By Rajesh Kurup
A number of institutional investors in Zee Entertainment Enterprises (ZEEL) are likely to support the call to remove the company’s directors at its extraordinary general meeting (EGM), sources have said.
“The notice to the exchanges did not specify the exact reasons sought for the removal of Punit Goenka as managing director and the two directors. While some of the proxy advisory firms had raised corporate governance issues, the institutional investors would like to scrutinise the allegations before taking a call,” one source said.
In its report, brokerage firm Edelweiss had said that while the prospects for the company are improving, it is still a volatile story. With promoters holding just 3.99% in ZEE, it is only a matter of time before the board is revamped, Edelweiss said.
On September 13, ZEEL informed the stock exchanges that top investors in the company, Invesco Developing Markets Fund and OFI Global China Fund, have sought the removal of managing director Punit Goenka and two directors. The investors, who together hold a 17.88% stake in ZEEL, had sought an EGM for the directors’ ouster.
The investors had also sought the removal of Manish Chokhani and Ashok Kurien, who resigned ahead of the company’s annual general meeting.
The investors had sought their removal under Section 169 (which empowers a company to remove a director by passing an ordinary resolution) and other applicable provisions of the Companies Act 2013. The board of ZEEL will have to convene an EGM in 45 days’ time.
ZEEL has said it is examining the investors’ demands and will take necessary action. As of June, the promoters hold 3.99% stake in ZEEL, foreign institutional investors 57.46%, mutual funds 8.10%, insurance companies 10%, non-institutional investors 19.93% and other DIIs 0.52%.
Institutional investors have sought appointment of six of their own nominees — Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta — on ZEEL’s board.