Zee Entertainment Enterprises Ltd. said that its board has rejected the requisition notice by institutional investors Invesco Developing Markets Fund and OFI Global China Fund LLC that sought an extraordinary general meeting of shareholders.
“In its meeting held on Oct. 1, 2021, the board has arrived at a conclusion that the requisition is invalid and illegal,” the company said in a filing with stock exchanges. And hence it has conveyed its inability to convene the EGM to Invesco Developing Markets Funds and OFI Global China Fund, LLC.
The filing said the board consulted with independent legal counsel “including senior retired Supreme Court judges” to arrive at this decision in a “fair and transparent manner”.
The board found that the requisition did not comply with several laws, but did not specify exactly which provisions.
On Sept. 30, the National Company Law Tribunal in Mumbai had directed Zee Entertainment’s board to “positively consider” the EGM requisition sent by the two foreign funds – they together own 17.88% in the company.
The Story So Far…
The two institutional investors had, on Sept. 11, written to the company board seeking an EGM to oust Punit Goenka, managing director and chief executive, and two other directors. The two foreign funds also proposed appointment of 6 new independent directors on the company board.
The two directors, Ashok Kurien and Manish Chokhani stepped down the on Sept. 13, citing personal reasons. But Goenka has stood firm against this investor pushback.
Soon after, Zee Entertainment announced a merger with Sony India, saying the Goenka’s leadership was pivotal to the proposed combination.
After a reminder letter to the board prompted no action on its EGM requisition, earlier this week, Invesco moved the NCLT seeking a court-ordered EGM.
In its petition, which BloombergQuint has viewed, Invesco said not convening an EGM is a deliberate and oppressive act by Zee Entertainment.
Under the company law, shareholders holding not less than 10% of paid-up share capital can requisition an extraordinary general meeting.
The matter was heard by the NCLT on Sept. 30. Can the board deny calling an EGM when a 17% shareholder requests for it, the tribunal asked. We have not come across any case where the board can deny request for an EGM. It’ll be travesty of justice if their right to requisition an EGM is denied, it observed. Consider the requisition made by the petitioners, NCLT said while dictating its order.
The hearing of the case will resume on Oct. 4.