Invesco Developing Market Funds and OFI Global China Fund have been seeking an EGM of ZEE Entertainment Enterprises Ltd (ZEEL) to oust the current board and place their own representatives. But the ZEEL board has rejected the overseas shareholders demand to convene the EGM, terming their requisition invalid and illegal and pushing the matter to litigation.
Legal experts said the Bombay HC on Tuesday restrained Invesco from taking any action in furtherance of their requisition notice calling for an EGM. What this means is that Invesco’s EGM demand cannot be met by ZEEL or adjudicated by any other legal authority till the court decides on validity of their requisition on the grounds raised by ZEE.
“The decision taken by the Hon’ble Bombay High Court is a huge win for all the stakeholders of the Company,” a ZEEL spokesperson said.
The court, in its order, said that there will be an injunction in terms of prayer clause (a) of the Interim Application, restraining Defendants Nos 1 and 2 (including their employees, agents and anyone acting by, through or under them) from taking any action or step in furtherance of the Requisition Notice dated September 11, 2021, including calling and holding an EGM under Section 100(4) of the Companies Act, 2013.
It observed directing Zee Entertainment to call an EGM would be potentially non-compliant, and that there is one fundamental flaw in Invesco’s construct.
“It assumes that resolutions at an EGM requisitioned by shareholders are somehow special or more sacrosanct than resolutions proposed by the Board itself. There is no warrant for this. If the Board itself proposes an EGM to consider these very resolutions, or ones equally vulnerable, it is entirely possible for anyone with sufficient legal standing, even a shareholder in a derivative action, to ask of a Court precisely that which Zee does today,” the court said.
Zee had sought injunction against Invesco from taking any action as part of its requisition notice for holding an EGM. On October 22, the court reserved its order in the matter when Zee had argued he call for an EGM by its largest shareholders Invesco and OFI Global was illegal and invalid.