Invesco Developing Markets Fund and OFI Global China Fund–owned by American independent investment management company Invesco–sought an extraordinary general meeting (EGM) to vote on resolutions to remove the directors and induct six new independent board members.
A ZEE spokesperson said the company will take “necessary action as per applicable law,” without elaborating, in response to queries.
The proposed new independent directors are Surendra Singh Sirohi, independent director, HFCL; Naina Krishna Murthy, founder and managing partner of K Law; Rohan Dhamija, senior partner, Analysys Mason; Aruna Sharma, independent director, Welspun Enterprises and Jindal Steel; Srinivasa Rao Addepalli, director, Tata Communications Payment Solutions; and Gaurav Mehta India head, The Raine Group.
ET has seen a copy of the September 11 notice issued by Invesco, the largest shareholder in ZEE with a combined stake of 17.88%. In July 2019, Invesco had signed a deal with ZEE promoters to acquire up to 11% of the company for Rs 4,224 crore at Rs 400 per share. However, ZEE’s shares have plunged since then. On Monday, it closed at Rs 186.80 apiece on the BSE, up 2.10%.
- Invesco had also sought removal of two independent board members Manish Chokhani and Ashok Kurien
- Performance & corporate governance issues could be behind fund’s move
- Both have quit citing personal reasons
- Proxy advisory firm IiAS had raised corp governance issues against 2 directors
- It had advised shareholders against their re-appointment at EGM
- Both were members of audit committee in FY20
- IiAS said they were accountable for losses due to related-party transactions as well as governance concerns
Registered with the US Securities & Exchange Commission, the fund has been a financial investor in ZEE since 2002 and owned a 7.7% stake in the company before 2019.
Invesco didn’t respond to questions.
Kurien was a member of the board’s corporate social responsibility and stakeholders’ relationship committees. Chokhani was on the nomination and remuneration, and risk management committees.
Proxy advisory firm Institutional Investors Advisory Services (IIAS) last week asked Zee shareholders not to vote for the reappointment of independent directors Kurien and Chokhani during the annual general meeting (AGM) scheduled for September 14, citing corporate governance issues.
Both Kurien and Chokhani were members of the audit committee in FY20, and IIAS said they were accountable for losses on account of related-party transactions as well as governance concerns outlined by previous independent directors that had resulted in significant erosion in shareholder wealth.
While Invesco hasn’t said why it’s seeking the removal of the directors, insiders put it down to performance and corporate governance issues.
Goenka is the only member of the promoter family with a board seat. He and the family now own 3.99% of ZEE.
Non-executive directors Subodh Kumar and Niharika Vohra had quit in November 2019, alleging governance lapses on matters such as treasury operations, related-party deals, film financing and corporate social responsibility expenses.
At the same time, Subhash Chandra had stepped down as chairman of the company that he founded in 1992. Chandra’s resignation came days after the promoter family saw its stake in ZEE fell below 5% from around 42% in March 2018. In an open letter, Chandra accepted the blame for placing a series of mistimed and expensive infrastructure bets. As his investment companies had borrowed heavily from mutual funds and non-banking finance companies to fund road and renewable energy projects, he had to sell his stake in ZEE to repay lenders. Later, the ZEE board inducted new independent directors, including former finance secretary R Gopalan, who is currently chairman.
Chandra, now chairman emeritus, said last month that he had settled over 91% of the debt with 43 lenders, and the remaining dues are in the process of being paid. Chandra had also apologised to brother Jawahar Goel, whose company–Dish TV—has been caught up in the turbulence.
Last month, Yes Bank, the largest shareholder of Dish TV, had sent a similar communication to the company, seeking the removal of the managing director Goel and other independent directors over lapses in corporate governance.
