Zee Gets Reprieve as NCLAT Offers More Time
On Thursday, the NCLT Appellate Tribunal (NCLAT) gave a reprieve to Zee by giving them more time to respond to the EGM demand raised by Invesco Fund and OFI Global China Fund.
Here is a quick time line of key events in the Zee-Invesco case and how it panned out since 11-September.
1) On 11-Sep Invesco Fund and OFI Global China Fund call for the removal of Punit Goenka from the post of MD & CEO. They also called for the removal of two directors of Zee; Ashok Kurien and Manish Chokhani. Ashok and Manish have resigned from the board.
2) Not only did Punit Goenka (son of Subhash Chandra) continue at the helm, he also stitched a deal with Sony Pictures for a merged entity in which Sony Pictures will have 53% and Zee Entertainment will have 47%. Punit was to continue for 5-year term.
Check - What does the Zee merger with Sony mean
3) Invesco was unhappy with the deal as it would dilute their stake. Post-merger, Invesco Fund will see its holding fall from 17.88% to 8.40%. During the same period, the ownership of Zee promoters will go up from 3.44% to 4% due to non-compete clause.
4) Invesco asked the Zee board to summon an EGM immediately so that the issue of Punit Goenka continuing at the helm could be discussed as well as taking a fresh view on the merger. Invesco also wanted to induct 6 of its nominees as directors in Zee.
Check - Invesco Approaches NCLT to Call EGM for Change of Zee Board
5) Zee refused to call the EGM and underlined that any changes in the management of Zee will require prior approval of the I&B Ministry.
6) With the NCLT asking Zee to file a response to Invesco’s EGM request in 36 hours, Zee approached the NCLAT under the pretext that such a short time was against the principles of natural justice.
7) After hearing the submissions, NCLAT did come to the conclusion that the NCLT had erred in not giving enough time to Zee for filing a response. That comes as a major reprieve for Zee Entertainment.
Zee is also a case of how promoters need a new strategy in such conflicts with large institutional shareholders. The entire chronology of events above happened in less than 4 weeks indicating how busy a week it has been for Zee and for Invesco too.
NCLT Instructs Zee Entertainment Board to Call for EGM
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