Some institutional investors are reportedly seeking the removal of Punit Goenka as the MD and CEO of Zee Entertainment Enterprises Ltd even as the deadline for the Sony merger expired on Saturday with no word of an extension.
They are seeking regulatory intervention and may call for an extraordinary general meeting (EGM) to oust Goenka if he refuses to step down.
The one-month extended deadline for the proposed $10-billion merger between Zee and Culver Max Entertainment, formerly Sony Pictures Networks India (SPNI), ended on Saturday.
With no updates from either side, the much delayed deal is teetering at the brink though there is a possibility of one more extension of the deadline.
On Friday, Zee said it is engaging in good faith negotiations with Sony to discuss the extension of the date ``by a reasonable period’’.
Though it is not clear whether Zee was referring to the ongoing discussions since December, it led to speculations the company has sought a fresh extension from Sony.
Even as the ball is now in Sony’s court, a Moneycontrol report on Sunday said a group of institutional investors including LIC who hold more than 23.5 per cent stake in Zee may call for an EGM to remove Goenka and some other directors — if Goenka remains adamant on occupying the top post after the merger.
The investors also include ICICI Prudential, Amansa Holdings, Nippon India and Plutus Group.
They are preparing an alternative merger plan for the Sony board and could notify exchanges about their intention to effect a leadership change at Zee.
The report said that the institutions have written to market regulator Sebi that due to the deadlock, the interests of minority shareholders have been hit.
There was, however, no confirmation on whether institutions were contemplating such a move.
According to the Companies Act, any shareholder or a group of shareholders holding at least 10 per cent of a company can request the board to call an EGM.
The board has 21 days from the receipt of the notice to call the meeting. If they fail to do so, the investors can call an EGM within three months.
If the institutions were to go ahead with such a plan, it would not be the first time Goenka is facing such a situation.
In September 2021, Invesco which held nearly 18 per cent of Zee, had requisitioned an EGM to remove Goenka and two other directors (who quit after that) and the induction of six independent directors.
This was rejected by Zee who moved the Bombay High Court and obtained an injunction from a single-judge bench.
This was challenged by Invesco, and later a division bench of the Bombay High Court ruled in its favour.
Subsequently, Invesco withdrew its EGM notice while maintaining its support for the proposed merger. If the latest report is correct, it will be an uphill battle for Goenka as the promoters holding in Zee is only at 4 per cent.
The proposed deal was signed between the two sides in 2021. It had stipulated the merger to be completed before December 21, 2023.
The agreement also included a grace period of one month. However, there are reports which say the agreement between Zee and Sony allows for three extensions of the deadline.
While an official announcement is likely to be made on Monday, the buzz was that parleys are continuing between the two sides and that Goenka has agreed to give up the role of MD & CEO of the merged entity. However, differences persist on his replacement.
