Invesco Developing Markets Fund, the top investor in Zee Entertainment Enterprises Ltd (ZEEL), has decided not to pursue with its requisition for an Extraordinary General Meeting (EGM) to evict certain directors.
The investor, which together with its subsidiary OFI Global China Fund holds a 17.88% stake in ZEEL, has reiterated its support for ZEEL’s proposed merger with Sony Picture Networks India (SPNI).
“We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognise that, following the merger’s consummation, the board of the newly-combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company. Given these developments, and our desire to facilitate the transaction (with SPNI), we have decided not to pursue the EGM as per our requisition dated September 11, 2021, it added.
“Invesco will continue to monitor the proposed merger’s progress. If the merger is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM, it added.
Earlier on September 11, Invesco had issued a requisition letter asking ZEEL’s board to hold an EGM to evict certain directors, including its chief executive officer and managing director Punit Goenka, alleging breach of corporate governance norms. Invesco had also raised concerns on the media firm’s proposed merger with SPNI, terming it as “unfairly” favouring the founding family.
ZEEL’s board, later in its meeting on October 1, termed the request as “invalid and illegal”. Following this, the companies moved both the Bombay High Court and the National Company Law Tribunal’s Mumbai bench.
On Tuesday, the Bombay High Court permitted an appeal filed by Invesco against an earlier interim injunction by a single bench judge to convene an EGM. The ruling permitted convening of ZEE’s AGM. The court had also directed the companies to maintain status quo for three weeks, permitting ZEEL to move the Supreme Court.
On its part, Invesco welcomed the ruling.
“We are pleased with the Bombay High Court’s ruling, which we view as an important reaffirmation of shareholder rights in India and the mechanisms under Indian law to hold boards accountable to their shareholders. The ruling is a boon for corporate governance in India and a win for shareholder democracy,” it said in the statement today.
Earlier in September, ZEEL’s board had also approved a merger of the company with rival SPNI, a subsidiary of Japan’s Sony Corporation. If the deal gets regulatory and shareholder approvals, it would create the country’s largest media and entertainment company. Both the companies, ZEEL and SNPI, have signed a non-binding term-sheet to combine their linear networks, digital assets, production operations and programme libraries.
