What do you see as the road ahead in the Zee / Invesco Fund dispute?

Here is what has happened in the Zee / Invesco case and the likely road ahead. On 30th September, the NCLT asked Zee Entertainment to call a special EGM as requested by Invesco Fund. Now Invesco Fund owns nearly 18% stake in Zee Entertainment and with more than 10% paid up capital, they are authorized to call for an EGM under Section 100 of the Companies Act 2013. However, Zee has refused to play ball.

According to Zee, the EGM would not be possible since any change in the board would require the approval of the Ministry of Information and Broadcasting as well as the approval of SEBI. Also, Zee has claimed that, the merger decision was approved by a majority of the votes and hence any reconsideration by a new board was not called for. Zee has already approached the court to quash the NCLT order on holding EGM.

While these issues can drag on at a legal and technical level, the big question is what are the larger implications. Clearly, Zee needs to engage its larger shareholders better, especially considering that Invesco holds nearly 18% in Zee. We have seen assertive institutional investors in the case of PNB Housing, Vedanta delisting, Eicher, Lupin, Finolex and many more. Clearly, institutions are looking to extract value by insisting on corporate governance.