Sebi fines NDTV Rs 5 crore for loan agreement disclosure lapses

Securities and Exchange Board of India(Sebi) has imposed a penalty of Rs 5 crore on New Delhi Television Limited(NDTV) for not disclosing information on loan agreements with Vishvapradhan Commercial Private Ltd (VPCL) to public shareholders.

On August 26, 2017, the capital markets regulator received a complaint from Quantum Securities relating to loan agreement signed between promoters of NDTV— Prannoy Roy, Radhika Roy and RRPR Holding-- and VCPL.

Subsequently, Sebi conducted an investigation which revealed that the loan agreements entered between RRPR Holdings and VCPL contained certain clauses related to NDTV. Prima facie, the deal appeared to be material and price sensitive, the regulator said.

Sebi said the loan agreements allegedly contained various clauses which were binding on NDTV, in such a way that it could adversely affect the interest of its public shareholders.

In 2009, VCPL gave a loan of Rs 350 crore to RRPR. This loan was taken by RRPR to repay its previous loan taken by it from ICICI Bank in October, 2008.

The regulator said the VCPL loan agreement did not carry any interest rate on the loan, while the loan from ICICI Bank carried an interest rate of 19%.

One of the clauses of the agreement gave VCPL right to covert warrants into shares of RRPR, at any point of time. This clause enabled VCPL to indirectly acquire 30% shareholding of NDTV.

“The VCPL loan agreements were inherently material and price-sensitive in nature and therefore they are required to be disclosed to the stock exchanges for dissemination to the public so that public shareholders and prospective shareholders could have taken an informed decision regarding their dealing in the shares of the noticee (NDTV)," Sebi said in its order on Tuesday.

“Depriving the public shareholders and prospective investors from such a crucial and price sensitive information is not only bad in law but also seriously affects the transparency in securities market,” the regulator said.