ZEEL Refuses To Call an EGM; Bombay HC To Pronounce Judgement on Tuesday
Moneylife Digital Team 22 October 2021
The Bombay High Court (HC) on Friday reserved its judgment in the dispute between Zee Entertainment Enterprises Ltd (ZEEL) and the company’s majority stakeholder Invesco Developing Markets Fund and OFI Global China, who are seeking an extraordinary general meeting (EGM). During the hearing, ZEEL informed the HC that it would not call an EGM as requisitioned by its largest shareholders.
Senior counsel Gopal Subramanium representing ZEEL contended that Invesco Developing Markets Fund is a foreign investor with stakes in several listed companies in India. “As Invesco has proposed to appoint six directors on the board of ZEEL, it would tantamount to taking control of the company,” he says, adding, “There is no concept of an independent director being suggested by shareholders.”
So far, both Invesco Developing Markets Fund and OFI Global China have not made any open offer for ZEEL. Last month, these shareholders asked the company board to call for an EGM to remove Punit Goenka as managing director (MD) and chief executive (CEO) and two other directors and appoints six of its nominees.
During the hearing on Friday, Mr Goenka alleged that Invesco is ‘seeking control’ of the company’s board and trying to ‘sabotage’ its proposed merger with Sony Pictures Networks India (Sony India).
Senior counsel Kapil Sibal, representing Mr Goenka, argued that there needs to be a public offer if there is a change in control of the board, and before effecting any change to the board, prior permission from the ministry of information and broadcasting (MIB) is required.
Senior counsel Janak Dwarkadas, representing OFI Global China, contended that to call for an EGM, the shareholder must have 10% in the company. “It is my right as a shareholder to call for the EGM,” he contended. Invesco Developing Markets Fund and OFI Global China hold a 17.88% stake in ZEEL.
ZEEL, Invesco and OFI Global China have been engaged in a tussle since September at various forums, including the Bombay HC, the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).
On Thursday, the Bombay HC had asked ZEEL to hold the EGM, chaired by a retired judge and keep in abeyance the resolutions passed till the HC decides on the legality and validity of EGM requisition.
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