Radhika and Prannoy Roy, founders of NDTV, are planning to move court against the ‘outrageous’ and ‘pervert’ SEBI order issued on Friday. In a statement issued late on Friday evening they said that the SEBI order asking them to step down as directors and to not hold any management positions in NDTV was ‘outrageous, bad in law and against all procedures’.
The order, they claimed, referred to issues that were not even mentioned in the show cause notice. They will challenge the SEBI order in the courts as advised within the next few days.
Securities market regulator SEBI on Friday debarred NDTV's promoters Prannoy Roy and Radhika Roy from holding any key managerial positions in the Board or the management of the news channel company for being "involved in fraudulent acts".
Additionally, along with RRPR Holdings, they have been debarred from accessing the stock markets or selling their holdings in the news channel. The Roys were also found to be in violation of NDTV's code of conduct, SEBI said in an order.
The order comes after SEBI carried out an investigation into allegations against the Roys and RRPR Holdings for not disclosing material information to the shareholders of NDTV about loan agreements entered into by them with Vishva Pradhan Commercial Private Limited.
"Under the circumstances, the Noticees no. 2 (Prannoy) and 3 (Radhika) had this avowed duty to act in a fair and transparent manner to protect the interest of their minority shareholders and not to indulge in any fraudulent activity or any activity detrimental to the interest of the shareholders of NDTV," said the order signed by SEBI's Whole Time Member S.K. Mohanty.
"However, contrary to the same, in the present case, the Noticees i.e. the promoters and Directors of NDTV have been found to have indulged in fraudulent acts wherein they have bartered away the interests of NDTV by making them subject to prior written consent of 'ICICI/VCPL' without disclosing the same to the company (NDTV)."
The order further said that "Noticee no. 2 and 3 opted to violate the Code of Conduct of NDTV which they were supposed to abide by, being the Chairman and Managing Director of the company".
"Noticee No. 2 and Noticee No. 3 have consciously taken such a position under the loan agreements which was directly inconsistent with their role as Chairman and Managing Director".
"Any fraudulent act directly designed to defraud such investors cannot be treated as good for the securities market and for the interest of investors. Such acts, if not dealt with adequately and sternly, will send a wrong signal to the violators having same or similar propensity and will not be good for the securities market."