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The shares of Zee Entertainment Enterprises Ltd surged nearly 23 per cent Tuesday morning after Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) and OFI Global China Fund LLC, which together hold 17.88 per cent in Zee Entertainment, called for an extraordinary general meeting of the shareholders of the company today to seek the ouster of Subhash Chandra’s son Punit Goenka as the director of the company.
The investors have also sought the removal of two other directors, Monish Chokhani and Ashok Kurien.
At 11:08 am, Zee Entertainment was trading at ₹229.15 on the BSE, up ₹42.35 or 22.67 per cent. It opened at ₹205.45 as against the previous close of ₹186.80. It hit an intraday high of ₹232.15 and a low of ₹205.45.
On the NSE, it was trading at ₹228.90, up ₹42.05 or 22.50 per cent.
Stocks that will see action today
The company’s stock trades in the futures & option (F&O) segment, which has no circuit limits.
The two largest shareholders, in a letter on September 11, had called an extraordinary general meeting (EGM) seeking removal of Punit Goenka, Manish Chokhani and Ashok Kurien as Directors of the firm, the company said in a regulatory filing on September 13.
Invesco has proposed six new independent directors to reconstitute the board.
Invesco, OFI call for EGM of Zee Entertainment shareholders
Meanwhile, Manish Chokhani and Ashok Kurien have resigned from their respective posts ahead of the meeting.
“The company has today received letters from Mr Manish Chokhani and Mr Ashok Kurien resigning from the position of Non-Executive Non-Independent Directors of the company with immediate effect. The company has taken the said letters on record,” it informed the exchanges on September 13.
Last week, proxy advisory firm Institutional Investor Advisory Service (IIAS) had raised concerns against Subhash Chandra-backed Zee Entertainment regarding corporate governance.
Development seen as positive
According to analysts, the new development may be perceived as positive. According to DART Research, the resignation of both the directors is positive.
“Punit Goenka too may resign from directorship and continue as CEO. This will be positive,” it said.
“If he resigns as MD & CEO, then Zee may witness disruption in business. It has already seen almost 300-350 bps market share loss from peak to 17 per cent now. Zee has also talked of a significant step-up in investments,” DART research added.
“Nevertheless, irrespective of whether Punit Goenka resigns or not as MD & CEO (as Director seems inevitable) still the PE multiple would get upgraded. Activism by large shareholder is welcome. Expect stock to react significantly positive,” it said.
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