MCA orders inspection of Zee Entertainment’s books

The Ministry of Corporate Affairs has ordered an inspection of the financials of Zee Entertainment Enterprises Limited (ZEEL) following allegations of corporate governance lapses and after some of its independent directors quit recently, a source told Moneycontrol.

The inspection has been ordered under Section 206 (5) of The Companies Act.

The MCA’s Western Regional Director will carry out the probe into the company’s books and will record the statements of the company management.

On November 27, Zee announced the resignation of independent directors Sunil Sharma and Neharika Vohra, and non-independent director Subodh Kumar.

According to a release filed with the exchanges, Sharma tendered his resignation on November 24 citing the sale of shares by the promoter group and the reconstitution of the board.

While Kumar and Vora listed several reasons for their resignation, and accused the company of handing out film advances, promoter loans and being lax on corporate social responsibility (CSR) spending.

The company has denied all wrongdoing.

“The Ministry of Corporate Affairs (MCA) has asked to furnish certain information under section 206 of the Companies Act for their inspection. However, the same is not related to any Corporate Governance issue whatsoever. ZEE Entertainment Enterprises Ltd. as a Company has always adhered to the highest levels of Corporate Governance, maintaining utmost transparency across all aspects,” the company spokesperson said.

Moneycontrol has previously reported that SEBI is also looking into Zee’s alleged corporate governance issues.