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Ahead of Zee’s annual general meeting to be held today, corporate governance advisory body InGovern has raised concerns over the appointment of Zee’s promoter, MD and CEO, Punit Goenka as the member of the company’s Audit Committee.
Goenka was appointed as a member of the Audit Committee with effect from March 17th, 2021, replacing Ashok Kurien and Manish Chokhani. InGovern noted that it was surprising that a promoter and MD, Goenka, a non-Independent Executive Director, has been appointed as an Audit Committee member. “It is strange that the Board allowed such induction of a Promoter Executive Director into the Audit Committee,” said InGovern.
Goenka is the son of Essel Group patriarch, Subhash Chandra. Essel Group owns 4 per cent stake in Zee, after selling their majority stake to pay Chandra’s mounting ₹13,000 crore debt.
Zee’s largest shareholders Invesco Developing Markets Fund and OFI Global China Fund has called for the removal of Goenka from the company’s board of Directors in an Extraordinary General Meeting. InGovern, Invesco, OFI and proxy advisory firm Investor Advisory Services also raised concerns against Ashok Kurien and Manish Chokhani, calling against their re-appointment on the company's board of directors during the AGM which will be held today.
Resignations
However, Kurien and Chokhani resigned ahead of the AGM. Other concerns raised by InGovern against the Essel Group include the fact that some of the party transactions related to the Audit Committee overseen by Kurien and Chokhani have led to the reduction of promoter Essel Group’s shareholding to 3.99 per cent. “Zee is probably one of the few companies where the promoters retain significant control over the company with very little shareholding,” InGovern said.
Under Chokhani and Kurien, the Audit Committee did very little to safeguard the interests of the company and the minority shareholders, according to InGovern. “Even the currently qualified consolidated financial statements show that little has been done to completely unwind all abusive related party transactions. The audit committee has not ensured that the Put Option is properly recognised in the books as per accounting standards,” said the InGovern report.
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