Markets regulator Sebi on Thursday imposed a total penalty of Rs 27 crore on NDTV promoters, Prannoy Roy and Radhika Roy, as well as on RRPR Holding for violating various securities norms by concealing information from shareholders regarding certain loan agreements. RRPR Holding is a promoter entity of New Delhi Television Ltd (NDTV).
According to Sebi, certain loan agreements had clauses that have adversarial effect on the NDTV 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 material information to the shareholders about loan agreements with VCPL.
One loan agreement was with ICICI Bank, and two were with Vishvapradhan Commercial Private Ltd (VCPL). As per Sebi, an agreement was signed in 2009 with VCPL for a loan of Rs 350 crore to repay the ICICI Bank loan and a second loan agreement with VCPL was signed for Rs 53.85 crore, a year later.
These loan agreements included clauses and conditions that substantially affected the functioning of NDTV, Sebi said in its 52-page order. Further, one of the terms of loan agreements allowed VCPL to indirectly acquire 30 per cent shareholding of NDTV through conversion of warrants into equity shares of RRPR Holding.
The loan agreements were structured in such a manner that clauses on various matters pertaining to NDTV, which were material and price sensitive information, were concealed from the minority shareholders. The Roys have contended that NDTV was not a party hence there was no requirement for them to make disclosure of the agreement to the stock exchanges.
"I admit this position that NDTV was not a party to these loan agreement, however, contents and clauses of loan agreement clearly demonstrates that the scheme was devised by the noticees in such a way that though NDTV would not be a party to the said loan agreements, yet the loan agreements would contain certain crucial, onerous and hostile stipulations pertaining to NDTV," Sebi Adjudicating Officer Amit Pradhan said. Such stipulations included NDTV's capital restructuring, which were agreed to be undertaken by Prannoy Roy and Radhika Roy, only with the prior consent of ICICI Bank/ VCPL, he added.
Through such acts, the two promoters and RRPR Holding have violated provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, according to Sebi. In addition, the Roys have entered into loan agreements which created conflict of their personal interest with the interest of NDTV, without making disclosure as required under the company's code of conduct.
they violated code of conduct of NDTV and provisions of equity listing agreement. Accordingly, a fine of Rs 25 crore has been imposed on Roys and RRPR Holding, which needs to be paid jointly and severally. Besides, a penalty of Rs 1 crore each has been levied on Prannoy Roy and Radhika Roy.
In June 2019, the regulator had barred the three promoters from the capital markets for two years and also restrained the two individuals from holding any board or top management role at the company in this period in the same case. However, the Securities Appellate Tribunal (SAT) stayed the Sebi's decision.
Last month, Sebi restrained the couple from the securities market for two years and also directed them to disgorge illegal gains of over Rs 16.97 crore for indulging in insider trading more than 12 years ago, while the company denied the charges.