Invesco’s demand: NCLT directs Zee to take steps for EGM

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October 01, 2021 5:30 AM

Invesco has been consistent in its demand for an EGM in its earlier letters, dated September 11 and September 23, wherein it had asked ZEEL to adhere to its fiduciary duties and statutory obligations and convene an EGM.

The two investors, who together hold 17.88% in ZEEL, had approached the NCLT for directing ZEEL to hold its EGM within the stipulated time frame to reconstitute the board and remove two board members and Punit Goenka as the managing director and CEO of the company.The two investors, who together hold 17.88% in ZEEL, had approached the NCLT for directing ZEEL to hold its EGM within the stipulated time frame to reconstitute the board and remove two board members and Punit Goenka as the managing director and CEO of the company.

The National Company Law Tribunal (NCLT) on Thursday directed Zee Entertainment Enterprises (ZEEL) to hold a board meeting to consider the request of its shareholders, Invesco Developing Markets Fund and OFI Global China, for convening an extraordinary general meeting (EGM) of the company to discuss various issues.

The tribunal’s direction came on a petition filed by Invesco and OFI Global China. The two investors, who together hold 17.88% in ZEEL, had approached the NCLT for directing ZEEL to hold its EGM within the stipulated time frame to reconstitute the board and remove two board members and Punit Goenka as the managing director and CEO of the company.

The NCLT bench, led by Bhaskara Pantula Mohan and CB Singh, observed that the law mandates ZEEL to convene an EGM and (it) is not the board’s “discretion”. According to Section 100 of the Companies Act, 2013, listed companies are supposed to announce a date for an EGM within three weeks of receiving such a request from an investor holding at least 10% shares. The tribunal also directed the company to communicate the board’s decisions appropriately to the shareholders.

The NCLT will next hear the matter on October 4.

Invesco has been consistent in its demand for an EGM in its earlier letters, dated September 11 and September 23, wherein it had asked ZEEL to adhere to its fiduciary duties and statutory obligations and convene an EGM.

Mukul Rohatgi, representing Invesco, told the tribunal that Zee Entertainment was not being run as it should be and that the new directors should be on the board to ensure the interest of the shareholders. Rohatgi also reiterated Invesco’s earlier demand of an EGM, despite the merger, to remove MD & CEO Goenka, and two other directors (who have already resigned).

Zee’s counsel responded by saying that the independent directors of ZEEL would hold a meeting either on Thursday evening or Friday to take a call on the requisitions by an investor to hold an EGM. “The independent directors of the company will be meeting today (Thursday) evening, which would be followed by a board meeting. The board meeting would be held either today or tomorrow, depending on how late independent directors’ meeting would go, and a decision on the EGM would be taken,” ZEEL’s counsel Gopal Subramanium informed the tribunal.

“The board of the company is scheduled to meet as per the statutory time allotted, in relation to the matter. The company will continue to take all the actions needed in the interest of the shareholders and as per the law,” a ZEEL spokesperson said.

Invesco (formerly Invesco Oppenheimer Developing Markets Fund) along with its subsidiary OFI Global China Fund, had earlier asked ZEEL to convene an EGM to evict certain directors for alleged breach of corporate governance norms. Invesco had also sought the appointment of its six members on the company’s board.

On ZEEL’s earlier proposed merger with rival Sony Pictures Networks India (SPNI), Invesco counsel said it was not against the deal. However, it was worried about a fall in its stake in the merged company. “We are only seeking clarity on this,” senior counsel Janak Dwarkadas said, appearing for the petitioners.

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