Zee Entertainment is locked in a legal battle with one of its biggest foreign investors, Invesco, after it called for the removal of the TV network’s CEO, citing concerns about corporate governance.
Zee has said that it has tightened its governance procedures. But the controversy comes at a difficult time for one of India’s largest news and entertainment TV conglomerates as it recently started merger talks with a local unit of Japan’s Sony Group Corp.
Here’s what the Invesco-Zee controversy is about:
What Are there demands from Invesco?
Invesco’s legal filings reviewed by Reuters – which are not public – show it wants a change in Zee in light of the corporate governance and financial irregularities that have plagued the company, and even the country’s markets. Flagged by regulator.
Invesco’s Developing Markets Fund and its OFI Global China Fund LLC hold around 18 per cent stake in Zee. He has suggested the appointment of six new independent board members and the removal of Puneet Goenka, the current CEO of Zee.
Invesco asked Zee to convene an “extraordinary general meeting” of shareholders on September 11 to consider its demands.
How does Zee look at Invesco’s demands?
Zee on October 1 rejected Invesco’s request to reform the board, saying the move had legal loopholes.
Invesco then took the fight to the country’s company tribunal, where it is trying to force Zee to call a meeting, saying Zee’s behavior is “oppressive”. As per Friday’s order of the tribunal, Zee has two weeks to respond.
The TV giant says it has implemented corrective plans to address the concerns raised by the market regulator and that it adheres to the “highest standards of governance”.
It is unclear how shareholders will vote when the meeting is called, but Zee founder Subhash Chandra, CEO Goenka’s father, has accused Invesco of hatching a hostile takeover plot.
“They want to take over the company against Indian laws,” Chandra said. Invesco has not commented on the allegation.
Is the Zee-Sony deal in danger?
While Invesco was pushing for Zee shareholder meeting, the TV giant announced merger talks with Sony. The terms of the deal state that Goenka plans to continue as CEO of the merged entity, which will be mostly owned by Sony.
Invesco has told an Indian tribunal hearing that it is not against the Zee-Sony plan, but its filing criticizes how the two interacted.
Invesco said the Sony deal would allow the Chandra family to increase their stake to 20 per cent from the now four per cent, adding that it was “an attempt to simply divert the attention of the general public” and that the latter was not available at the time of a shareholder meeting. The event had to be stopped.
Zee Prime-time Appeal, Bollywood Support
In an unusual public satire, Chandra made a prime-time TV appearance on Zee’s Hindi news channel this week.
Speaking about Zee’s journey in India, Chandra shed tears and said, “I urge Invesco to treat Invesco not like an owner but like a shareholder… you want a fight, then I’ll fight back. “
Zee, which over the years has introduced dozens of entertainment channels and shows in several local languages in India, is a household name. It is now getting the support of Bollywood.
Filmmaker Boney Kapoor said on Twitter, “Zee which was earlier an Indian channel promoted by an Indian nationalist… is (now) harassed by American and Chinese investors. Praying Zee Entertainment lives in the passionate hands of the original Indian entrepreneur.”