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Zee Entertainment Gets Breather, Bombay HC Grants Injunction Against Invesco’s Call For EGM – Moneycontrol.com

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The Bombay High Court on October 26 offered relief to Zee Entertainment by granting an injunction against its Invesco’s call for an extraordinary general meeting (EGM).

“The Bombay HC has restrained Invesco from taking any action in furtherance of their requisition notice (to call an EGM),” said Nirav Shah, a partner at law firm DSK Legal. “The court will now have to decide whether the requisition notice is valid or not on the grounds raised by Zee and until the Bombay High Court decides this, the meeting requisitioned by Invesco cannot be held,” he explained.

“There will be an injunction in terms of prayer clause (a) of the Interim Application, restraining Defendants Nos. 1 and 2 (including their employees, agents and anyone acting by, through or under them) from taking any action or step in furtherance of the Requisition Notice dated 11th September 2021, including calling and holding an EGM under Section 100(4) of the Companies Act, 2013,” the court said in its October 26 order.

The court observed that directing Zee Entertainment to call an EGM would be potentially non-compliant. It further said that there is a fundamental flaw in Invesco’s construct.

“Invesco assumes that resolutions at EGM are somehow special, more sacrosanct than resolutions proposed by the board,” it said.

Zee had sought injunction against Invesco from taking any action or steps as part of its requisition notice including calling and holding an EGM.

On October 22, the court reserved its order in the matter when Zee had argued that the call for an EGM by its largest shareholders Invesco and OFI Global was illegal and invalid.

Invesco wanted to remove Zee Entertainment Managing Director and Chief Executive Officer Punit Goenka and appoint six independent directors on the board of the company.

Gopal Subramanium, the counsel for Zee Entertainment, said the board of a listed company needs an optimum balance between executive and non-executive directors. The change that Invesco wanted to bring in would defeat that purpose. Zee also noted that a prior permission was needed from the Ministry of Information and Broadcasting to make any such change.

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Kapil Sibal, appearing for Goenka, argued that the company would not be able to function if its MD and CEO were removed. 

Invesco’s counsel Janak Dwarkadas said they have a statutory right to call for an EGM and that they satisfied both numerical and procedural need to call an EGM. He said that they need a numerical requirement of one-tenth of equity share cap to call for EGM, pointing towards the 17.88 percent stake held jointly by Invesco and OFI Global.

Dwarkadas also said that they have moved the National Company Law Tribunal (NCLT) and the tribunal has the power to decide on this case.

He said that they need a numerical requirement of one-tenth of equity share cap to call for EGM, pointing towards the 17.88 percent stake jointly held by Invesco and OFI Global.

Dwarkadas also said that they have moved the National Company Law Tribunal (NCLT) and the tribunal has the power to decide on this case.

A day prior to reserving its order, the court had asked Zee to call an EGM but added that the EGM resolution had to be kept in abeyance till it decided on the legality and validity of the requisition.

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The court had also said that the EGM will be chaired by a retired judge, adding that the resolution will be subject to the approval from the Ministry of Information and Broadcasting (MIB).

While Subramanium had told the court during the October 21 hearing that the company will inform the date of the EGM the next day, on October 22, he reiterated that Invesco’s call for the EGM was invalid.