Sony: Invesco withdraws EGM requisition for ZEE’s board reconstitution, reiterates support for Zee-Sony merger

A day after winning its appeal in the Bombay High Court against Zee Entertainment Enterprises (ZEE), Invesco Developing Markets Fund (Invesco) has decided to withdraw its requisition notice, which sought removal of MD and CEO Punit Goenka from the board of ZEE.

In a statement, Invesco, the largest shareholder of ZEE with around 18% stake in the entertainment company, also reiterated its support for the proposed merger of ZEE with Sony Pictures Networks India (SPN).

“We continue to believe this deal in its current form has great potential for Zee shareholders,” the company said. “We also recognise that, following the merger’s consummation, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company. Given these developments, and our desire to facilitate the transaction, we have decided not to pursue the EGM as per our requisition dated September 11, 2021.”

In its requisition, the offshore investor had asked ZEE’s board to conduct an extraordinary general meeting (EGM) of the shareholders to vote on removal of Goenka and two other directors – who have quit since then – and induction of six new independent directors.

After rejecting the requisition, ZEE had moved to the Bombay High Court and secured an injunction from a single-judge bench, which was challenged by Invesco.

On March 22, a division bench of the Bombay High Court ruled in Invesco’s favour, recognising Invesco’s requisition for an EGM as legally valid, while setting off an earlier judgment of a single-judge order.

“We are pleased with the Bombay High Court’s ruling, which we view as an important reaffirmation of shareholder rights in India and the mechanisms under Indian law to hold Boards accountable to their shareholders. The ruling is a boon for corporate governance in India and a win for shareholder democracy,” Invesco said.

The investor has maintained that it will continue to monitor the proposed merger’s progress. “If the merger is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM,” it said.

“Zee welcomes the decision by Invesco for its belief in the true potential of the proposed merger with SPN and for its faith in the management’s approach,” the company said in a statement. “As the Company takes the required steps forward in seeking all the regulatory approvals as mandated by law, to complete the proposed merger, it continues to seek the required valuable support from all its stakeholders.”

The spokesperson further added that Invesco has been an integral part of ZEE’s “value-creation journey” for almost two decades.

“The company acknowledges this support. The company remains focused on the completion of the proposed merger with SPN, which is in the best interest of all the stakeholders,” ZEE said.