Mumbai: Zee Entertainment Enterprises Ltd. said it is unable to call a meeting of shareholders as sought by investors Invesco Developing Markets Fund and OFI Global China Fund LLC, setting the stage for a legal tussle.
“The board deliberated, and unanimously concluded that the requisition notice is not valid, as it suffers from multiple legal infirmities,” Zee said in an exchange filing 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.”
The refusal risks escalating a standoff with Invesco and OFI, which petitioned an Indian court Wednesday seeking the EGM, after earlier writing to Zee with its request. The funds want the ouster of Zee board members including Chief Executive Officer Punit Goenka, who has since started merger talks with Sony Group Corp.’s Indian unit with the aim of leading the combined company.
It’s almost certain that Invesco and OFI will ask the court at the next hearing Oct. 4 to order the EGM, and if such an order is passed Zee will appeal against it, said Anupam Shukla, counsel at Pioneer Legal. While the Sony-Zee deal is “at a very nascent stage, the developments in the matter will likely be slow at least until the EGM is concluded,” he said.
Zee shares fell as much as 6.3% after the news.
- Any broadcaster needs permission from India’s Information Ministry before changing its CEO/board
- Accepting Invesco and OFI’s demands would effectively change control of the company without triggering an open offer that’s required by law
- The proposed change of control would fall afoul of India’s anti-competition rules
Emails to Invesco and OFI weren’t immediately answered outside of U.S. business hours. The funds hold a combined 17.9% stake in Zee. –Bloomberg
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