Zee board declines Invesco's EGM call; says requisition notice is not 'valid'

Zee Entertainment's board on Friday said it'll not convene the extraordinary general meeting (EGM) called by Invesco Developing Markets Fund on the lines "requisitioned by" it and termed it invalid. The company said the decision has been taken in the best interest of the company, shareholders and stakeholders.

"...in the best interests of the Company as a whole, including all its shareholders and stakeholders, we express our inability to convene the EGM on the lines requisitioned by you," Zee said in a stock exchange filing.

The Zee board decision comes a day after the National Company Law Tribunal (NCLT) bench in Mumbai made it clear that it is the "mandate of the law" that Zee calls for an EGM. It said the Zee board does not have any right to deny an EGM sought by shareholders having one-tenth of the shareholding.

The issue is at a critical stage as US-based investment management firm Invesco, a global fund that holds a 17.88 per cent stake in Zee, had on September 11 called for an EGM, seeking the ouster of Punit Goenka, Zee's MD & CEO and appointment of its own independent directors. Along with Invesco, OFI Global China Fund, LLC, had also called for an EGM.

The Zee board said at its meeting held on October 1, after considering the unanimous advice received about the legal validity of the requisition notice, the board deliberated, and concluded it's not "valid" and "suffers" from "multiple legal infirmities".

"In its meeting held on 1st October 2021, the Board has arrived at a conclusion that the requisition is invalid and illegal; and has accordingly conveyed its inability to convene the Extraordinary General Meeting to Invesco Developing Markets Funds and OFI Global China Fund, LLC," the statement said.

Citing legal infirmities in the requisition notice, Zee said policy guidelines for uplinking of TV channels in India shows that a company must take prior permission from the government before effecting any change in the CEO or board.

"It will be obligatory on the part of the company to take prior permission from the Ministry of Information & Broadcasting before effecting any change in the CEO/Board of Directors."

As per the company, the proposed appointments by the shareholders, if effectuated, will lead to the company effecting wide-ranging changes in the board of directors without prior permission of the Ministry of Information & Broadcasting, and will result in violation of its guidelines.

Zee said its board arrived at this decision by referring to various non-compliances under multiple laws, including the Securities and Exchange Board of India Guidelines, Ministry of Information and Broadcasting Guidelines and key clauses under the Companies Act & Competition Act.

"The company cannot comment on any future actions since the matter is sub judice," it said.

In India, Invesco, apart from Zee has made investments in the likes of HDFC, Kotak Mahindra Bank, TCS, Infosys, HDFC Bank, Oberoi Realty, Godrej Properties, HDFC Life Insurance and Havells India. As of filing the story, the Zee share was trading at Rs 294.9, down Rs 8.3 or 2.74 per cent, compared to the previous day close of Rs 303.2 on the NSE.

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