Zee Entertainment Enterprises Ltd refuted American fund manager Invesco’s allegations of corporate misgovernance and that its board is acting in a non-transparent manner.

The broadcaster said that five of the six independent directors had joined the board in the past two years, and Invesco was consulted before they were appointed.

The Mumbai-based media group said Invesco’s actions over the past few weeks and open letters seem to be “motivated by concerns entirely extraneous to any corporate governance issue”.

“The board notes that Invesco, in its open letter, has made references to the advisory letter issued by Sebi (Securities and Exchange Board of India) on 17 June 2021. We note that the open letter refers to the Sebi advisory letter as an “extraordinary regulatory rebuke” but has ignored the remaining observations in the letter whereby Sebi has acknowledged that the company has undertaken corrective measures and has directed the company to place the corrective measures before its audit committee,” Zee said in a disclosure to the exchanges.

Zee’s statement is partly correct because the market regulator, in the 17 June advisory note, had said that its examination into the affairs of the company had “revealed various irregularities” and “cautioned” the company “to be careful in future”.

“It would be worth noting here that five of the six existing independent directors on the board of the company have been appointed after Invesco’s investment in 2019 and that Invesco was consulted and their views were positively considered at the time of making such appointments,” it said.

Wednesday’s 11-page disclosure by Zee was the second such in as many days after the company disclosed a detailed note made by its managing director Punit Goenka on Tuesday.

On Monday, Justin Leverenz, chief investment officer, Invesco Developing Markets Equities, cited issues that had forced the American fund manager to take an activist approach for the first time in its history.

“Our initiative is driven by our belief that the promoter family of Zee, with the support of its current board of directors, continues to evade accountability to its ordinary shareholders, who own 96% of Zee’s equity,” he added.

“This lack of governance oversight by Zee’s current board has permitted Zee’s deep entanglement with the financial distress of its founding family, as identified in SEBI’s letter of 17 June 2021. In this extraordinary regulatory rebuke, SEBI mentioned ‘large outstanding dues from related parties’, ‘letters of comfort issued by directors of the company without informing the board’, and alongside other observations, concluded that ‘actions of the company are not in the best interest of shareholders,” Leverenz said.

“These matters are in the public domain, and you, as shareholders, are as aware of them as we are. We note that on the eve of our EGM requisition, the Indian stock market indices had more than doubled in the preceding five years, whereas the stock of Zee had more than halved in the same period. This is a sombre report card,” he added. Since Invesco first asked Zee to hold an extraordinary general meeting in its letter on 11 September, both sides have claimed to validate their positions. Invesco, which owns a 17.88% stake in Zee, wants to remove Punit Goenka, Zee’s managing director and the son of the company’s founder Subhash Chandra, from the board, besides urging shareholders to vote on inducting six new independent directors.

Zee has rejected Invesco’s demands of holding a special shareholder meeting. Both Invesco and Zee are fighting the battle before the National Company Law Tribunal and the Bombay high court.

Email queries to Invesco did not elicit any response till press time.

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