There is a big boardroom tussle underway between Zee Entertainment and Invesco. Zee Entertainment Enterprises Limited (ZEEL) was on October 21 ordered by the Bombay High Court to hold an extraordinary general meeting (EGM) requisitioned by its shareholders Invesco Developing Markets Fund and OFI Global China. The EGM will be chaired by a retired judge and its resolution is to be kept in abeyance till the Bombay HC decides on the legality and validity of EGM requisition, the court ruled. It added that the EGM resolution will be subject to approval of the Ministry of Information and Broadcasting. In an interview with CNBC-TV18, HP Ranina, corporate lawyer, shed light on the legal aspects of the impending EGM.

Ranina is of the view that what the Bombay High Court has said is only to reiterate the rights of the shareholders, to call an extraordinary general meeting (EGM) as permitted under the new Companies Act.

“Therefore, Zee has now buckled-in in a sense and gone ahead, and they are now holding the EGM under the direction of the Bombay High Court. This means that the minority shareholders will now obviously have a right to have their say, and if they can muster enough voting support, then they may be able to move their resolutions, whether it's for removing Punit Goenka or for bringing in Reliance or whatever,” he explained.

“So, the minority shareholders will now have an opportunity and Invesco will be able to muster the strength which it has to get support from other smaller retail investors. We will have to see how it pans out at the EGM which is going to be held now,” he added.

He further said, “Now the real battle will start. The strength of all the parties involved will be ascertained, who has the controlling interest, whether Zee group has a controlling interest or the other investors, whether institutional investors coupled with retail investors have enough strength, all this will now come out in the EGM. This is why I think Zee made a mistake in trying to drag on this issue of not calling for an EGM. They should have, once a requisition was obtained under the Companies Act and now they will have to go through it and face the consequences.”

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When asked if the shareholders' vote will count, Ranina said, “The vote will count because any Court or any authority will take into account the views of the shareholders. The views of the shareholders can never be ignored. So, while there may be other issues like whether they can have a controlling interest or not, without the approval of the other authority, the shareholders' view will ultimately prevail.”

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“The Bombay High Court cannot ignore that view or any other authority cannot ignore the view in case the majority of the shareholders decide to remove Punit Goenka and now they can do that because it's a shareholder democracy and if the majority of the shareholders vote in favour of a particular resolution, that resolution will be carried. So certainly, it will have a lot of weight and no authority can ignore the voice of the shareholders,” explained Ranina.

For the full conversation, watch the video

(Edited by : Dipikka Ghosh)