them subject to the prior written consent of ICICI/VCPL without disclosing the same to the company..SEBI, therefore, concluded that the conduct of Prannoy Roy and Radhika Roy failed to conform to the fair and transparent principles of trades in the securities market. The way loan agreements were used to deceitfully transfers shares of NDTV upto 30 percent to VCPL without the knowledge of Board or its shareholders, amounted to unfair trade practice and was in stark violation of Regulation 4(1) of PFUTP Regulations..Further, as the Chairman and the Managing Director, respectively, Prannoy Roy and Radhika Roy were also actively running the day to day management of NDTV. Under the circumstances, they had this avowed duty to act in a fair and transparent manner to protect the interest of their minority shareholders and not to indulge in any fraudulent activity or any activity detrimental to the interest of the shareholders. By failing to do so, they also acted in violation of the Code of Conduct of NDTV..SEBI, therefore, ordered the following:.RRPR Holdings, Prannoy Roy and Radhika Roy are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two (2) years. It is also clarified that during the said period of restraint/prohibition, the existing holding, including units of mutual funds, of the Noticees shall remain frozen;.Roys are restrained from holding or occupying position as Director or any Key Managerial personnel in NDTV for a period of two (2) years; and.Roys are restrained from holding or occupying position as Director or any Key Managerial personnel in any other listed company for a period of one (1) year..[Read Order].Bar & Bench is available on WhatsApp. For real-time updates on stories, Click here to subscribe to our WhatsApp.
