The National Company Law Appellate Tribunal (NCLAT) on May 26 set aside a National Company Law Tribunal (NCLT) order directing the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) to review their initial approvals to the Zee-Sony merger.
The NCLT order was passed without hearing the parties involved, the appellate tribunal said, as it sent the case as to it. NCLT will have to hear the issue afresh by granting all the parties a chance to put forth their case.
Appearing for Zee Entertainment, senior advocate Mukul Rohatgi argued that NCLT had passed the order without hearing their case and the consequence of the order virtually nullifies all the regulatory approvals they obtained in the last year.
Rohatgi argued that BSE and NSE merely screen-shared a copy of SEBI's order from April, which pertained to another company of the Essel group, but NCLT somehow directed them to review the approval.
The lawyers for the stock exchanges told the appellate tribunal that they were instructed to just place SEBI's order at NCLT and not make any submissions. They would have no objection to any order that the NCLAT would pass, the exchanges said.
On May 11, NCLT had directed the exchanges to reassess and validate the non-compete clause of the merger, which was approved by the market regulator Securities and Exchange Board of India (SEBI).
SEBI issued an interim order in April against Shirpur Gold Refinery, an Essel Group company, along with its former chairman Amit Goenka, promoter Jayneer Infrapower and Multiventures, and five others for allegedly siphoning off funds from the company and violating other rules.
This adverse interim ruling against an entity of the Essel Group led to the NCLT passing its May 11 order.
The proposed deal would see Sony Pictures Entertainment indirectly hold a 50.86 percent stake in the combined company, while Zee's founders will have a 3.99 percent share and the remaining 45.15 percent will belong to other shareholders, including the public.
A non-compete fee of Rs 1,100 crore will also be paid by Sony to the promoters of the Essel Group. A definitive merger agreement between Zee and Sony was signed in December 2021.
The proposal has been approved by BSE, NSE, and shareholders of Zee. The merger has also been approved with modifications by the Competition Commission of India.
The merger between Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises (ZEEL) is expected to be completed by September, Sony Corporation CEO Kenichiro Yoshida has said.
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