On Thursday, shares of Zee Entertainment Enterprises plummeted after two of its shareholders, Invesco and OFI Global China, filed a complaint with the National Company Law Tribunal (NCLT) for neglecting to call an extraordinary general meeting.
The Invesco Developing Markets Fund filed a complaint with the National Company Law Tribunal (NCLT) on Wednesday, accusing Zee Entertainment Enterprises (ZEEL) and three of its directors, including Chief Executive Officer and Managing Director Punit Goenka, of failing to call an extraordinary general meeting (EGM) of the company, as the US fund had requested.
The fund, which owns around 18 per cent of ZEEL, is requesting that its nominees be inducted onto the board of directors.
In addition to Goenka, the petition has named ZEEL Chairman R Gopalan and Independent Director Vivek Mehra as respondents. On Thursday, the case will be heard.
When contacted, a ZEEL spokesperson said: “The board of the company remains committed to acting within the framework of law and is focused towards enhancing the company’s growth and shareholder value. It is in the process of taking the required steps within the statutory period. The company does not wish to comment on any impulsive or premature steps taken by Invesco Developing Markets Funds and OFI Global China Fund.” as per Business Standard.
On September 11, Invesco and OFI Global China Fund, both of which are supported by Oppenheimer Holdings, requested that the ZEEL board call an EGM to induct six of their nominees.
In the same letter, Invesco also demanded that Goenka and two other board members, Ashok Kurien and Manish Chokhani, be removed from the board at the EGM. On September 14, just one day before the company’s annual general meeting of shareholders, Kurien and Chokhani resigned.
Within a few days, ZEEL announced a proposed merger with Sony Pictures. Sony shareholders would get a majority holding in the company, while Zee shareholders’ stake would be diluted. However, as a non-compete fee, the Subhash Chandra family would receive an additional 2 per cent share in the amalgamated business, bringing their total holding to 4 per cent.
The ZEE board is required by law to make a decision on the EGM within three weeks, but that date has yet to be met.
In a letter dated September 23, Invesco and Oppenheimer Fund urged the ZEEL board to uphold its fiduciary responsibilities and not violate its statutory obligations to call the EGM as requested before.
“We urge the board to reflect on this communication and act in the best interest of the company, its public shareholders, and uphold the highest standards of corporate and board governance,” the letter said.
After the promoter entities failed on bank loans, the Zee promoters lost control of the company. The promoters’ shareholding in both companies decreased to low single digits as the shares of listed entities like Zee and Dish TV were pledged with lenders.
Last Monday, YES Bank, which now owns 26 per cent of Dish TV after invoking the promoters’ pledge, requested that an EGM be held to induct six of its nominees onto the Dish board of directors and to oust CEO Jawahar Goel.
Invesco has filed a case with the NCLT after which Zee shares fell 2.1 per cent to Rs 303.4 in early trade on the BSE, after falling as high as 3.1 per cent to Rs 300.1 earlier in the day. The media index of the Nifty fell 0.6 per cent.
The panel will hear the petition against Zee Entertainment later today. You can read about Zee and Sony merger here
