NEW DELHI: The Enforcement Directorate has issued showcause notice to NDTV Ltd for bringing foreign investments of around Rs 2,030 crore into the parent company between 2007-10 allegedly in violation of Foreign Exchange Management Act (Fema) guidelines.
According to the ED, NDTV Ltd through its step-down subsidiary in UK, NDTV Networks Plc (NNPLC) was permitted by FIPB to raise overseas funds via a public offering of equity shares.
However, NNPLC raised money through loans, bonds and optionally convertible preference shares which the RBI says is not “a genuine and bona fide business activity” and is in contravention of Section 6(3)a of Fema.
The ED has also alleged that NDTV Ltd received funds in its group companies in India from its overseas subsidiaries, Mauritius Media and NDTV Worldwide Mauritius Ltd, in two transactions of $83,909,977 and $21,972 by automatic route allegedly in the guise of FDI, which RBI has again said is not a genuine and bona afide business activity.
The agency has listed some more transactions of the company which it has alleged were in violations of Fema rules and has issued a showcause for an amount totalling Rs 2030 crore.
In a statement to the Bombay Stock Exchange, NDTV has said that the company along with its top executives received a showcause notice from the ED on November 19 as to why “adjudication proceedings should not be held for alleged contraventions of provisions of Fema”.
“The company has been advised that the allegations of the contraventions of provisions of Fema in the showcause notice are not legally tenable and the company will reply to the same within due course of time,” the NDTV statement said.
Since Foreign Exchange Management Act (Fema) is a civil case, if charges are upheld by the adjudicating authorities, NDTV may at most have to pay a penalty equivalent to the quantum of violation.