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Penalty on NDTV over Disclosure Lapses to the tune of Rs. 5 Cr imposed: SEBI

1. The Security and Exchange Board of India (SEBI) imposed a penalty of Rs 5 crore on NDTV for its failure to disclose price-sensitive information about VCPL loan agreements. However, the company denied the charges and said it will appeal against the ruling of the Market Regulator.

2. On August 26, 2017, the SEBI received a complaint from Quantum Securities relating to loan agreement signed between promoters of NDTV i.e. Prannoy Roy, Radhika Roy and RRPR Holding and Vishvapradhan Commercial Private Ltd. (VCPL).

3. The probe began after receipt of complaints in 2017 from Quantum Securities Pvt Ltd about an alleged violation of rules by non-disclosure of material information to the shareholders about loan agreements with Vishvapradhan Commercial Private Ltd (VCPL).

4. As per the regulator, a loan amount of Rs.350 crore was borrowed by the promoters of NDTV under the VCPL loan agreement in 2009 to repay earlier loan availed from ICICI Bank and a second loan agreement with VCPL was signed for Rs 53.85 crore a year later.

5. One of the terms of loan agreements allowed VCPL to indirectly acquire 30% shareholding of NDTV through the conversion of warrants into equity shares of RRPR Holding. The SEBI said that 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. 

The SEBI said, “depriving the public shareholders and prospective investors from such crucial and price-sensitive information are not only bad in law but also seriously affects the transparency in the securities market.”

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