The Bombay High Court (HC) on Thursday asked the board of Zee Entertainment Enterprises (ZEEL) to hold an extraordinary general meeting (EGM) of shareholders as requested by its largest shareholder, Invesco.
A single-judge Bench of Justice G S Patel said the EGM resolutions will be kept in abeyance for a week thus, giving time to ZEEL to approach the courts to contest the legality and validity of the EGM requisition made by Invesco. The court also proposed that a retired judge or a neutral person chair the EGM. The ZEEL board is currently chaired by R Gopalan.
During the proceedings, Justice Patel said denying the right to call an EGM would set a “ferocious” precedent. ZEEL said it would inform the court on Friday about the EGM date.
Invesco had asked the ZEEL board to call an EGM of shareholders to vote on the removal of the current Chief Executive Officer and Managing Director Punit Goenka on September 11 and proposed the appointment of its six nominees.
Invesco had moved the National Company Law Tribunal (NCLT) after ZEEL did not take any decision on the request. After NCLT asked the ZEEL board to hold the meeting to decide on Invesco’s request, the board rejected the same.
ZEEL had moved the HC on October 2, asking the court to declare that the shareholders meeting requisition notice sent by Invesco on September 11 is illegal and invalid.
While Invesco holds 18 per cent stake in the company, company founder Subhash Chandra’s family stake has come down to 4 per cent after they sold their stake in India’s biggest listed entertainment company by market value to square off debt. The rest of ZEEL’s shares are held by institutions holding the key to keep Goenka in the company or vote him out.
The fight between Invesco fund, backed by American fund manager Oppenheimer, and ZEEL came out in the open last month, when it asked the board to remove three directors, including Goenka. While two directors – Ashok Kurien and Manish Chokhani – quit a day before the annual general meeting where shareholders were to vote on their renomination to the board, Goenka stayed on.
In its statement on October 1, ZEEL said its board arrived at a decision to reject the EGM request by 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 and Competition Act, after taking into account the interests of all shareholders and stakeholders of the company.