The Bombay High Court is slated to pronounce its order in Zee Entertainment Enterprises (ZEEL) legal tangle with its largest institutional investor, Invesco Developing Markets Fund, on Tuesday. Separately, the National Company Law Tribunal’s (NCLT) Mumbai bench has adjourned the case to Wednesday.
Appearing before the high court, ZEEL’s counsel Gopal Subramanium reiterated the media conglomerate’s inability to convene an extraordinary general meeting (EGM) as requisitioned by Invesco, terming it “illegal”.
On September 11, Invesco had asked ZEEL to hold an EGM and sought the removal of three directors, including ZEEL chief executive officer and managing director Punit Goenka, alleging breach of corporate governance norms. It had also sought induction of six of its nominees on ZEEL’s board.
On Friday, a single judge bench of Justice GS Patel, which heard the petition, said order would be pronounced on October 26.
In his argument before the high court, ZEEL counsel Gopal Subramanium said that a company’s board has the right to reject a requisition under certain circumstances, wherein investors come in with “designs” or are in violation of the Companies Act.
ZEEL’s counsel argued that Invesco is a foreign investor and has stakes in multiple listed Indian companies. Its requisition to appoint six independent directors on ZEEL’s board could be to “take over control” of the media firm.
“The common sense is that there are six directors, but they are not independent,” Subramanium said.
According to the ZEEL counsel, the Companies Act proposes that the Nomination and Remuneration Committee has to recommend the appointment of independent directors, which has to be approved by the board.
“There is no concept of an independent director being suggested by shareholders, which is also supported by the Sebi regulations,” he said, alleging Invesco’s proposal was a “wholesale illegality”.
The Bombay High Court was hearing a petition filed by ZEEL on October 2 asking it to declare Invesco’s EGM notice as “illegal and invalid”.
Meanwhile, the NCLT’s Mumbai bench has adjourned the case to Wednesday, as the tribunal will await Bombay High Court’s ruling on the matter.
Senior advocate Ranjit Kumar informed the NCLT that an intervention application has been filed on behalf of Zee group founder Subhash Chandra. However, details were not provided in open court.
Source: Financial Express