Zee’s institutional shareholders are deliberating on calling an extraordinary general meeting (EGM) to remove Zee CEO and MD, Punit Goenka from the firm. Some institutional investors may have also approached the Securities and Exchanges Board of India (SEBI) to seek regulatory interventions to address the inordinate delay in the merger of Zee and Sony. 

Even as the January 20 deadline to complete the merger has elapsed – both Zee and Sony remain mum on whether or not they will merge. This is the second deadline to complete the merger which has elapsed and Zee has sought another extension from Sony.

Prompted by this delay, certain institutional investors of Zee are discussing an alternative plan to complete the merger scheme. Discussions are also on for an EGM, called upon by the institutional investors, to vote on removing Goenka and a few other members from the board of Zee.

“It is under consideration, talks are on but nothing has been finalised yet. They’re still hoping it will be resolved organically,” an insurance official told businessline.

LIC’s institutional investors include ICICI Prudential (7.25 per cent), Amansa Holdings (2.39 per cent), Nippon India (6.12 per cent), and Plutus Group (2.6 per cent).

Delay in merger

Minority shareholders, holding a cumulative equity of at least 10 per cent, will be required to come together to call an EGM.

The delay in completing the merger scheme arose because Goenka and Sony differ in the key provisions of the merger that they want to execute. While Sony wishes to bar Goenka for any executive position in the merged firm, Goenka wants to continue on as the MD and CEO of the merged entity.

The discussion for a likely EGM to oust Goenka dates back to 2021, when the then minority shareholder, Invesco Mutual Fund called upon an EGM to oust Goenka to push for Zee’s merger with Reliance’s media firm, Viacom18. Invesco which had more than 10 per cent equity could call for an EGM as per Section 100 of the Companies’ Act.

Zee ultimately won that quagmire in the courts, Invesco was forced to withdraw its requisition notice seeking removal of Goenka as Zee’s MD and CEO. Later Invesco divested its shares in Zee, granting Goenka the moral victory. 

This sets precedent on how a request for an EGM by the likes of LIC, Nippon etc is likely to pan out. Experts indicate however, that it is against the interests of investors for the merger to continue to stall indefinitely. However, even though Goenka has only a 4 per cent stake in the firm, he has been able to exert disproportionate control on Zee’s board. 

Shriram Subramanian, Founder and MD of InGovern Research Services said on this matter, “Public shareholders should raise it with the Regulator. Institutional investors need to take a public stand by writing an open letter to SEBI and the Board of Zee. Investors should hold the Board responsible for not concluding the deal within 2 years and bringing the company to the brink. If the deal is called off, the stock price is likely to plummet by 40-50 per cent. Investors are genuinely angry with the Zee Board that the deal could not be concluded within 2 years.”