Two former directors of Zee Entertainment have cited certain governance issues as reasons behind their resignation from the company’s board, a regulatory filing showed. Independent director Neharika Vohra and nominee director Subodh Kumar have quoted irregularities in CSR spending, film advances worth Rs 2,200 crore, appropriation of Zee Entertainment’s fixed deposits worth Rs 200 crore by a bank among reasons behind their exit.
“The Board of Directors has noted that all of the issues raised by the resigning directors have been duly discussed, deliberated and acted upon from time to time in the previous committee/ board meetings in which the said directors were also present,” Zee Entertainment clarified.
Zee Entertainment Enterprises (ZEEL) stated in the filing that independent director Sunil Sharma had tendered his resignation due to subsequent sale of shares by the promoter group and reconstitution of the board.
“For other directors, Subodh Kumar (Non-Independent Director) and Neharika Vohra (Independent Director) have both given certain reasons, which have been considered by the Board of Directors,” the company said in its statement.
One of the reasons furnished by Kumar and Vohra was alleged laxity in spending CSR funds given to a related party foundation/ trust. “The CSR funds have been allocated in compliance with the law (and this has been certified by chairman of the CSR committee) and necessary certification obtained,” ZEEL clarified.
The two directors also flagged lack of legal action on the management’s part when a scheduled bank had appropriated Rs 200 crore of the company’s fixed deposits towards promoter loans. To this Zee Entertainment replied that this has been resolved and appropriate legal notices were sent to the bank in question at relevant time.
A scheduled bank wrote to all directors in October 2019 that a subsidiary of ZEEL had guaranteed the repayment of certain loan given to a related party, Kumar and Vohra mentioned. “The company has a legal opinion to state that the company is not liable and in any event there has been no enforcement of the ‘guarantee’ by the bank, other than to write letters, including to all the directors,” ZEEL said.
Kumar and Vohra also brought up film advances to the tune of Rs 2,200 crore given in 2018-19 among their reasons for leaving. “Information already disclosed in annual report and clarified in various investor interactions,” Zee Entertainment said in its response.
Against concerns raised by Kumar and Vohra on large outstanding from Dish TV and Siticable for the content supplied by ZEEL, the company stated, “The same have been secured by definitive plan and situation is being strictly monitored as instructed by the Board and also discussed in various analyst calls.”
The latest board restructuring on November 25 saw Subhash Chandra step down as the Chairman of ZEEL board. He will remain on the board as a non-executive director. The company also appointed three new independent directors namely R Gopalan, Surendra Singh and Aprajita Jain.―Business Today