NEW DELHI, Oct 1: The board of India’s Zee (ZEE.NS) rejected on Friday requests from two institutional investors for a meeting of shareholders, setting the stage for a courtroom battle that could affect an impending merger with Sony Group Corp.
The board’s decision comes a day after India’s companies court said Zee should consider a request by Invesco Developing Markets Fund and OFI Global China Fund LLC to hold an extraordinary general meeting.
Invesco and OFI Global had earlier this month asked Zee to remove Punit Goenka and two directors from the board and to appoint multiple independent directors.
But initial merger terms show Zee’s chief executive officer Punit Goenka will become the merged entity’s managing director and CEO as part of the deal.
On Friday, Zee rejected the call for an EGM, citing the lack of approvals required from India’s capital markets regulator and the federal broadcasting ministry for initiating changes to company’s board.
“The Board has arrived at this decision by referring to various non-compliances under multiple laws… and after taking into account the interests of all the shareholders and stakeholders of the Company,” Zee said in a regulatory filing.
Companies are legally required to call a meeting when asked by shareholders with stakes of 10% or more, said Shoubhik Dasgupta, a counsel at Pioneer Legal.
“The grounds given by Zee are applicable if and when the shareholders’ resolutions are passed at the EGM. Not at this stage,” Dasgupta told Reuters.
Invesco and OFI Global together account for 17.88% shares in Zee and filed a petition this week with the National Companies Law Tribunal (NCLT) after Zee last week signed a merger deal with Sony Group Corp’s India unit in a move that will create the country’s largest broadcaster.
“We feel that the company is not running as it should run in accord with the directions or for the welfare of the shareholders,” a lawyer for Invesco told a Mumbai bench of the NCLT on Thursday. “We are worried that our investment will go down the drain.”
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