Zee Entertainment Enterprises (ZEE) share price skyrocketed 20 per cent per cent on Thursday to hit the upper circuit as Invesco Developing Markets Fund (Invesco), the largest shareholder of ZEE with around 18% stake, decided to withdraw its requisition notice which sought the removal of MD and CEO Punit Goenka from the board of ZEE. The move comes a day after Invesco won its appeal in the Bombay High Court against the media company. Zee shares surged to hit an intraday high of Rs 307.25, up 19.9 per cent from previous close on the BSE.
In a statement, Invesco reiterated its support for the proposed merger of ZEE with Sony Pictures Networks India (SPN). The fund said that it had decided not to pursue an extraordinary general meeting (EGM) to add six independent directors as Zee’s merger with Sony will achieve the fund’s aim of strengthening board oversight. “Since we announced our intention to requisition, Zee has entered into a merger agreement with Sony. We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognise that, following the merger, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company,” the fund said. Also Read
The fund went on to say that it will continue to monitor the proposed merger’s progress. “If the merger is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM,” it added. Earlier on September 11 last year, Invesco had issued a requisition letter asking ZEEL’s board to hold an EGM to evict certain directors, including its chief executive officer and managing director Punit Goenka, alleging breach of corporate governance norms. Additionally, it had raised concerns on the media firm’s proposed merger with SPNI, terming it “unfairly” favouring the founding family.
After rejecting the requisition, ZEE had moved to the Bombay High Court and secured an injunction from a single-judge bench, which was later challenged by Invesco. On Tuesday, a division bench of the Bombay High Court ruled in Invesco’s favour, recognising Invesco’s requisition for an EGM as legally valid, while setting off an earlier judgment of a single-judge order. The ruling permitted convening of ZEE’s AGM. The court had also directed the companies to maintain status quo for three weeks, permitting ZEEL to move the Supreme Court.
Invesco welcomed the ruling saying, “We are pleased with the Bombay High Court’s ruling, which we view as an important reaffirmation of shareholder rights in India and the mechanisms under Indian law to hold boards accountable to their shareholders. The ruling is a boon for corporate governance in India and a win for shareholder democracy.”
While Zee Entertainment share price has ralied over 45 per cent in the last one year, the stock has plunged nearly 8 per cent so far in 2022. Zee Entertainment shares are currently trading 47 per cent down from 52-week high of Rs 378.60, hit on 15 December 2021.