Amid ZEE-Sony merger buzz, Invesco demands holding of EGM

Amid the flurry of activities following the ZEE-Sony merger announcement, Invesco Developing Markets Fund and OFI Global China Fund, LLC, the largest investors in Zee Entertainment Enterprises Ltd (ZEEL), which together hold 17.88% of the paid-up share capital of the media group, have reiterated their demand for an extraordinary general meeting (EGM).

Earlier on September 12, 2021, Invesco and OFI Global China had called for an EGM and also demanded the removal of ZEEL CEO and Managing Director Punit Goenka, along with two company directors Ashok Kurien and Manish Chokhani.

Following the September 12 letter, Manish Chokhani and Ashok Kurien immediately resigned from the posts of non-executive non-independent directors a day ahead of ZEEL’s AGM.

In the latest letter to ZEEL, Invesco and OFI Global China have stated that the decisions on material strategic import must follow, and not precede, actions towards establishment of a proper and independent governance structure. “In this context, and against the backdrop of our EGM requisition, your disclosure of 22 September 2021 is symptomatic of the erratic manner in which important and serious decisions have been handled at the company,” said the letter. 

The investors were referring to the recent announcement of the ZEE-Sony merger. Expressing dissatisfaction with the current promoters, Invesco in the letter stated that a “newly constituted board supported with the strength of independences will be best suited to evaluate and oversee the potential for strategic transactions”.

While some analysts are taken by surprise at the Invesco letter, some see the proposed merger with Sony as a smart move to fend off Invesco’s proposed move to remove Goenka.

In view of the fresh letter sent by Invesco, the coming one month will be very crucial as far as ZEEL is concerned. According to the rules, the company has time till October 2 to call for the EGM and another three weeks to hold it.