Key investors and LIC want regulatory action as the Sony-ZEEL deal delays

Key investors and LIC want regulatory action as the Sony-ZEEL deal delays

Key investors and LIC want regulatory action as the Sony-ZEEL deal delays

If Punit Goenka declines to step down, investors may petition shareholders to elect a new board.

Citing the present deadlock in the company's merger negotiations with Sony Group, a group of institutional investors, led by Life Insurance Corporation of India (LIC), which owns more than 23.5% of Zee Entertainment Enterprises Ltd (ZEEL), wrote to the market regulator. Those with knowledge of the situation said that minority stockholders are suffering as a result.

If ZEEL managing director and CEO Punit Goenka steps down before the deadline, the investors—which additionally incorporate ICICI Prudential, Amansa Holdings, Nippon India, and Plutus Group—are also putting up a backup merger proposal for the Sony board to review. Refuse to go. The sources, who want to remain anonymous, said that the merger with Sony had been completed.

According to a source with knowledge of the situation, "the fund plans to call an extraordinary general meeting (EGM) to remove Goenka while some other directors."

As per the individuals mentioned before, it is anticipated that investors would notify the exchanges of their desire to impact the ZEEL leadership transition. Punit Goenka is the representative of the ZEEL promoters, who own around 4% of the business.

In answer to a question via email, a representative for Zee said,

The corporation doesn't respond to rumors or conjecture, a Zee representative emailed Moneycontrol.

Requests for response from representatives of LIC, ICICI Prudential, Amansa Holdings, Nippon India, and Plutus Group were not immediately answered.

According to Indian regulations, the board must schedule an EGM within 21 days of receiving a legitimate demand from shareholders who control at least 10% of the company. The board must take action if the plan is approved by the majority of shareholders.

The price of ZEEL's shares dropped by 7% to Rs 231, on January 20.

The original deadline for the merger's completion was December 21, 2023, but Zee asked for an extension, and Sony granted it. As a result, the merger agreement inked in 2021 provided for a 30-day extension beyond the December 21 date in the event that either party requested it.

A provision in the inked merger agreement said that ZEEL would need additional time to settle the question of whether Goenka will oversee the merged company. After the regulatory investigation into Goenka, Sony withdrew its original consent to accept him as the head of the combined company.

The Securities and Exchange Board of India (SEBI) accused Zee in June of last year of engaging in dishonest business practices by fabricating loan recovery claims in order to conceal private funding arrangements involving Zee Chairman Subhash Chandra. The regulator claimed in an interim decision that Chandra and his son Goenka had misused their authority and embezzled money. Goenka was thereby prohibited from serving in executive or director capacities in publicly traded corporations.

On October 30, nevertheless, Goenka's prohibition issued by SEBI was reversed by the Securities Appellate Tribunal, and he was once again appointed managing director of ZEEL.

Separately, during the December 22 EGM, almost 71% of Dish TV's shareholders voted against the nomination of four independent directors due to concerns about corporate governance. Additionally, the Goenka family owns Dish TV. The public shareholders and promoters are at odds more now, with special circumstances investor Jesse Flowers leading the charge. The investor cited a number of instances of poor corporate governance, such as Dish TV's June 2017 decision to write down an investment of almost Rs 203 crore in its streaming service Watcho.