Zee refuses to convene the EGM as requisitioned by Invesco

'In its meeting held on October 1, 2021, the Board has arrived at a conclusion that the requisition is invalid and illegal,' says Zee in a stock exchange filing

The board of Zee Entertainment Enterprises Ltd will not hold an EGM as demanded by shareholder Invesco, the company said on Friday. 

"The Board sought the opinions of independent counsel, legal experts including senior retired Supreme Court judges and evaluated the matter in a fair and transparent manner. In its meeting held on October 1, 2021, the Board has arrived at a conclusion that the requisition is invalid and illegal; and has accordingly conveyed its inability to convene the Extraordinary General Meeting to Invesco Developing Markets Funds and OFI Global China Fund, LLC," Zee said in a stock exchange filing. 

Zee's decision comes a day after the National Company Law Tribunal (NCLT) on Thursday directed Zee Entertainment Enterprises Ltd (ZEEL) to hold a board meeting to consider its minority shareholder Invesco's request for convening an Extraordinary General Meeting (EGM) for discussing various issues. On Friday at 1455 hours, the company's scrip on NSE was trading 3% lower at Rs 293.70.

US-based Invesco had moved a petition seeking convening of the EGM, removing the company's chief executive and managing director Punit Goenka as well as two other directors, and reconstituting the board with the appointment of six new directors. Since Goenka was an interested party, he recused himself and did not attend, participate or vote in the Board meeting, the media company said on Friday.

The tribunal's order came on a petition filed by Invesco Developing Markets Fund along with OFI Global China Fund against media major ZEEL for not convening the EGM.

While directing ZEEL to convene a board meeting to consider the request, a two-member Mumbai bench of the tribunal, headed by its Acting President Bhaskara Pantula Mohan, also asked the company to communicate the board's decisions appropriately to the shareholders.

On Thursday, Mukul Rohatgi, representing Invesco, told the tribunal that ZEEL was not being run as it should be and that the new directors should be on the board to ensure the interest of the shareholders.

According to Rohatgi, Invesco had requisitioned for EGM on September 11 and the communication was received by ZEEL on September 12. He also urged the tribunal to direct the company to hold the EGM within 45 days.

The NCLT bench, comprising Bhaskara Pantula Mohan and Chandra Bhan Singh, passed the directions and the matter will be heard next on October 4.

Invesco Developing Markets Fund, formerly Invesco Oppenheimer Developing Markets Fund, along with OFI Global China Fund LLC hold 17.88 per cent stake in ZEEL.

On Wednesday, an Invesco spokesperson said that ZEEL's failure to convene the EGM prompted the company to approach the NCLT.

"The company's (ZEEL) failure to take steps within its notice period to call an EGM, coupled with its delay in noticing our EGM on September 11th and failure to notice our September 23rd letter to the exchanges, has prompted us to file a petition before the NCLT to enforce our rights as shareholders to call for this EGM of the company," the spokesperson said.

Earlier this month, the two investment firms called for the EGM to discuss various issues, including removal of Goenka and two other independent directors -- Manish Chokhani and Ashok Kurien. Chokani and Kurien have resigned. "Please note that Mr. Manish Chokhani and Mr. Ashok Kurien have resigned as directors of the Company on Septemb er 13, 2021, for personal reasons," Zee further said on Friday.

Besides, the investment firms have sought the appointment of six of its own nominees on the company's board. They are Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta.

Goenka is the son of Essel Group Chairman Subhash Chandra. Essel Group currently owns 4 per cent stake in the company.

On September 22, ZEEL and Sony Pictures Networks India (SPNI) had announced their merger, which will create the country's largest media company.

The merged entity, in which SPNI's parent company Sony Pictures Entertainment would infuse USD 1.575 billion, will be a publicly listed company in India.