Bombay High Court asks ZEE to call EGM as sought by Invesco

By: |
October 22, 2021 3:46 AM

The court said that if this argument was accepted, no requisition could ever be called for removal of directors as a company’s board would be controlling the NRC.

The court was hearing a petition filed by Zee on October 2 asking it to declare Invesco’s EGM notice as “illegal and invalid”.The court was hearing a petition filed by Zee on October 2 asking it to declare Invesco’s EGM notice as “illegal and invalid”.

The Bombay High Court on Thursday asked Zee Entertainment Enterprises (Zee) to convene an extraordinary general meeting (EGM), as requisitioned by its single largest investor Invesco Developing Markets Fund.

However, the court added that the results of the EGM be kept in “abeyance” till it decides on the legality of the requisition. Further, the EGM should be chaired by a competent person such as a retired high court judge, a senior counsel or someone from the corporate world, the order stated.

A single judge bench of Justice GS Patel said that denying a shareholder the right to call an EGM would set a “ferocious precedent”.

On his part, Zee’s counsel Gopal Subramanium said that the company will inform the court of an EGM date by Friday morning. He said that for a listed company, the nomination and remuneration committee (NRC) has to follow the process of listing regulations.

The court said that if this argument was accepted, no requisition could ever be called for removal of directors as a company’s board would be controlling the NRC.

The high court said the EGM’s results should be kept in abeyance as Zee had earlier cited legality issues, including jurisdiction for filing of the case. The court also wanted a neutral person to chair the EGM proceedings, and not anyone from the current board.

The court was hearing a petition filed by Zee on October 2 asking it to declare Invesco’s EGM notice as “illegal and invalid”.

Invesco, which together with its subsidiary OFI Global China Fund holds a 17.88% stake in ZEE, is fighting a legal battle after its two requisition notices (dated September 11 and September 23) to hold an EGM and evict certain directors were rejected by the Zee board.

In September, Invesco had moved the National Company Law Tribunal (NCLT) after Zee turned down its EGM requisition.

Invesco had sought convening an EGM for the ouster of Punit Goenka (son of Essel Group founder and chairman Subhash Chandra) and two non-executive directors Ashok Kurien and Manish Chokhani, alleging breach of corporate governance norms. Kurien and Chokhani later resigned.

Further, the fund had also sought induction of six nominees of its choice on Zee’s board. On its part, Zee had rejected the requisition citing “multiple legal infirmities”.

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