Zee’s shares closed 17% higher on the BSE on Thursday following the development. Zee has three weeks to file an appeal against the court order that upheld Invesco’s right to call for an extraordinary general meeting (EGM) of Zee shareholders. But there is no clarity on the company’s stance following the change in circumstances.
Currently, the planned merger between Zee and the local unit of Japan’s Sony is pending regulatory and shareholders’ approval.
Invesco owns about 18% in Zee and its support to the merger proposal will be vital as the transaction requires the approval of 75% of the Mumbai-listed company’s shareholders. Goenka holds a tad below 4% in Zee, which was founded by his father Subhash Chandra in 1992.
“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. Since we announced our intention to requisition an EGM, Zee has entered into a merger agreement with Sony Pictures. 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,” Invesco said. Alleging corporate governance lapses, Invesco, which has been a shareholder in Zee for almost two decades, had sought an EGM to oust Goenka and induct six new independent directors in the company.
Zee welcomed Invesco’s decision for its belief in the potential of the proposed merger with Sony Pictures and for its faith in the management’s approach. “The company remains focused on the completion of the proposed merger, which is in the best interest of all the stakeholders,” Zee said.
Invesco said it will proceed to withdraw the EGM request application pending before the National Company Law Tribunal (NCLT). It, however, added that it will “continue to monitor the proposed merger’s progress” and if it failed, it might again seek a fresh EGM. Invesco holds investments worth more than $7.9 billion (over Rs 59,000 crore) in India.