NDTV promoters to appeal against Sebi order imposing fine of Rs 27 crore

Markets regulator Securities and Exchange Board of India (Sebi) on Thursday imposed a penalty of Rs 27 crore on New Delhi Television's (NDTV) promoters- Prannoy Roy, Radhika Roy and RRPR Holding. The penalty was imposed for violating various securities norms, including Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations. The regulator imposed the penalty against NDTV promoters for by concealing information from shareholders regarding certain loan agreements.
 

RRPR is a part of NDTV's promoters' group and had a 29.18 per cent stake in the company as of September 2020.
 

The regulator in its order said the loan agreements had clauses that have an adversarial effect on NDTV shareholders. The said loan agreements include one with ICICI Bank and two with Vishvapradhan Commercial Private Ltd (VCPL). Sebi began its probe after receiving a complaint from Quantum Securities, a shareholder of NDTV, about the violation of rules by non-disclosure of material information to shareholders.
 

The regulator said its probe began after receipt of complaints, in 2017 from Quantum Securities Pvt Ltd – a shareholder of NDTV – about an alleged violation of rules by non-disclosure of information, important to shareholders, about loan agreements with VCPL.

The regulator said an agreement was signed in 2009 between VCPL and NDTV's promoters for a loan of Rs 350 crore to repay the ICICI Bank loan. A second loan agreement with VCPL was signed for Rs 53.85 crore, a year later. And these loan agreements included clauses and conditions that substantially affected the functioning of NDTV. It allowed VCPL to indirectly acquire 30 per cent shareholding in the company by converting warrants into equity shares of RRPR Holding.
 

The regulator further said the loan agreements were structured so that clauses on various matters about NDTV, which was price sensitive information, were concealed from the minority shareholders. However, the Roys contended that NDTV was not a party to the agreement, and there was no requirement on their part to make a stock exchange disclosure.
 

Sebi, in its order, said clauses of the loan agreement, demonstrate that NDTV promoters devised the scheme in such a way that they would contain crucial information about NDTV, though NDTV was not part of the agreement.
 

Sebi imposed a fine of Rs 25 crore on Roys and RRPR Holding, which needs to be paid jointly and severally. Besides, a penalty of Rs 1 crore has been imposed on Prannoy Roy and Radhika Roy.
 

NDTV founders said they would appeal against the order at Securities Appellate Tribunal (SAT). They said the Sebi order is based on an incorrect assessment of facts and that they have never surrendered the company's control to another entity.