SAT Stays SEBI Order Barring NDTV Promoters Prannoy Roy, Radhika Roy From Capital Market And Top Managerial Posts

A recent order passed by the Securities and Exchange Board of India (SEBI) which had barred New Delhi Television (NDTV) promoters Prannoy Roy and Radhika Roy from accessing the capital market or holding managerial posts, has been stayed by the Securities Appellate Tribunal (SAT).

Adjourning the case to September 16, the SAT stated that such orders prima facie would not serve the interests of NDTV’s shareholders or investors, adding that the TV news broadcast company “cannot remain headless”.

The SAT has directed SEBI to file a reply even as it gave three weeks to Prannoy Roy and Radhika Roy to file a rejoinder. The tribunal has directed them not to alienate or created any encumbrance on their shareholding in NDTV until further orders.

It also pulled up SEBI for not supplying a copy of its order to the Roys who are the appellants in the case, stating that it is SEBI’s duty to supply them with the order.

However, the SAT made it clear that various allegations made in the SEBI order had to be considered in detail.

The SEBI order is about a Rs 350-crore loan from ICICI Bank to NDTV’s holding company RRPR Holding, which was liquidated later by taking two more loans from Vishvapradhan Commercial (VCPL).

The loan from VCPL was interest-free for 10 years on the condition that VCPL would have a right of first refusal on 50% of NDTV shares in the event they were sold in the market. The loan agreement also had certain call options for transfer of 30% of RRPR’s shareholding at a price of around Rs 215 per share.

According to the SEBI order dated June 14, this loan agreement was nothing but a “sham agreement which violated disclosure norms”.