Sebi also banned them from taking any a position in any listed entity.

In its 51-page order, the markets regulator said all the three key promoters did insider trading by concealing price-sensitive information about three loan agreements, did not make the necessary disclosures to the stock exchanges, and kept the minority shareholders in the dark.

“Any fraudulent act directly designed to defraud such investors cannot be treated as good for the securities market and for the interest of investors. Such acts, if not dealt with adequately and sternly, will send a wrong signal to the violators having same or similar propensity and will not be good for the securities market,” Sebi Whole-time Member S K Mohanty said in the order.

“I find that the ……. Noticee No.1, Noticee No.2 and Noticee No.3 …. are grossly in violation of the provision of PFUTP Regulations,” he said.

The regulator alleged the Roys violated NDTV’s Code of Conduct. NDTV in a statement said Radhika and Prannoy Roy, the promoters of NDTV, believed the Sebi order asking them to step down as director and not hold any management positions in NDTV was based on an incorrect assessment of the situation and a “highly unusual and perverse directive”.

They will take legal action in a few days.

According to Sebi, “all three notices” entered into three loan agreements, one with ICICI Bank and two with Vishvapradhan Commercial Private Ltd (VCPL), which contained material and price-sensitive information. It was alleged that many actions and decisions on important matters pertaining to NDTV were made without the knowledge of the minority shareholders.

Further, under the VCPL agreements and the two call option deals executed as supplementary to the loan agreements, a beneficial interest in 30 per cent shares of NDTV was effectively vested in VCPL.

“All these information were profoundly material and price sensitive information which would have influenced the investment decision of the investors in the shares of NDTV, had they been made aware of these information at that time. Terms of the loan agreements were devised to affect the interest of shareholders of NDTV,” Sebi said in the order.

Sebi initiated a probe in the matter after it received complaints and also a representation by Quantum Securities, a shareholder of NDTV, alleging that three promoters — RRPR Holdings and the Roys —violated Sebi rules by not disclosing the material information to the shareholders of NDTV about the loan agreement they entered into with VCPL.

The regulator conducted investigation into the matter between October 14, 2008, and November 22, 2017.

The promoters’ shareholdings in NDTV was 63.1 per cent at the end of the quarter ended June 2009.

Investigation revealed RRPR entered into a corporate rupee term-loan facility agreement with ICICI Bank in October 2008, which was later amended for pre-payment. The loan had conditions such as not permitting any merger, de-merger, consolidation, reorganisation, a scheme or arrangement or compromise with its creditors or shareholders, or effecting any scheme of amalgamation or reconstitution of NDTV without written approval from ICICI Bank.

It was found that the ICICI Bank loan agreement bearing such stipulations was not disclosed to the company (NDTV).

Investigation further showed during the enforceable tenure of such a loan agreement, Prannoy and Radhika Roy had transferred shares of NDTV and had also received shares of NDTV from RRPR in an off-market deal.

Investigation found that RRPR took a loan of Rs 350 crore from VCPL to repay the loan taken from ICICI Bank. The agreement gave significant powers to VCPL.

A second loan agreement for Rs 53.85 crore was signed with VCPL a year later. By that loan, the promoters of NDTV allowed the lender to indirectly acquire a 30 per cent stake in the media company by converting their warrants into equity shares.

Sebi said the company was bound to give such information to the public shareholders.