Invesco moves NCLT against Zee, petition to be heard on Thursday

Move premature; in process of taking required steps: Zee

Invesco Developing Markets Fund on Wednesday moved the National Company Law Tribunal (NCLT) against Zee Entertainment Enterprises and three of its directors, including Chief Executive Officer and Managing Director Punit Goenka, for not calling an extraordinary general meeting (EGM) of the company, as sought by the US fund.

The fund, which holds about 18 per cent stake in Zee Entertainment Enterprises (ZEEL), is seeking the reconstitution of the board by induction of its nominees.  

Apart from Goenka, ZEEL Chairman R Gopalan and Independent Director Vivek Mehra have been made respondents to the petition. The matter is listed for hearing on Thursday.

When contacted, a ZEEL spokesperson said: “The board of the company remains committed to acting within the framework of law and is focused towards enhancing the company’s growth and shareholder value. It is in the process of taking the required steps within the statutory period. The company does not wish to comment on any impulsive or premature steps taken by Invesco Developing Markets Funds and OFI Global China Fund.”

On September 11, Invesco and OFI Global China Fund, backed by Oppenheimer Holdings, had asked the ZEEL board to convene an EGM to induct six of their nominees. In the same letter, Invesco had proposed the removal of Goenka and two other directors -- Ashok Kurien and Manish Chokhani -- from the board in the EGM. Kurien and Chokhani resigned just a day before the company’s annual general meeting of shareholders on September 14.

Within days, ZEEL announced a merger proposal with rival Sony Pictures. The deal would give a majority stake to Sony shareholders and dilute the stake of Zee shareholders. The Subhash Chandra family, however, would receive an extra 2 per cent stake in the merged entity as non-compete fee, taking their total stake to 4 per cent.

According to law, the ZEE board has to take a decision on the EGM within three weeks and the deadline is not over yet.

In a letter dated September 23, Invesco and Oppenheimer Fund asked the ZEEL board again to adhere to its fiduciary duties and not violate its statutory obligations to convene the EGM, as requisitioned earlier. “We urge the board to reflect on this communication and act in the best interest of the company, its public shareholders, and uphold the highest standards of corporate and board governance,” the letter said.

The Zee promoters had lost control of the company after they defaulted on bank loans taken by the promoter entities. As the shares of the listed entities like Zee and Dish TV were pledged with lenders, the promoters’ stake in both companies fell to low single digit.

Last week, YES Bank, which now holds 26 per cent in Dish TV after invoking the promoters’ pledge, had asked it to call an EGM to induct six of its nominees on the Dish board and remove Jawahar Goel as CEO.