The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday directed the board of Zee Entertainment Enterprises (ZEE) to consider requisition made by the company’s largest investor to hold an extraordinary general meeting (EGM) before October 3.
The bench led by Bhaskara Pantula Mohan and CB Singh in its oral order directed the board of the company to consider the requisition as per Section 100 of the Companies Act.
The tribunal has posted the hearing for the case to October 4.
On September 11, Invesco, which holds 17.88% stake in ZEE, had sent a notice to the ZEE board requisitioning an EGM of the company to consider removal of MD & CEO Punit Goenka and two other non-independent non-executive directors from the company’s board and induction of six new independent directors.
As the ZEE board did not announce an EGM date, and the 21-day deadline was to end on October 3 rd, Invesco had filed a petition in the NCLT on Wednesday.
Seeking the tribunal’s intervention, Invesco’s counsels argued that this is the case of Corporate Democracy.
The offshore investors of ZEE also argued that the company is not running smoothly as it should have and as shareholders are concerned and hence they want to remove respondent no 2 (Goenka) from the board of the company.
“After I give notice to Respondent No 1 (ZEE), the board has to convene a meeting within 21 days which will end on October 3,” argued Mukul Rohtagi, senior advocate, appearing for Invesco. “We have invested so far over Rs 5,000 crore in the company and now that we have lost the confidence in the present management, every day is important for us to call for EGM.”
Senior Counsel Janak Dwarkadas, who also appeared for the investors, argued that so far the current board has not called for EGM because they have already informed the stock exchange that they have signed a non-binding term sheet agreement with Sony Pictures Networks India (SPN) for some sort of merger.
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“We are not against the merger but it should consider by the board that we think would be a proper board to consider this merger,” argued Dwarkadas. “We are seeking the removal of Punit Goenka, but one of the points of the said merger is that he will continue to be MD in the merged entity for five years. Also, the announcement said that his shareholding will not change, and in that case, we fear that it will impact our interest and hence we want to hold EGM for the removal of Goenka.”
Countering this, Gopal Subramanium, Senior Advocate for ZEE argued that the independent directors and board will hold their meeting and will take decisions on EGM.
“This is happening before the 21 deadline, which ends on October 3,” he argued.
A ZEE spokesperson said that the Board of the company is scheduled to meet as per the statutory time allotted, in relation to the matter. “The Company will continue to take all the actions needed in the interest of the shareholders and as per law,” said ZEE spokesperson.
Source: Economic Times