• Notification Date: 07-08-2023
• Notification No: N/A

MCA to investigate ZEE Entertainment on Allegations of Syphoning Funds and Bogus Book Entries

 
The ZEE Entertainment Enterprises is set to undergo investigation by the Ministry of Corporate Affairs (MCA) in response to allegations of fund misappropriation and fraudulent entries. These accusations were raised by the Securities Exchange Board of India (SEBI) in its interim order. There is no official confirmation regarding this matter by both MCA and ZEE. According to ET, there is a probing lapse in corporate governance issues. However, there is no official inspection order issued by the MCA apart from the reports made by the ET. 

On June 12, 2023, SEBI in its order stated that facts make out a prima facie case of Mr. Subhash Chandra and Mr. Punit Goenka having abused their position as directors/KMPs of a listed company for syphoning off funds for their own benefit. The order mentioned that “while the investigation is still underway, their continuation as a director/Key Managerial Personnel in any listed company or its subsidiaries is likely to be prejudicial to the interest of those companies, particularly its investors. Therefore, I am convinced that, pending completion of investigation by SEBI, interim directions need to be issued to safeguard the management such companies and protect their investors and other stakeholders.” 

Also, the SEBI instructed the above-mentioned directors to cease to hold the position of a director or a Key Managerial Personnel in any listed company or its subsidiaries until further orders. 

MCA reportedly ordered an inspection against an Indian multinational educational company, BYJU’S last week. According to various reports, the Ministry has taken notice of significant corporate governance failures committed by the BYJU’s. 
 
Edtech suffered a huge blow when the auditing firm Deloitte Haskins & Sells resigned as BYJU’s and Aakash’s statutory auditor. Deloitte Haskins & Sell, one of the largest auditing firms, has stepped down from major Edutech Company Byju’s – Think and Learn Private Limited. On 22nd June 2023, the auditing firm submitted their resignation before the Board of Directors with immediate effect. 

As there was no official confirmation from the ministry and ZEE till now, it is anticipated that the ministry will investigate the interim order of the SEBI and will take necessary steps to examine the irregularities.