The development came a day after the ZEE board rejected the September 11 requisition notice sent by Invesco seeking an EGM to remove MD and CEO Punit
and two other directors from the board and induct another six members. The ZEE board on Friday said the notice was “not valid due to multiple legal infirmities” after seeking advice from legal experts, including three retired Supreme Court judges and senior counsel. They subsequently advised ZEE to file a “declaratory suit” in a civil court to confirm that the requisition is not valid.
Invesco Developing Markets Fund and OFI Global China Fund – both owned by Invesco – hold a total 17.88% stake in ZEE. Goenka and the promoter family own 3.99%. Goenka is ZEE founder Subhash Chandra’s son.
Some legal experts said that the case will come up for hearing in the National Company Law Tribunal (NCLT) on October 4 and that the objections raised by ZEE are outside its scope.
“Zee will likely argue that Invesco’s proposal to change the directors cannot be implemented as it would violate a number of laws,” said Sudip Mahapatra, partner at law firm S&R Associates. “Accordingly, it should not be required to call a shareholders’ meeting to seek a vote on such a proposal.”
Board rejig in focus
“Tactically, it may believe that the high court might be more amenable to entertain Zee’s wide-ranging arguments,” Mahapatra said.
Ashish K Singh, managing partner of law firm Capstone Legal, said, “The first hurdle for ZEE will be to prove its locus standi in a civil suit. In my opinion, the requisition notice is the subject matter of pending proceedings before the NCLT, where the company is also a party.”
Singh said ZEE’s main argument is that prior approval is needed for any change of directors.
However, it is unclear how this can be presumed even before the EGM, he said.
On September 11, the investors sent a notice to the ZEE board, seeking an EGM to remove three directors (two of whom have already quit), and the induction of six new independent directors.
On September 29, four days before the three-week deadline to decide on the notice, Invesco had moved the NCLT, seeking an order under Section 98 of the Companies Act, to direct the ZEE board to convene an EGM.
On September 22, the ZEE board announced a non-binding agreement for a possible merger with Sony Pictures Networks India (SPN).
Law firms Trilegal and Economic Laws Practice are advising ZEE, while law firm Dhruve Liladhar & Co is representing Invesco.