Two years after the merger between Zee Entertainment and Sony was announced, the National Company Law Tribunal (NCLT) on Thursday gave its nod to the deal that will lead to the emergence the largest media entity in the country.
The merger received NCLT nod even as the dispute between Zee promoters and the Securities and Exchange Board of India still being pending final decision.
SEBI had banned Punit Goenka and Subhash Chandra from holding any executive positions in Zee and any of its listed companies, alleging misappropriation of funds.
According to the original terms of the merger agreement, Punit Goenka was supposed to lead the Zee-Sony merged entity. At present, the matter is being heard by the Securities Appellate Tribunal, which refused to grant a stay on the SEBI order. Punit Goenka stepped down from the management and the board, tendering his resignation from the directorship of the company in July 22.
After the announcement of the NCLT order, Zee shares hit a 52-week high on Thursday afternoon, rising 16 per cent to ₹290.7 apiece.
The NCLT dismissed all objections related to the deal. Several creditors including IDBI and Axis Bank had tried to initiate insolvency proceedings against Zee at the NCLT. As of July 20, IDBI has approached the NCLAT, against the NCLT’s refusal to commence insolvency proceedings. The NCLT order greenlighting the merger will be uploaded on Friday.
Separately, the Bombay High Court has dismissed the application filed by Axis Finance Ltd to implead Zee Entertainment, Essel Mauritius, and Culver Max Entertainment (Sony) in its commercial summary suit against ZEEL promoter Subhash Chandra.
Legal hurdles cleared
With this, all legal hurdles for the merger have been removed. The only question that remains is whether Punit Goenka will lead the merged entity as envisaged in the earlier agreement. That will depend on the court proceedings in the SEBI dispute.
Goenka had said that he is willing to step aside if it comes to it. Meanwhile, the company can apply to the Registrar of Companies for the approval of the merged company name, brand within the next 30 days.