The Securities and Exchange Board of India (SEBI) has barred Prannoy Roy and his wife Radhika Roy from holding any directorship in New Delhi Television Ltd. (NDTV) for a period of two years.
Both also can’t access the securities market for that period, the regulator said on Friday, because they didn’t disclose material and price-sensitive information about loan agreements entered into by them with ICICI Bank and Vishvapradhan Commercial Pvt Ltd (VCPL).
Roys, along with their holding firm RRPR Holdings, have also been barred from accessing the securities market for two years.
Roy and his wife have also been restrained from being directors in any listed entity for an year.
As per information available on the BSE, Prannoy Roy is currently the executive director — chairperson of the listed media entity while Radhika Roy is an executive director.
NDTV said in a statement, “Radhika and Prannoy Roy, the founders of NDTV, believe the SEBI order asking them to step down as directors and to not hold any management positions in NDTV is outrageous, bad in law and against all procedures. It is, for example, unheard of that the order contains false decisions on issues that were not even mentioned in the show cause notice. They will challenge the SEBI order in the courts as advised within the next few days.”
As per the last shareholding pattern available, Prannoy Roy held 15.94% in NDTV while Radhika Roy held 16.33%. The aggregate promoters’ shareholding in NDTV was 63.17% at the end of the quarter ending on June 2009 which has since remained unchanged.
The latest SEBI order follows an investigation into a complaint received from Quantum Securities, an NDTV shareholder, alleging that RRPR Holdings, Prannoy and Radhika Roy -- all promoters of NDTV -- violated SEBI norms by not disclosing crucial information to the shareholders about loan agreements entered into by them with Vishvapradhan Commercial (VCPL).
SEBI conducted a probe into the alleged violation of takeover norms by VCPL through a 10-year loan ending July 2019, with various clauses that gave it control for up to 52% of the media firm.
SEBI had earlier ordered VCPL to make an open offer for up to 26% shares in NDTV from public shareholders as per its rules.
NDTV promoters were alleged to have taken a loan of Rs 375 crore from ICICI Bank, which was repaid in 2009 by taking Rs 350 crore loan from VCPL vide an agreement dated July 21, 2009.
The agreement provided for RRPR issuing a warrant to VCPL, convertible into equity shares aggregating to 99.99% of RRPR at the time of conversion at any time during the tenure of the loan or thereafter. This clause itself would translate into a 26% stake in NDTV.
Besides, it gave VCPL right to purchase from promoters all equity shares of RRPR at par value.
The agreements fortified the strategy adopted by VCPL to spread its reach up to 52% of NDTV shares in two ways -- indirect acquisition of convertible warrants of the holding company; and by purchase of a freely exercisable call option to buy 26% shares of NDTV.
"The VCPL Loan Agreement-1 was alleged to be material and price sensitive in nature which ought to have been disclosed by Noticees to NDTV who in turn should have disclosed the same to the stock exchanges," SEBI said in its latest order.