NCLT directs Zee board to consider Invesco's requisition for EGM

It's not a discretionary power of the Zee Entertainment board to call or not call for EGM, says NCLT

The Mumbai Bench of the National Company Law Tribunal (NCLT) on Thursday asked the Zee Entertainment Enterprises board to consider the requisition of the Invesco Developing Markets Fund and OFI Global China Fund LLC to hold an extraordinary general meeting (EGM) of the company.

Following the order, the independent directors of the board met on Thursday evening and the meeting remained inconclusive till the time of going to press.

The meeting followed a direction from the Bench of Bhaskar Pantula Mohan and Chandra Bhan Singh, who asked the company’s board to comply with the Companies Act, 2013, which says the board of a company shall, at the requisition made by shareholders with not less than one-tenth of the paid-up share capital of the company, will call an EGM.

The Invesco Developing Markets Fund and OFI Global China Fund LLC hold 17.88 per cent in Zee Entertainment.

A Zee Entertainment spokesperson said: “The board of the company is scheduled to meet in accordance with the statutory time allotted, in relation to the matter. The company will continue to take action needed in the interests of the shareholders.”

The matter will be heard next on October 4.

The company has to call an EGM within 21 days of getting the requisition by a shareholder holding more than 10 per cent in the firm and hold it within 45 days. If this is not done, the meeting can be called and held by the requisitionists within three months of the date of the requisition.

In this case, the company has more than 250,000 public shareholders and hence Invesco was unable to take this route.

Gopal Subramanium, representing Zee Entertainment, told the Bench it depended on the facts of each case whether the board of the company wanted to hold an EGM or not.

On this, the Bench said calling an EGM was not the board’s discretion alone.

As the board of the company failed to call an EGM and with the 21-day deadline to call for such meeting ending, the Invesco Developing Markets Fund and OFI Global China Fund LLC moved the NCLT, seeking the tribunal’s intervention to direct the company to call the EGM.

Senior counsel Mukul Rohatgi, representing Invesco, said the reason behind moving the NCLT was that the company was not running as smoothly as it should have. Hence, it wants an EGM to remove Puneet Goenka, managing director and chief executive officer of Zee Entertainment, and two other directors who had resigned, and appoint independent directors.

Janak Dwarkadas, appearing for Invesco, said the fund had apprehensions that the board would not call an EGM because the company had informed the stock exchanges it had signed a non-binding term sheet agreement with Sony Pictures for merging itself with it.

Mohit Saraf, founder and managing partner, Saraf & Partners, said: “The NCLT observed that the board of Zee is duty-bound to call an EGM in accordance with the shareholder’s request.”