invesco, zee entertainmentIndia’s largest shareholder on Thursday backed Zee’s merger with Sony and decided not to prosecute it. zee, In a statement, the company said it is pleased with the Bombay High Court’s decision, which is an important affirmation of shareholder rights in India and the mechanism to hold the Board accountable to its shareholders under Indian law. This decision is a boon for corporate governance in India and a victory for shareholder democracy.
On 22 March, a Division Bench of the Bombay High Court ruled in favor of Invesco, holding Invesco’s demand for an EGM as legally valid, setting up an earlier ruling of a single-judge order.
“Since we announced our intention to seek an EGM and add six independent directors to the board of directors of Zee, Zee has entered into a merger agreement with Sony. We are confident that the deal in its current form will be beneficial to Zee shareholders. There is great potential. We also believe that, following the termination of the merger, the Board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening the Board’s oversight of the Company. In view of our desire to facilitate transactions, we have decided not to pursue the EGM as per our demand dated 11th September, 2021.”
This comes after the Bombay High Court on March 22 quashed a single-judge order granting interim injunction on holding the EGM for the removal of Zee chief executive Puneet Goenka. “We have held that the demand notice (for EGM sent by Invesco to Zee) is neither illegal nor liable to be dismissed,” the court said.
However, Invesco will continue to monitor the progress of the proposed merger. It added that Invesco reserves the right to demand a fresh EGM if the merger is not completed as currently proposed.
Meanwhile, Zee Entertainment has three weeks from the Bombay High Court to appeal in the Supreme Court against the Bombay High Court order.
In September 2021, Invesco sent a request to the Zee Board to hold an EGM as it felt that the company was not running smoothly. The fund, which is owned by about 18 per cent of Zee, sought the removal of three directors from the board, including Goenka. Following Zee’s refusal to respond to the demand, Invesco moved the Company Law Tribunal, which ordered consideration of the demand. Challenging the tribunal, Zee approached the High Court asking for the demand notice to be declared invalid and void.
In October 2021, a single bench in an interim order granted an injunction against holding the EGM, which was challenged by Invesco, saying the high court had no jurisdiction to hear the matter which should have been decided by the tribunal. .
Zee Entertainment Enterprises Ltd (ZEEL) shares rose 15 per cent on Thursday. At 9:55 am, Zee shares were trading 15.25 per cent or 39.05 points higher at Rs 295.10 on the BSE.
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