The standoff between promoters and minority shareholders of Dish TV India Ltd escalated last week after close to 71 percent of the company’s shareholders rejected the appointment of four independent directors over corporate governance concerns at the extraordinary general meeting (EGM) held on December 22.
Exchange filings showed that the minority shareholders rejected the appointment of -Rajesh Sahni, Virender Tagra, Aanchal David and Shankar Aggarwal. Instead, the shareholders approved the appointment of Sanjay Khanna and Ravi Bhushan Puri as new directors.
The Mint newspaper first reported the development on December 27.
The latest flare-up is part of long-simmering tensions between the promoters and public shareholders led by special situations investor JC Flowers, which has flagged several instances of corporate governance lapses at the company, including Dish TV’s decision to write off around Rs 203 crore investment in its OTT streaming app Watcho in June last year.
Minority shareholders have so far rejected several proposals by the current management led by Zee group founder Subhash Chandra and family, including the reappointment of Jawahar Goel, the younger brother of Subhash Chandra as managing director and the adoption of financial statements.
Experts maintained that while the change in the company’s management was warranted, the onus of steering the company in the right direction lay with minority shareholders now.
“This was long overdue at DishTV, but it is not clear whether JC Flowers has brought in a new board who can inspire confidence with shareholders,” Shriram Subramanian, founder and managing director of investor advisory firm InGovern Research Services, told Moneycontrol.
Dish TV’s promoters, who currently own around 4% stake in the company, have sought to restrain JC Flowers from exercising voting rights and prevent its participation in the management and affairs of the company or claiming rights to the shares. In 2016, Chandra borrowed more than Rs 4,000 crore from Yes Bank against the shares of Dish TV and some real estate properties. After he was unable to service the debt, a part of the pledge was transferred to JC Flowers’s Asset Reconstruction Co., in which Yes Bank also owns a 9.99 per cent stake.
JC Flowers owns 24.19 percent of Dish TV
Independent directors are usually people of integrity hired by a company for their expertise and experience. The directors cannot be affiliated with the company or its promoters in any way that could compromise their independence. They can serve a maximum of two straight terms of five years each, with a possible reappointment only after a cooling-off period.
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