Tribunal orders Zee to announce EGM by Sunday

Zee’s counsel, Gopal Subramaniam, told the Mumbai bench of the National Company Law Tribunal (NCLT) that independent directors will meet on Thursday to consider holding an extraordinary general meeting, and the company will inform shareholders about its decision by Friday. .

After an hour-long argument by the lawyers of Invesco and Zee, the bench of Bhaskar Pantula Mohan and CB Singh observed: “We direct the respondents (Zee) to consider the request positively and comply with Section 100 of the Companies Act.” give.” .

The tribunal has fixed the next hearing in the matter on October 4.

Under the rules governing listed firms, a company has three weeks to announce an EGM from the day it receives a request from an investor holding at least 10% of the shares. Invesco’s letter dated September 11, seeking an EGM, was received the next day by Zee. Invesco wants shareholders to vote on the recommendations of Goenka’s removal as director and restructuring of the board.

Since the EGM is to be called within 45 days of the receipt of the letter from a major shareholder, it means that the shareholders’ meeting in Zee is to be held before October 27.

A Zee spokesperson said the company’s board is “scheduled to meet in connection with the matter as per the allotted statutory time”. The firm will continue to take all necessary action in the interest of the shareholders and in accordance with law.”

Invesco, the largest investor in Zee, owns 17.88% through Invesco Developing Market Fund and OFI Global China Fund Llc, unhappy with Zee founder Subhash Chandra and his son, Puneet Goenka, who together own 3.99% . The twin developments on Thursday—NCLT directs Zee board to convene an EGM and Zee independent directors to convene separate meetings to look into the issue—means that an EGM is a foregone conclusion, and the spotlight is on the matter. But how 78 percent of public shareholders vote.

For now, none of the major foreign shareholders, including local investors such as Vanguard, BlackRock, Amansa and Life Insurance Corporation of India, have spoken on the subject. Mint’s emails to Zee’s 10 largest shareholders in the past one week have not been answered.

Mukul Rohatgi, one of the two lawyers representing Invesco, said, “The matter is very simple. My client is of the view that the company is not running as smoothly as it should… It is a matter of corporate democracy. Is.”

Janak Dwarkadas, another lawyer for Invesco, argued, “Heaven won’t fall if they call an EGM. Let them call an EGM. They can convince the shareholders in the meeting that these investors (Invesco) are spoilers and so don’t vote for them.” side. But let the shareholders say that Mr. Goenka, you are right.”

Significantly, Invesco’s counsel also explained why the US fund manager had moved the NCLT before the end of three weeks. Invesco wants the regulatory body to direct Zee to conduct the EGM, as it is impracticable for Invesco to hold meetings with a large number of investors who own shares in the company.

“Zee has over 250,000 shareholders. We do not have the addresses of all shareholders to send notices. Hence, it becomes impractical for us to call the EGM,” said Dwarkadas.

The arguments made by Invesco’s counsel underlined the investor’s displeasure with the owners of Zee. Invesco’s lawyers said that instead of accepting Invesco’s letter seeking an EGM, Zee went ahead and arranged a transaction with Sony Pictures Networks. Goenka will continue to run the merged entity for five years. Our (Invesco) shareholding will be weak. But Goenka has been assured of a current shareholding of 3.99%. He (Goenka) is sitting handsome. There is no adverse effect on it. we have invested more ₹5,000 crore in the company. We are worried… our investment will go down.”