Zee Entertainment is locked in a legal battle with one of its largest foreign investors, Invesco, after it called for the ouster of the TV network’s CEO, citing corporate management concerns.
Zee has tightened its management processes. But one of India’s largest news and entertainment television groups has come at a controversial time because it recently began merger talks with a local division of Japan’s Sony Group Corporation.
Here is what the Invesco-G controversy is:
What Invesco’s demands?
Invesco’s legal documents reviewed by Reuters – which are not public – show a desire for change in life in light of corporate management and financial malpractices, and even flagged by the country’s market regulator.
Invesco’s Emerging Market Fund and its OFI Global China Fund LLC hold 18 per cent stake in Jiv. They have recommended the removal of Zion’s current chief executive, Pune Goenka, and the appointment of six new independent board members.
Invesco asked Zee on September 11 to convene an “extraordinary public meeting” of shareholders to consider its demands.
How does Zee view Invesco’s demands?
On October 1, Gee rejected Invesco’s request to restructure the board, saying the move had legal implications.
Invesco took the war to the country’s institutional tribunal, where it tried to force Gee’s to convene a meeting, calling Gee’s behavior “repressive.” According to Friday’s verdict, Zee has two weeks to respond.
The television company claims to have implemented revision plans to address concerns raised by the market regulator and that it adheres to “the highest standards of management”.
It is not clear which way shareholders will vote if a meeting is called, but Zee founder Subhash Chandra has accused Goenka’s father, Invesco, of plotting a hostile takeover.
“They want to take over the company against Indian laws,” Chandra said. Invesco has not commented on the allegations.
Is the Zee-Sony deal at risk?
When Invesco pressed for a Zee partner meeting, it announced its merger talks with television company Sony. Terms of the deal Goenka plans to continue as CEO of the merged company, which will be a majority for Sony.
Invesco told the Indian tribunal that it was not against the Zee-Sony project, but its filing criticizes how the two entered into negotiations.
Invesco said the Sony deal would allow Chandra’s family to raise itself from four per cent to 20 per cent now, which was “an attempt to divert the public” and halted the partner meeting.
Zee Prime-Time Appeal, Bollywood Support
In an extraordinary public diet, Chandra appeared on Zee’s Hindi news channel on prime time television this week.
“I urge you to treat Invesco not as the owner but as a partner … you have to fight and then I will fight again,” Chandra said, shedding tears about Ji’s trip to India.
Zee, which has been providing dozens of entertainment channels and shows in many local languages in India for many years, is a household name. It now has support from Bollywood.
“Zee, the first Indian channel promoted by an Indian nationalist … is now being hunted down by US and Chinese investors. Zee Entertainment is in the hands of original Indian entrepreneurs,” filmmaker Bonnie Kapoor said on Twitter.