Zee Ent expresses inability to convene EGM as requested by Invesco
- Zee Enterprises said, the issue was deliberated by the board at length and in the best interests of the company, including all the shareholders, a decision was reached not to proceed with an EGM
- Zee Entertainment Enterprises Ltd (ZEEL) on Friday informed the stock exchanges that it will not be able to conduct an extraordinary general meeting (EGM) as requested by two institutional investors Invesco and OFI Global China Fund LLC to discuss various issues, including removal of Managing Director Punit Goenka.
Zee pointed out that Invesco had called for the EGM to push for the ouster of directors Ashok Kurien and Manish Chokhani, apart from MD and CEO Punit Goenka. However, Kurien and Chokhani have already resigned from their posts, thereby, making the resolution moved by Invesco "infructuous", it said.
"The Board deliberated, and unanimously concluded that the Requisition Notice is not valid, as it suffers from multiples legal infirmities," the company said.
According to JN Gupta, founder of proxy advisory firm Stakeholders Empowerment Services, the rejection of EGM on technical grounds "does not amount to good governance".
"Zee should have raised an objection to EGM notice earlier if they felt it was untenable," Gupta told CNBC TV 18.
Notably, Invesco, which along with OFI Global China Fund LLC holds a 17.88 percent stake in Zee Entertainment, had demanded an EGM in a letter written to the company on September 11.
Apart from the ouster of three directors including MD Goenka, Invesco sought the appointment of six new directors - Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli, and Gaurav Mehta.
On September 29, a week after Zee announced the mega merger with Sony Pictures Networks India (SPNI), Invesco moved the NCLT seeking an order from the tribunal for an EGM.
Before the tribunal, senior advocate Janak Dwarkadas, who was representing the investors, said their concern is that the Zee board may delay the calling of an EGM till the Zee-Sony merger comes into effect. "Our shareholding will be diluted post the merger," he added.
The tribunal, however, observed that the merger with Sony should not be a concern as it cannot go through without Invesco's approval.
The NCLT, while noting that any entity with at least 10 percent stake in a listed company has the right to call for an EGM, decided to hear the matter on October 4. The Zee board has "2-3 days time within which they can take the decision with regard to the requisition made by the petitioners", it said.
In a press statement issued after rejecting the EGM call, Zee said the board arrived at this decision after "referring to various non-compliances under multiple laws, including the Securities and Exchange Board of India Guidelines, Ministry of Information and Broadcasting Guidelines and key clauses under the Companies Act & Competition Act".
The company added that it cannot comment on any future actions since the "matter is sub-judice".
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