MUMBAI: The Bombay high court on Tuesday gave Zee Entertainment Enterprises a major relief in its 45-day feud with Invesco, its largest shareholder, as it restrained the US fund from calling a special shareholders’ meet to oust company MD Punit Goenka. Besides the removal of Goenka, Invesco wanted to induct multiple independent directors on the board of Zee. The nomination of identified individuals does not speak well of their “independence”, Justice G S Patel of the Bombay high court stated in his 44-page order, adding that Invesco’s demand to oust Goenka without proposing a replacement “puts Zee into a statutory black hole”. “Sometimes, it happens that a company must be saved from its own shareholders, however well-intentioned,” Justice Patel remarked. Invesco, which owns nearly 18% in Zee, can appeal against the order in the same forum or in the Supreme Court. Tuesday’s development comes after the Bombay high court last Thursday suggested Zee to call a special shareholders’ meet – or an extraordinary general meet (EGM) – as requested by Invesco. However, Tuesday’s favourable order follows after Zee lawyers argued that the company needs to maintain a balance between executive and independent directors on the board. Separately, Zee cancelled its Wednesday board meet for considering its second quarterly earnings of fiscal 2022 due to lack of quorum. Justice Patel observed that Goenka’s removal from Zee will cause an immediate vacancy and non-compliance. Not proposing a replacement for Goenka would result in Zee violating the Companies Act and facing liabilities. “No shareholder can be permitted to drive his company into a state of non-compliance and penalty.” Justice Patel further commented how this (removal of Goenka) is to be done without prior permission of the information and broadcasting ministry is also unclear. “I see no method of circumventing the (company’s) nomination and remuneration committee or directly proposing persons as ‘independent directors.” “It is impossible not to see the nominees of Invesco…in the Companies Act, shareholders do not get to choose individual independent directors. They may only demand that there be independent directors,” Justice Patel remarked. Zee shares ended more than 4% higher at Rs 317 by close of Tuesday’s trade on the BSE.
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