Zee Entertainment Enterprises (ZEEL) said it will not convene the extraordinary general meeting (EGM) called by Invesco.

The company said the decision has been taken in the best interest of the company, shareholders and stakeholders.

ZEEL board met today, 1 October 2021, to deliberate the course of action in relation to the requisition notice issued by Invesco Developing Markets Fund and OFI Global China Fund on 11 September 2021. Punit Goenka did not attend, participate, or vote in the board meeting.

Based on legal advice from the company’s counsel, the ZEEL board unanimously concluded that the requisition notice is not valid, as it suffers from multiples legal infirmities.

“in the best interests of the Company as a whole, including all its shareholders and stakeholders, we express our inability to convene the EGM on the lines requisitioned by you,” ZEEL said in a regulatory notification issued today, 1 October 2021.

The board decision came a day after the Mumbai bench of the National Company Law Tribunal (NCLT) directed ZEEL to consider positively the requisition for an extraordinary general meeting (EGM) made by shareholder Invesco under the Companies Act. It also directed ZEEL to “comply with section 100 of the Companies Act” and posted Invesco’s application for compliance on 4 October 2021.

Invesco Developing Markets Fund and OFI Global China Fund LLC, which together own a 17.88% stake in ZEEL, filed a petition against the media company, before the National Company Law Tribunal (NCLT), Mumbai Bench, under Sections 98(1) and 100 of the Companies Act, 2013, requesting the tribunal to order an EGM of the company.

Invesco Developing Markets Fund and OFI Global China Fund on 11 September 2021 served a requisition notice to ZEEL to hold an EGM to remove Punit Goenka from the firm’s board as director.

Goenka, son of Essel Group founder and chairman Subhash Chandra, is managing director and chief executive officer of ZEEL.

The two institutional investors also called for the removal of two of ZEEL’s independent directors, Ashok Kurien and Manish Chokhani. The letter also proposed the appointment of six independent directors, including Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta.

On 13 September, ZEEL informed that Chokhani and Kurien resigned as non-executive non-independent directors.

Meanwhile, on 21 September 2021, ZEEL’s board approved the merger between the firm and Sony Pictures Networks India (SPNI). The merger ratio is expected to result in 47.07% of the merged entity to be held by ZEEL shareholders and the balance 52.93% of the merged entity will be held by SPNI shareholders.

As part of the transaction, Punit Goenka will continue to be the managing director and CEO of the merged entity. However, majority of the board of directors of the merged entity will be nominated by Sony Group.

Further, certain non-compete arrangements will be agreed upon between the promoters of ZEEL and the promoters of SPNI. According to the term sheet, the promoter family is free to increase its shareholding from the current 4% to up to 20%, in a manner that is in accordance with applicable law.

ZEEL is a media and entertainment company engaged in providing broadcasting services. On a consolidated basis, ZEEL posted a net profit of Rs 213.8 crore in Q1 FY22, steeply higher than net profit of Rs 30.37 crore in Q1 FY21. Net sales increased 35% to Rs 1775 crore in Q1 FY22 from Rs 1312 crore posted in Q1 FY21.

Shares of ZEEL tumbled 3.61% to Rs 292. The stock hit a high of Rs 302.90 and a low of Rs 284.40 so far.

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