Invesco approaches NCLT over non-convening of EGM by ZEEL

Invesco Developing Markets Fund and OFI Global China Fund, LLC, the largest investors in Zee Entertainment Enterprises Ltd (ZEEL), have further intensified their demand for holding of an Extraordinary General Meeting (EGM) for the reconstitution of the ZEE Board. The investors, who together hold 17.88% of the paid-up share capital of the media group, in a second letter dated September 23, 2021, again called upon ZEE to hold an EGM, adding “it is your duty under company law to now do so”.

At this EGM, shareholders of ZEE will decide on the composition of the company’s Board of directors. Invesco has proposed the removal of non-independent directors, and recommended six additional independent directors for shareholders to consider and vote on.

With no move by ZEE on holding the EGM, the investors have now approached the National Company Law Tribunal (NCLT) and sought its intervention in directing ZEE to hold the EGM. The case No. CP - 322/2021 was registered on September 29, 2021.

As per media reports, the investors in their petition called the non-convening of the EGM by ZEE “a deliberate and oppressive act” and added that “it also constitutes gross mismanagement of the company’s affairs” by ZEE.

Zee Entertainment Enterprises Limited, Punit Goenka, R Gopalan and Vivek Mehra are the respondents in the case.

Meanwhile, amid Invesco’s calls for EGM and ouster of non-independent directors, ZEE announced the decision to merge with Sony Pictures Networks India on September 22, 2021. The non-binding Term Sheet provides an exclusive negotiation period of 90 days, during which ZEEL and SPNI will conduct mutual diligence and negotiate definitive, binding agreements. Under the terms of the non-binding Term Sheet, Sony Pictures Entertainment, the parent company of SPNI, would invest growth capital so that SPNI has a cash balance of approximately $1.575 billion at closing for use to enhance the combined company’s digital platforms across technology and content, ability to bid for broadcasting rights in the fast-growing sports landscape and pursue other growth opportunities.