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| Image Credit: ZEE |
The Invesco Developing Markets Fund filed a complaint with the National Company Law Tribunal (NCLT) on Wednesday, accusing Zee Entertainment Enterprises and three of its directors, including Chief Executive Officer and Managing Director Punit Goenka, of failing to call an extraordinary general meeting (EGM) of the company, as the US fund had requested.
The fund, which owns around 18% of Zee Entertainment Enterprises (ZEEL), is requesting that its nominees be inducted onto the board of directors.
In addition to Goenka, the petition has named ZEEL Chairman R Gopalan and Independent Director Vivek Mehra as respondents. The case is set to be heard on Thursday.
“The board of the company remains dedicated to acting within the boundaries of the law and is focused on boosting the firm's growth and shareholder value,” a ZEEL representative stated when contacted. It is in the process of taking the necessary measures within the prescribed time frame. The company does not desire to comment on Invesco Developing Markets Funds and OFI Global China Fund's rash or premature actions.”
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On September 11, Invesco and OFI Global China Fund, both of which are supported by Oppenheimer Holdings, requested that the ZEEL board call an EGM to induct six of their nominees. In the same letter, Invesco requested Goenka and two other directors, Ashok Kurien and Manish Chokhani, be removed from the board of directors at the EGM. Kurien and Chokhani resigned on September 14, just one day before the company's annual general meeting of shareholders.
Within a few days, ZEEL announced a proposed merger with Sony Pictures. Sony shareholders would get a majority holding in the company, while Zee shareholders' stake would be diluted. However, as a non-compete fee, the Subhash Chandra family would receive an additional 2% share in the amalgamated business, bringing their total holding to 4%.
The ZEE board is required by law to make a decision on the EGM within three weeks, and the deadline has not yet passed.
In a letter dated September 23, Invesco and Oppenheimer Fund urged the ZEEL board to uphold its fiduciary responsibilities and not violate its statutory obligations to call the EGM as requested before. “We ask the board to consider this communication and act in the company's best interests, as well as respect the highest standards of corporate and board governance,” the letter stated.
After the promoter entities failed on bank loans, the Zee promoters lost control of the company. The promoters' shareholding in both companies decreased to low single digits as the shares of listed entities like Zee and Dish TV were pledged with lenders.
Last Monday, YES Bank, which now owns 26% of Dish TV after invoking the promoters' pledge, requested that an EGM be held to induct six of its nominees onto the Dish board of directors and to oust CEO Jawahar Goel.
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