Zee Entertainment: Invesco, OFI Global China Fund Call for EGM To Remove Punit Goenka from Board
Moneylife Digital Team 14 September 2021
Two independent directors, namely Ashok Kurien and Manish Chokhani, resigned from the board of Zee Entertainment Enterprises Ltd a day before the company’s annual general meeting (AGM). Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) and OFI Global China Fund llC, which together hold 18% stake, have called for an extraordinary general meeting (EGM) to remove Punit Goenka, managing director (MD) of Zee Entertainment and Mr Kurien and Mr Chokhani. The AGM of Zee Entertainment is scheduled to take place on Tuesday.
 
Last week, while raising serious corporate governance concerns in the company, proxy advisory firm Institutional Investors Advisory Services (IiAS) had asked shareholders not to vote for re-appointing Mr Kurien and Mr Chokhani on the Zee Entertainment board during the AGM. However, both these independent directors resigned before the AGM.
 
In a regulatory filing, Zee Entertainment says, Mr Chokhani has resigned due to ‘changed life circumstances and perspective post COVID’, while Mr Kurien resigned ‘due to his pre-occupation.
 
In calling for an EGM, Invesco Developing Markets Fund and OFI Global China Fund llC wanted to pass three resolutions to remove Mr Goenka and the two independent directors from Zee Entertainment board. At the same time, the Funds wish to appoint six of their nominees, namely, Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta, on the company board as independent directors. 
 
In a letter to the company, the largest shareholders say, “Zee Entertainment is required to seek approval from the ministry of information and broadcasting (MIB) in connection with the appointment of the new independent directors.
 
"For the purpose of such application, we hereby enclose the relevant declarations and information required from each of the proposed independent directors. Accordingly, we request the company submit an application with the ministry seeking approval for the appointment of the proposed independent directors at the earliest.”
 
As reported by Moneylife, last week, IiAS had asked shareholders of Zee Entertainment not to re-appoint Mr Kurien and Mr Chokhani as independent directors. 
 
The proxy advisory firm has pointed out that both Mr Kurien and Mr Chokhani were on the nomination and remuneration committee (NRC) of the board and, hence, were also accountable for how remuneration had been managed in financial year (FY) 20-21 as chief executive officer (CEO) and MD Mr Goenka’s remuneration increased by 46%, higher than what was approved by shareholders in the 2020 AGM, while employees were given no raise during FY20-21. (Read: IiAS Advises Zee Entertainment Shareholders To Vote Against Reappointment of Ashok Kurien and Manish Chokhani)
 
At the company’s 2020 AGM, shareholders had approved the reappointment and remuneration of Mr Goenka for five years from 1 January 2020. However, IiAS had recommended voting against his reappointment due to his weak oversight over the business, concerns over related-party transactions and other governance concerns.  
 
Now with the largest stakeholders also seeking the removal of Mr Goenka from the Zee Entertainment board, it would be interesting to see how events turn out during the company AGM. 
 
At 14.29pm Tuesday, Zee Entertainment was trading 32.8% higher at Rs248.05 on the BSE, while the 30-share Sensex was up by 89 points at 58,266 points.
 
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