LI Network
Published on: October 14, 2023 at 19:38 IST
The Securities and Exchange Board of India (SEBI) declined to revoke the securities market ban imposed on Eros International Media Ltd and four others in a case involving alleged fund diversion. The investigation by SEBI into the matter is expected to be completed within six months, as per the order.
The ban on dealing in the securities market applies not only to Eros International but also to its Managing Director, Sunil Arjan Lulla, Chief Executive Officer Pradeep Kumar Dwivedi, and the two promoter entities—Eros Worldwide FZ LLC and Eros Digital Private Ltd.
SEBI had initially issued an interim order in June, prohibiting these five entities from participating in the securities markets due to prima facie findings related to the potential diversion of funds. In this recent order, SEBI reaffirmed the ban.
In its confirmatory order, SEBI noted that the noticees (the five entities) did not provide substantial reasoning regarding the prima facie findings in the interim order, which included allegations of fund siphoning to related or promoter-controlled entities and overstatement of Eros’s books of accounts.
As a result, the five entities will continue to be restrained from engaging in the direct buying, selling, or dealing of securities until further notice. Furthermore, Lulla and Dwivedi will remain prohibited from holding positions as directors or key managerial personnel in any listed company, including Eros or its subsidiaries, until further orders are issued.
In the interim order, SEBI had found that the company’s books of accounts were overstated and did not accurately represent its financial health. It also raised concerns about transactions between content advance entities and trade receivable entities, which indicated the circulation of funds within Eros International.
The regulator noted that the company continued to advance funds to entities potentially involved in diverting funds to entities associated with the promoters.
In August, the Securities Appellate Tribunal (SAT) rejected appeals made by Eros International Media Ltd and others in this matter.
