Zee board rejects demand from Invesco to convene extraordinary general meeting, citing “multiples legal infirmities”.

The board of Zee Entertainment Enterprises Ltd won’t hold a unprecedented general meeting (EGM) as demanded by shareholder Invesco Developing Market Funds, the corporate said during a regulatory filing on October 1.

The statement was issued each day after the National Company Law Tribunal (NCLT), while hearing a plea moved by Invesco, said the Zee board should consider the demand for an EGM as mandated by the law.

Zee, within the regulatory filing, said the board had convened a gathering on October 1 to debate the demand raised by the shareholders for the extraordinary meeting.

“In the simplest interests of the corporate as an entire , including all its shareholders and stakeholders, we express our inability to convene the
EGM,” it said.

The company claimed that it received this conclusion after consulting legal experts including former judges of Supreme Court.

Zee acknowledged that Invesco had involved the EGM to push for the ouster of directors Ashok Kurien and Manish Chokhani, aside from MD and CEO Punit Goenka. However, Kurien and Chokhani have already resigned from their posts, thereby, making the resolution moved by Invesco “infructuous”, it said.

“The Board deliberated, and unanimously concluded that the Requisition Notice isn’t valid, because it suffers from multiples legal infirmities,” the corporate said.

According to JN Gupta, founding father of proxy advisory firm Stakeholders Empowerment Services, the rejection of EGM on technical grounds “does not amount to good governance”.

“Zee should have raised an objection to EGM notice earlier if they felt it had been untenable,” Gupta told CNBC TV 18.

Notably, Invesco, which along side OFI Global China Fund LLC holds a 17.88 percent stake in Zee Entertainment, had demanded an EGM during a letter written to the corporate on 9/11 .

Apart from the ouster of three directors including MD Goenka, Invesco sought the appointment of six new directors – Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli, and Gaurav Mehta.

On Michaelmas , every week after Zee announced the mega merger with Sony Pictures Networks India (SPNI), Invesco moved the NCLT seeking an order from the tribunal for an EGM.

Before the tribunal, senior advocate Janak Dwarkadas, who was representing the investors, said their concern is that the Zee board may delay the calling of an EGM till the Zee-Sony merger comes into effect. “Our shareholding are going to be diluted post the merger,” he added.

The tribunal, however, observed that the merger with Sony shouldn’t be a priority because it cannot undergo without Invesco’s approval.

The NCLT, while noting that any entity with a minimum of 10 percent stake during a listed company has the proper to involve an EGM, decided to listen to the matter on October 4. The Zee board has “2-3 days time within which they will take the choice with reference to the requisition made by the petitioners”, it said.

In a press statement issued after rejecting the EGM call, Zee said the board received this decision after “referring to varied non-compliances under multiple laws, including the Securities and Exchange Board of India Guidelines, Ministry of data and Broadcasting Guidelines and key clauses under the businesses Act & Competition Act”.

The company added that it cannot discuss any future actions since the “matter is sub-judice”.