MUMBAI: A day after refusing to convene an extraordinary general meeting (EGM) as demanded by shareholder Invesco Developing Market Funds, Zee Entertainment Enterprises Ltd (ZEEL) on Saturday moved the Bombay High Court seeking the demand to be deemed as “illegal and invalid”.
“This is to inform you that the Company has filed a suit before Bombay High Court under the ordinary original civil jurisdiction (Civil Suit), inter alia requesting the Bombay High Court to declare that the requisition notice sent to the Company by Invesco Developing Markets Fund and OFI Global China Fund LLC (shareholders of the Company) is illegal and invalid,” the company said in a stock exchange filing.
In a regulatory filing on Friday, October 1, ZEEL stated that its board would not be holding an EGM. The statement was issued a day after the National Company Law Tribunal (NCLT), while hearing a plea moved by Invesco, said the Zee board should consider the demand for an EGM as mandated by law.
In a press statement issued after rejecting the EGM call, ZEEL said the board arrived at this decision after “referring to various non-compliances under multiple laws, including the Securities and Exchange Board of India Guidelines, Ministry of Information and Broadcasting Guidelines and key clauses under the Companies Act & Competition Act”.
ZEEL contends that Invesco’s call for an EGM is “infructuous”. Why? Because it was centred on a demand for the ouster of directors Ashok Kurien and Manish Chokhani, apart from MD and CEO Punit Goenka. However, as Kurien and Chokhani have already resigned from their posts, the resolution is ipso facto untenable, it argues.
US-based Invesco, which along with OFI Global China Fund LLC holds a 17.88% stake in ZEEL, had demanded an EGM in a letter written to the company on September 11.
Apart from the ouster of three directors including MD Goenka, Invesco has sought the appointment of six new directors – Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli, and Gaurav Mehta.
On September 29, a week after Zee announced the mega merger with Sony Pictures Networks India (SPNI), Invesco moved the NCLT seeking an order from the tribunal for an EGM.
On September 22, ZEEL and Sony Pictures Networks India (SPNI) had announced their mergers, which will create the country’s largest media company.
The merged entity, in which SPNI’s parent company Sony Pictures Entertainment would infuse $1.575 billion, will be a publicly listed company in India.
Speaking of the proposed merger, what does not quite gel in terms of how Invesco is operating in this whole legal imbroglio is what its motives currently are. There is without douibt more at play below the surface.
For in the normal course, Invesco would have been expected to support the merger. As elucidated by proxy advisor firm InGovern, at the time the merger process was announced, with “White Knight” Sony as a majority shareholder, and a likely reconstituted board, the merged entity is exactly what Invesco would have hoped for.
Turns out it is not. So the billion dollar question is why not?
There is also the no small matter of how the “White Knight” might respond to the legal imbroglio that is developing with no resolution in sight. Will it get spooked and just walk away? Or will it “stay the course”? SportzPower’s odds are on Sony taking the latter option.
There is certainly more to this than meets the eye. And while SportzPower is yet to get secure “full disclosure” from industry leaders it has reached out to, what is a given is that there are wheels within wheels that are aturning…
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