Zee Entertainment’s proposal to issue fully convertible warrants to its promoters for Rs 2,237 crore failed to secure the required shareholder majority at its extraordinary general meeting (EGM) held on Thursday. The outcome has come as a huge setback for the promoters who were looking to hike their stake in the company from 3.99% to 18.39% and stay invested in the company for the long term.
The special resolution, which came up for voting at 11 am in the morning, fell short of the 75% threshold required to clear the proposal, with approximately 60% of shareholders supporting the resolution, while 40% voting against it.
“As the number of votes cast in favour of the resolution was not more than three times of the number of votes cast against, I hereby certify that the special resolution has not been passed with requisite majority,” according to the scrutinizer of the e-voting at the EGM.
Zee’s board acknowledged the outcome, saying they were grateful for the support from shareholders who voted in favour of the resolution.
“The board and the management also respect the decision taken by the remaining shareholders,” the company said.
This is the second time in eight months that shareholders have rejected a proposal pertaining to the promoter family. In November 2024, shareholders had rejected the reappointment of Punit Goenka as a director on the board of the company. He remains CEO of the firm after stepping down as its MD.
In the run-up to the EGM, domestic proxy advisory firms such as SES, InGovern, and IiAS had advised shareholders to block the resolution due to concerns about governance, valuation and the rationale for raising funds through warrants. SES had later reversed its stance, even as global proxy advisors such as Glass Lewis remained in favour of the proposal.
In an investor call last week, Zee founder Subhash Chandra had indicated that the promoters was neither pledging shares or taking loans to fund the transaction. Instead, they were building a war chest by tapping recoveries from creditors. While 25% of the amount would be paid upfront by the promoters, the balance 75% would be staggered over 18 months, Zee said on June 16 while making the announcement to the stock exchanges following two board meets that day.
Despite the setback, Zee said it remained focused on delivering growth and investing in technology and innovation to be future-ready. The company would continue to leverage its cash reserves, prudent approach, and entrepreneurial spirit to drive its future ambitions, it added.