NCLT directs Zee board to consider Invesco’s requisition for EGM

The National Company Law Tribunal (NCLT) on Thursday asked Zee Entertainment and its board to consider the requisition of Invesco Developing Markets Fund and OFI Global China Fund LLC, who hold 18 per cent stake in the company, to hold an extraordinary general meeting (EGM) of the company.

The bench of Bhaskar Pantula Mohan and Chandra Bhan Singh has also asked the company and its board to comply with Section 100 of the Companies Act, 2013, which says that the board of a company shall, at the requisition made by shareholders with more than one-tenth of the paid-up share capital of the company, call an EGM of the company. The matter will be next heard on October 4.

The counsel representing Zee Entertainment apprised the bench that the independent directors of the company are meeting on Thursday and subsequently the board will also meet to decide on the matter of calling for an EGM of the company.

“The Board of the Company is scheduled to meet as per the statutory time allotted, in relation to the matter. The Company will continue to take all the actions needed in the interest of the shareholders and as per law,” a Zee spokesperson said.

By law, the company has to call for an EGM within 21 days of getting the requisition by a shareholder holding more than 10 per cent stake in the company and hold the EGM within 45 days, failing which the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition.

Gopal Subramanium, representing Zee Entertainment, told the bench that it depends on the facts of each case whether the board of the company wants to hold an EGM or not, following which the bench said that it is not the discretionary power of the board to call an EGM or not.

US-based Invesco had moved a petition seeking convening of the EGM, removing the company’s chief executive and managing director Punit Goenka as well as two other directors, and reconstituting the board with the appointment of six new directors.

Mukul Rohatgi, representing the petitioners, said the company is not running as smoothly as it should and hence they want an EGM to remove Puneet Goenka, the current MD & CEO of Zee Entertainment and two other directors, who have already resigned, and appoint some independent directors. The notice was sent to the company on September 11 and till date they have not called for an EGM with the deadline to call for an EGM expiring on Sunday, said Rohatgi.

Senior counsel Janak Dwarkadas, appearing for the petitioners, argued that the board is bound to call for an EGM but their apprehension is that the board would not call for it. Separately, they have informed the stock exchanges that they have signed a non-binding term sheet agreement with Sony for merging the company. He, however, stated that they are not against the merger but the merger proposal should be considered by a board that they think is a proper board.

But, Rohatgi said that merger or no merger they want an EGM.

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