Invesco’s demand that Zee Entertainment Enterprises Ltd convene a special shareholders’ meeting to remove managing director Puneet Goenka and reconstitute the board is not legally compliant, Bombay High Court relieves Zee Group founder Subhash Chandra , who are battling rebellion against it. His family’s control over India’s largest publicly traded broadcaster.
However, the ongoing legal battle between the two parties in the National Company Law Tribunal will continue.
The company court will hear whether Zee should be ordered to convene a shareholders’ meeting on Wednesday.
Justice GS Patel in his 44-page order on Tuesday said, “It cannot be correct to say that the Board approves every demand. I also do not suggest that the rights of the shareholders be curtailed or abrogated or that they do so.” Can’t. Look for what they do now. But the way they’re going to do it has to be legally compliant.”
“I specifically asked Mr. Dwarkadas (Invesco’s counsel) whether this (Invesco’s Extraordinary General Meeting, or EGM demand) means that a group of eligible shareholders can propose that the company conduct online gambling business ,” the order stated. “Their response was that this is too extreme or bizarre. Indeed it is, and that is precisely the point. If the proposed proposals are not ones that can even be considered in law, then how is the question of voting them even at an EGM. getting up?”
“Sometimes, it so happens that a company should be saved from its own shareholders, though with good intention. If a shareholder resolution binds a corporate enterprise to always walk on treacherous shoals of statutory compliance, then this There is no comprehensible or logical reason to allow consideration of such resolution. Shareholder primacy or dominance does not extend to permitting illegality driven by shareholder,” the order said.
Zee termed Tuesday’s decision a victory for all stakeholders.
A Zee spokesperson said, “The decision…is a major victory for all stakeholders of the company.”
An email sent to Invesco seeking comment remained unanswered.
For now, the verdict gives time to Zee, which is essential in its fight against Invesco, which holds 17.88% of the shares. First, Invesco would ideally prefer the EGM to be held before December 31 as its recommendations to remove Goenka and appoint six directors would require approval from 50% of the shareholders. From January 1, director appointments and removals require approval from 75% of shareholders.
The delay in deciding whether the EGM needs to be called will give Zee additional time to complete the due diligence process and seek shareholders’ approval for its proposed transaction with Sony Pictures Networks India Ltd. Chandra is betting that shareholders will support Invesco’s proposal for merger on its demands. Mint reported on Tuesday that Zee and Sony plan to complete an inspection of books and assets as part of the proposed merger by the end of November, three weeks ahead of the 90-day deadline set by the two broadcasters.
The ongoing controversy began when Invesco in its September 11 letter to Zee asked to hold an EGM as it was unhappy with the company’s operations. Subsequently, Zee and Sony agreed to sign a non-binding agreement for the merger, under which Sony would invest $1.6 billion and take a 53% stake in the merged entity.
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