Network 18 Media and Investments settles case with Sebi; pays Rs 1.56 cr

Network 18 Media and Investments has settled a case with Sebi, pertaining to alleged failure to disclose Independent Media Trust (IMT) as a promoter in the draft papers for the rights issue, after paying Rs 1.56 crore towards settlement charges.

Network 18 Media and Investments or NW18 had approached Sebi to settle the matter through the settlement order.

Consequently, the regulator through a settlement order said, "the instant adjudication proceedings initiated against the noticee (NW 18) vide SCN (show-cause notice) dated January 22, 2020, are disposed of".

Securities and Exchange Board of India (Sebi) received a complaint in March 2017 against NW18, wherein it was alleged that the company failed to disclose IMT as a 'promoter' in its draft letter of offer and letter of offer filed way back in 2012.

The regulator observed that NW18 made a rights issue in 2012, wherein the draft letter of offer was dated March 1, 2012, and the letter of offer was dated August 31, 2012.

The company's promoter Raghav Bahl disclosed that the firm had entered into an arrangement with IMT, a trust set up for the benefit of Reliance Industries, to secure the funding required for this purpose, Sebi said in its settlement order.

The regulator, which conducted an investigation, observed that IMT had indirectly acquired joint control over NW18 by way of Single Unit Agreement (SUA) in November 2011, whereby IMT along with the holding companies of NW18 and the promoters of NW18 had agreed to act as 'single unit' in managing the matters of NW18 and acquired the right to appoint the majority of the board of directors of the firm.

It was also observed that IMT and the promoter entities of NW18 entered into the SUA with the common objective of owning and controlling at least 51 per cent equity share capital of the company by agreeing to act as a single unit in managing the matters of the company and jointly having the right to appoint a majority of the board of directors of the firm, the order mentioned.

Therefore, IMT qualified to be a Person Acting in Concert (PAC) with the promoter entities of the company in terms of the SAST (Substantial Acquisition of Shares and Takeovers) norms pursuant to entering into the SUA, it added.

Further, DCPL, the trustee of IMT, was wholly-owned by Raghav Bahl and his wife Ritu Kapur, who were the promoters of the company, IMT qualified to be included in the promoter group of the firm as per ICDR (Issue of Capital and Disclosure Requirement) Regulations, Sebi noted.

Thus, the regulator said that IMT being a part of the promoter group was required to be disclosed, under the promoter category by the company in its draft letter of offer and letter of offer.

As the company had allegedly not disclosed IMT as part of the promoter group of the company in its draft letter of offer and letter of offer filed in 2012, it is alleged that the firm has violated the provisions of the ICDR Regulations, Sebi noted.

Accordingly, Sebi issued a show-cause notice to the company in January 2020 in the matter.

Pending adjudication proceedings, the company filed a settlement application in July 2020.

Following this, Sebi's High Powered Advisory Committee considered the proposed settlement terms and recommended the case for settlement upon payment of Rs 1.56 crore towards settlement charges and the same was approved by a panel of whole-time members of Sebi.

NW18 remitted the amount and accordingly, the regulator settled the matter.