Zee Entertainment's top investor Invesco has moved the National Company Law Tribunal (NCLT) against the company for not calling an extraordinary meeting (EGM).
Proxy advisory firms are perplexed regarding Invesco's move.
Shriram Subramanian, founder and MD of InGovern Research Services, proxy advisory firm noted that if Invesco has moved NCLT under Section 100 then the company has 21 days to call for an EGM.
"Since, 21 days have not passed it is not clear as to what is the purpose behind moving NCLT," he said.
As per rules, the ZEEL board has time up to October 2 to call for an EGM, as requisitioned by Invesco and another 21 days to hold it. EGM has to be called within 45 days with a 21-day notice period. So, the company can push it to a maximum period of 24 days from receipt of investor request.
Subramanian added, "even if an EGM is not called by the company, Section 100 gives the right to investor to call for an EGM at the cost of the company. Other shareholders will be wondering as to what is the motivation behind Invesco doing this and whether they are trying to de-stabalise the company in the process."
JN Gupta, the co-founder of Stakeholder Empowerment Services, also said, “Invesco’s move is premature as the law gives 21 days to Zee to call for an EGM and there is still time for the company to comply with it. The law does not provide any provision for NCLT to intervene at this stage.”
According to Avanti Chandele, Partner, Mind Legal, a listed company on receipt of notice to call for an EGM, has to call a meeting within 21 days.
"According to Companies Act, if the Board doesn't call a meeting within 21 days then within three months the shareholders themselves can call the meeting."
Invesco had first sent a letter to Zee requesting the company to convene an EGM on September 11, which the latter received on September 12. Therefore, Zee needs to announce an EGM date by October 2 at the latest.
Subramanian highlighted that Invesco is calling the EGM for the removal of Punit Goenka, MD and CEO, Zee Entertainment and for the appointment of new directors.
Invesco has suggested the names of Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli, Gaurav Mehta to be appointed as new independent directors.
The US Fund had also asked for the removal of Manish Chokhani and Ashok Kurien ahead of the AGM which was held on. September 14. Both the directors had resigned before their re-appointment was taken up at the 39th AGM of Zee.