Prannoy Roy-led New Delhi Television Ltd (NDTV) has been facing the regulatory heat these days. According to the media reports, NDTV was required to disclose the fact that it has received a Rs. 450 crore tax demand notice from the income tax department. However, NDTV failed to disclose the same to BSE or National Stock Exchange (NSE) about this notice and this may be a breach of the listing norms.
When BSE and NSE asked NDTV about this, NDTV argued that the demand notice was “without any basis or justification and contrary to provisions of Income Tax Act, 1961 and had resulted only due to erroneous and incorrect view taken by the tax department”. Hence NDTV saw it fit not to disclose anything about it. NDTV has also argued that the matter was “sub-judice” and that it has received a stay. Other listed companies, including Infosys, however, time and again have disclosed such information to the bourses
In short, the contention of NDTV was that the claim made by the tax department cannot be deemed as an enforceable tax demand against NDTV due and payable by it. The demand has resulted only due to erroneous and incorrect view taken by the tax department.
Earlier in February 2014, in a major crackdown against listed companies not complying with regulatory disclosure norms, NSE and BSE imposed fines or suspended trading in over 1,100 cases of non-compliance, involving nearly 600 companies. After finding hundreds of companies of not adhering to various provisions of listing agreement, market regulator Securities and Exchange Board of India (SEBI) had asked the stock exchanges to put a stronger mechanism in place to ensure compliance.
This non-disclosure of information prompted NSE and BSE to seek clarification from the company. While BSE has mentioned the notices it sent to NDTV, there are no details available at NSE. NSE just says that it sought clarification from NDTV based on a complaint.
When NDTV failed to provide specific response to its query, BSE again sent an email on 27th May to the company asking it to give point-wise reply. In its reply, NDTV said, “we have clarified our position with respect to the queries of exchange on various disclosures under listing agreement vide Company’s letters dated 16 May 2014 and 22 May 2014, wherein the company categorically explained the position as to how the company has not violated the provisions of clause 36 of the listing agreement”.