The boards of ZEE Entertainment Enterprises (ZEEL) and Dish TV will have to convene an EGM in 45 days and seek shareholder’s approval after large investors sought removal of certain directors.
“The Companies Act 2013 has laid out the process for investors calling an EGM. Within 45 days, the company is required to hold an EGM and if they don’t, then the investors have three months to organise the EGM for which the company will have to bear expenses,” proxy advisory firm Institutional Investor Advisory Services India (IiAS) said in a note.
The removal of directors requires a simple majority (more than 50% of the votes cast). Promoters also can cast votes, but this will have “limited impact” in the case of DishTV and ZEEL, since promoters are “small”.
The promoters own 5.93% stake in DishTV, helmed by managing director Jawahar Lal Goel, and 3.99% (Punit Goenka and family) stake in ZEEL.
Large investors of both ZEE Entertainment and Dish TV had sought the removal of directors and the appointment of fresh ones. The next four weeks will determine whether there will be a smooth transition to a new board, it added.
YES Bank, which holds a 25.63% stake in Dish TV, had sought removal of five directors, including managing director Jawahar Lal Goel, citing governance issues. The other directors whose removal was sought are Rashmi Aggarwal, Bhagwan Das Narang, Shankar Aggarwal and Ashok Mathai Kurien.
In its September 3 notice, Yes Bank said the company’s board had approved a rights issue, despite the bank’s — which is the single largest shareholder of the company — objections.
In a similar instance, ZEEL’s foreign portfolio investors Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) and OFI Global China Fund — who together hold 17.88% stake in the company — had sought removal of many directors.
These included removal of directors Punit Goenka and non-executive directors Ashok Kurien and Manish Chokhani. At present, Goenka — son of Essel Group founder and chairman Subhash Chandra — is the CEO and managing director at ZEEL.
While ZEEL held its AGM on Tuesday, Dish TV’s AGM is slated for September 27. The demands by the large investors were not part of the resolution process that was put for vote at ZEEL AGM.