The Bombay High Court has allowed American investment firm Invesco to embark on a process to hold an extraordinary general meeting (EGM) for Zee Entertainment’s shareholders. Overturning a single bench’s judgement, Invesco has been allowed to approach the National Company Law Tribunal (NCLT) to conduct the EGM. Invesco had argued that it cannot do so on its own.
Invesco’s request for an EGM came before the Zee board announced plans to merge Zee with Sony Pictures Networks India in September 2021. At the EGM, Invesco seeks the removal of promoter and CEO Punit Goenka from the Zee board of directors. Invesco cited issues of corporate misgovernance and undue promoter control for its request for an EGM.
The Division Bench has repealed the interim order by Justice GS Patel that granted an injunction against holding the EGM.
Industry insiders remain unsure if Invesco will pursue the case with NCLT for an EGM, since the contours of the Zee-Sony merger grant Invesco’s demands. A Zee-Sony merger with a Sony majority on the board will ensure that issues related to corporate misgovernance and undue control by the Essel Group on the company’s management cease in the merged entity. Sources had earlier told BusinessLine that Invesco was pursuing an appeal against the court’s order to junk an EGM, simply to establish a precedent favourable to shareholder rights.
Analysts also believe that the Division Bench’s decision will not lead to the calling off of the Zee-Sony merger. However the merger will be delayed. “This will further delay the Zee-Sony merger process, which, in turn, will negatively impact share price performance over the near term. We believe there is a very low likelihood of the Zee-Sony merger being called off as it is beneficial for both entities to consolidate in this dynamic TV/OTT market,” said Karan Taurani of Elara Capital.