Sebi cautions Zee Entertainment on delay in EGM notice

The market regulator, the Securities and Exchange Board of India (Sebi) has cautioned and advised Zee Entertainment Enterprises to exercise due diligence for ensuring timeliness of disclosures about the extraordinary general meeting (EGM) request made by its largest shareholder, Invesco.

In a caution letter to Zee, the Sebi said any such aberration in future would be viewed seriously and appropriate action would be initiated. In a letter dated October 21st, to the company, the Sebi said the disclosure dated September 13, 2021 made by Zee Entertainment Enterprises at 9:58 pm to the stock exchanges titled 'Requisition for calling an Extraordinary General Meeting of the shareholders of lEEL' received from Invesco Developing Markets Fund and OFI Global China Fund llC letter, was late. The board took note of the letter today.

"It is observed that the company received a requisition letter dated September 1, 2021 from its shareholders on September 12, 2021 at 1 :28 am (Sunday) calling for an EGM for resolutions on removal of executive/non-executive directors and appointment of few independent directors, which was considered to be a material event by the company and therefore, disclosed the said letter under Regulation 30 of SEBI lODR, Regulations, 2015, on September 13, 2021 at 9:58 pm. However, such disclosure was made much beyond 24 hours from receipt of information.   

In its letter, the Sebi said Zee submitted to the regulator that the disclosure was made subsequent to ascertaining the authenticity of the requisition. 'It is, however, noticed that the company took considerable time (around 36 hours) in initiating the verification exercise. Further, the reasons given by the company for delay in sending the verification mail to the investor is not tenable. Considering the gravity of the contents of the letter, such verification mail could have been sent by the company at the start of the business day itself (September 13, 2021) while simultaneously initiating their independent process of verification of their records," the Sebi said.

"Since this disclosure had a bearing on the ongoing e-voting; due to overlapping resolutions in the letter and the AGM; as a good governance practice the company should have disclosed the said letter within 24 hours of receipt of the letter," the Sebi warned the company.