Zee Entertainment falls nearly 3% in trade as board refuses to hold EGM

• Zee Entertainment has declined to hold an EGM despite the company law court asking its board to consider the demand.
• Zee Entertainment’s board unanimously rendered the requisition as invalid on grounds that it suffers from ‘multiple’ legal imperfections.
• Post the development, Zee Entertainment’s stock price fell about 3% in trade to ₹294.30 per share, as of 3:30 p.m. on Friday.

Zee Entertainment Enterprises Ltd., which has been locked in a tussle with its largest shareholder, has declined to hold an extraordinary general meeting (EGM) despite the company law court asking its board to consider the demand, as per a stock exchange filing on Friday.

“Accordingly, 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,” the company said in reply to the requisitions made by Invesco in its September 11 and September 23 letters.

The US-based Invesco Developing Markets Fund and OFI Global China Fund, together, hold 17.88% in Zee Entertainment.

The development comes a day after the Mumbai bench of the National Company Law Tribunal (NCLT) directed the board of Zee to consider Invesco’s requisition to hold an EGM before October 3. The next NCLT hearing on the matter is scheduled on Monday.

In a meeting on Friday, which was not attended by Punit Goenka, managing director and chief executive at Zee Entertainment, its board unanimously rendered the requisition as invalid on grounds that it suffers from ‘multiple’ legal imperfections, the company said.

Post the development, Zee Entertainment’s stock price fell about 3% in trade to ₹294.30 per share, as of 3:30 pm on Friday.

Simply put, Zee Entertainment’s board has been locked in a battle with its investors-- Invesco and OFI, as they requested for the removal of Goenka, along with Ashok Kurien and Manish Chokhani, from the position of directors at the company, citing issues with corporate governance.

Later, on September 23, Kurien and Chokhani resigned citing personal reasons.

The funds had also asked for appointment of six new independent directors to the company’s board.

Meanwhile, Zee went ahead and announced the company’s merger with Sony Pictures Networks India on September 22. Based on disclosures filed with exchanges, Sony will hold a majority stake of 52.93% in the merged entity and infuse growth capital of about $1.6 billion once the deal closes. Zee shareholders, post the deal, will hold the balance 47.07% in the merged entity.

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