The Bombay High Court (HC) on Thursday asked Zee Entertainment Enterprises Ltd (ZEEL) to call an extraordinary general meeting (EGM) as requested by Invesco Developing Markets Fund (Invesco) and OFI Global China Funds (OFI), the largest shareholders in the company.
However, the HC says that the resolution passed in the EGM would be kept in abeyance until it decides on the legality and validity of the requisition made by the two stakeholders. Further, the bench added that the resolutions passed in the EGM would be subject to approval from the ministry of information & broadcasting (MIB). The EGM would be held under the chairmanship of a retired judge from the HC or another independent person.
Earlier this month, ZEEL had also moved the HC against Invesco and OFI Global's requisition for an EGM to discuss various issues, including removing Punit Goenka, managing director (MD) and chief executive officer (CEO) of the company.
The company's plea before the HC was to declare the call for EGM invalid after Invesco got the nod from the National Company Law Tribunal (NCLT) seeking a meeting by the ZEEL board.
Earlier, Invesco, in a statement, had revealed that the Reliance group was keen on a deal with ZEEL – a fact hidden by the founding group in the charges levelled in the ongoing war between the company and its largest investor with an 18% stake.
In a hard-hitting press statement, Invesco also says, "We specifically note that the implication that we as a shareholder would seek out a transaction for Zee that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic."
Last week, in a statement, ZEEL stated its the board of directors reportedly considered a note from Punit Goenka, MD & CEO of the company alluding to another merger deal pushed by its largest overseas shareholder that would have robbed the shareholders of at least Rs10,000 crore. He had not named the 'largest group' interested in the deal.
Invesco's responded by saying, "We wish to make clear that the potential transaction proposed by Reliance (the strategic group referenced but not disclosed in the 12 October 2021 communication by Zee) was negotiated by and between Reliance and Mr (Punit) Goenka and others associated with Zee's promoter family. The role of Invesco, as Zee's single largest shareholder, was to help facilitate that potential transaction and nothing more."
Reliance, however, says it regretted being drawn into the dispute between ZEEL and Invesco.
In a statement, the Mukesh Ambani-led group says, "In February- March 2021, Invesco assisted Reliance in arranging discussions directly between our representatives and Mr Goenka, member of the founder family and MD of Zee. We had made a broad proposal to merge our media properties with Zee at fair valuations of Zee and all our properties. The valuations of Zee and our properties were arrived at based on the same parameters. The proposal sought to harness the strengths of all the merging entities and would have helped to create substantial value for all, including the shareholders of Zee."
Last month, Invesco-OFI approached the NCLT against ZEEL for failing to announce a date for the EGM that it had requisitioned for seeking removal of the company's MD & CEO Goenka and reconstituting the board.
Invesco-OFI, which hold a 17.88% stake in ZEEL, had also proposed the names of six independent directors as part of the EGM requisition.
ZEEL, on the other hand, had moved to the National Company Law Appellate Tribunal (NCLAT) to get a stay on the NCLT order that sought a reply from the company on its decision on holding an EGM.
ZEEL is engaged in a boardroom brawl with the company's two largest shareholders expressing non-confidence with the existing management and seeking an EGM to sack a few directors, including ZEEL MD and CEO Punit Goenka.
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