Invesco, Zee Entertainment‘s largest shareholder, on Thursday has backed the Zee merger with Sony and has decided not to pursue litigation against Zee. In a statement, the company said it is pleased with the Bombay High Court’s ruling, which is 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.
On March 22, a division bench of the Bombay High Court ruled in Invesco’s favour, recognising Invesco’s requisition for an EGM as legally valid, while setting off an earlier judgment of a single-judge order.
“Since we announced our intention to requisition an EGM and add six independent directors to Zee’s Board of Directors, Zee has entered into a merger agreement with Sony. We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognize 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, we have decided not to pursue the EGM as per our requisition dated September 11, 2021,” it said.
This comes after the Bombay High Court, on March 22, quashed a single-judge order granting interim injunction on holding the EGM to remove Zee chief executive Punit Goenka. “We have held that the requisition notice (for EGM sent by Invesco to Zee) is neither illegal nor incapable of being set aside,” the court said.
However, 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 said.
Meanwhile, Zee Entertainment, has three weeks’ time from the Bombay High Court to move the Supreme Court to appeal against the Bombay HC order.
In September 2021, Invesco sent a requisition to the Zee board to hold an EGM as it felt the company was not running smoothly. The fund that owns nearly 18 per cent of Zee sought to remove three directors from the board including Goenka. After Zee’s refusal to respond to the requisition, Invesco moved the company law tribunal which ordered considering the requisition. Challenging the tribunal, Zee approached the high court asking it to declare the requisition notice as illegal and invalid.
In October 2021, a single bench granted an injunction against holding of the EGM in an interim order which Invesco challenged saying the high court had no jurisdiction to hear the matter which should have been decided by the tribunal.
Shares of Zee Entertainment Enterprises Ltd (ZEEL) rallied 15 per cent on Thursday. At 9:55 am, shares of Zee were trading at Rs 295.10, up 15.25 per cent, or 39.05 points higher, on the BSE.
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