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MUMBAI : The Bombay high court on Tuesday cleared the decks for an extraordinary general meeting (EGM) of Zee Entertainment Enterprises requested by Invesco Developing Markets Fund, in a relief for the investor battling the media company for over six months.

Justice S.J. Kathawalla, who heard the case along with Justice Milind Jadhav in a division bench, said, “The EGM requisition notice is neither incapable nor illegal to be set aside; consequently, we have set aside all single judge’s findings on all counts." A detailed order was awaited at the time of filing this report.

The order will take effect after three weeks, meaning Zee has enough time to move Supreme Court for relief.

The legal tussle started when Invesco and its affiliate, OFI Global, sought an EGM to remove Punit Goenka as managing director, and reconstitute Zee’s board with six new directors. The company rejected the request. Following this, on 11 September, the two funds sent an EGM requisition letter, reiterating the demand, which was also rejected.

Invesco and OFI Global China then jointly moved the National Company Law Tribunal (NCLT) against Zee, requesting the tribunal to order an EGM.

On 2 October, Zee moved the high court in its plea to declare the requisition of Invesco as “illegal" and “invalid", where a single-judge bench of Justice G.S. Patel restrained the investors from taking any action against Zee over the EGM requisition. The order also temporarily barred them from calling and holding the meeting on their own. Following this, in November, Invesco and OFI Global China Fund moved the high court’s division bench.

Invesco and OFI Global together hold nearly 18% stake in the firm. Both Zee and Invesco have been accusing each other of corporate governance lapses. The development may prolong Zee’s merger with Sony, which may be a hurdle for the two media giants if the EGM goes through. The dispute can stretch further if the case goes to Supreme Court. In December, Sony Corp’s Sony Pictures Entertainment signed definitive deals to merge with Zee. Sony will hold majority stake in the merged firm, and the Zee promoter family will own 3.99% with an option to raise the stake up to 20% from market.

“The Zee-Sony merger is private agreement. In case EGM takes place and shareholders in majority decide to vote out Goenka, the private deal will be meaningless as the key clause of the agreement was to have Goenka head the media firm for five years," a lawyer said, seeking anonymity.

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