Zee Entertainment Enterprises Ltd. (ZEEL) will have to hold an extraordinary general meeting (EGM) of its shareholders, the National Company Law Tribunal (NCLT) held today (30th September). It was a mandatory requirement since two shareholders, jointly holding more than 10% of the shares of ZEEL, had requisitioned the EGM, explained the NCLT. The Tribunal said, ZEEL will have to consider the requisition before 3rd October, as per section 100 of the Companies Act. The NCLT bench which passed the oral order was led by Bhaskara Pantula Mohan and C.B. Singh. The case has been posted for hearing on 4th October.
Invesco Oppenheimer Developing Markets Fund and OFI Global China Fund LLC, both foreign funds, had yesterday (29th September) approached the NCLT against ZEEL for failing to announce a date for the extraordinary general meeting (EGM) to remove CEO and Managing Director Punit Goenka and to reconstitute the Board of Directors. Non-calling of the EGM constitutes an “oppressive act” and is “gross mismanagement” of the company’s affairs, the two investors’ application to the NCLT had said.
Invesco had mentioned the matter for an urgent hearing, following which the Bombay bench of the NCLT scheduled it for today (30th). Zee opposed the move, stating that there was no urgency for 21 days. However, not only did the NCLT hold the hearing today but also ruled against ZEEL.
Invesco and OFI jointly hold almost 18% share capital of ZEEL. They had on 11th September requisitioned an EGM for the ouster of three non-independent directors including Punit Goenka. They had also sought the appointment of six independent directors on the ZEEL Board. The two investors were yesterday seeking to invoke the powers of the NCLT under the Companies Act, to convene an EGM of the shareholders of Zee.
Two of the three non-independent directors — Ashok Kurien and Manish Chokhani — whose removal was sought by Invesco and OFI, resigned soon after the EGM requisition from the two investors. However, Goenka did not resign.
Meanwhile, on 22nd September, ZEEL announced approval and execution of a non-binding term sheet with Sony India for a potential merger. The proposed merger allows Punit Goenka to be in charge of the merged business for five years. Invesco said in a letter to the ZEEL Board that it was not against the proposed merger but wanted a new Board to evaluate the deal as well as decide on future leadership.