Sebi initiates action against NDTV, Prannoy Roy, Radhika Roy, RRPR Holdings

NDTV claims the violations in the notice are merely procedural

A day after leading media house New Delhi Television Ltd (NDTV) said it has been issued show-cause notices by the Securities and Exchange Board of India (Sebi) for alleged violation of takeover norms — for failing to make timely disclosures to exchanges with regard to share transactions of its promoters Prannoy Roy and Radhika Roy — the market regulator initiated approved enforcement action against NDTV, its promoters and RRPR Holdings.

While NDTV claims that the violations in the notice are merely procedural, Sebi in a notice issued on 8 June 2016 said: "...(Sebi) conducted an examination of certain non-compliance by you in the matter of NDTV Ltd and prima facie found that you have violated SEBI Act, 1992 and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (Takeover Regulations). In view of this, SEBI has decided to initiate/ launch adjudication proceedings against you under section 15A (b) of the SEBI Act for the alleged violation."

However, NDTV has told the exchanges that: "The Company is of the opinion that the alleged non-compliance referred in the show-cause notice (SCN) are technical/procedural in nature. The Company and its Promoters are in the process of seeking legal advice to take appropriate action in the said matter."

Meanwhile, Sebi in its notice has also said, in case NDTV desires to avail settlement of the said proceedings, it can file an application in terms of Regulation 3(1) of the said Regulations with two months.

Sebi observed non-compliances after complainant Quantum Securities alleged multiple disclosure violations by NDTV, its promoters and major shareholders. Based on the allegations made by Quantum and the information provided by the exchanges, Sebi noticed a slew of non-compliances. 

Sebi has found disclosure discrepancies with respect to the below mentioned deals:

1) General Atlantic sold 7.73% to promoters

2) Indiabulls Financial Services bought 6.40% in NDTV on 1 January 2008. However, the information was not disclosed to the exchanges for over seven years

3) NDTV promoters entered into an agreement with Goldman Sachs for the sale of 14.99% stake held in NDTV. Dates of sale: April 17, 2008 and July 14, 2008

4) NDTV promoters acquired 20.28% stake in the company on July 3, 2008. However, the company informed the BSE on July 3, 2015, and NSE on January 14, 2016

5) Both Prannoy and Radhika Roy acquired 5.5% each in NDTV from RRPR Holdings

6) There are also some discrepancies with respect to annual disclosures by the company. The company either failed to disclose information to NSE about its annual filing or did so with a massive delay.