The Chairman of Zee Entertainment Enterprises (ZEEL), R Gopalan, made no mention of the resignation of two directors, Ashok Kurien and Manish Chokhani, at the annual general meeting (AGM) of shareholders held in Mumbai on Tuesday or on the allegations of corporate governance lapses by the proxy advisory firms.
The AGM did not discuss the notice sent by its largest shareholder, seeking an extraordinary general meeting (EGM) of shareholders to remove the current Managing Director (MD) and Chief Executive Officer, Punit Goenka.
The AGM was attended by Zee Group patriarch Subhash Chandra, Goenka, and other independent directors.
The AGM was held in the backdrop of ZEEL’s largest shareholder, Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund), and OFI Global China Fund LLC, asking the company to call an EGM of shareholders to remove Goenka and two independent directors.
The Funds sought appointment of six of their own nominees to the board of ZEEL. The promoters – Chandra’s family – own only 4 per cent of the company and had to sell their stake to pay off Rs 13,000-crore debt taken by the promoter entities of ZEEL after defaulting.
In his speech, Goenka did not reference the EGM notice sent by Invesco and preferred instead to talk about Zee 4.0 plan.
The EGM has to be called within three weeks of the notice sent by shareholders, said a corporate lawyer.
The demand for an EGM came after two proxy advisory firms, Institutional Investor Advisory Services (IiAS) and InGovern, raised serious corporate governance concerns in the company.
In its report, InGovern said, “It is surprising that a non-independent executive director has been appointed an audit committee member. It is strange that the board allowed such an induction of a promoter executive director into the audit committee.”
The audit committee comprised Gopalan, independent director Aadesh Kumar Gupta, apart from two former directors, Kurien and Chokhani, who resigned on Monday, before their reappointment proposals were to be voted on Tuesday.
InGovern said it is on this audit committee’s watch that many of the related party transactions took place.
“The audit committee has done little to safeguard the interests of the company and minority shareholders. Even the currently qualified consolidated financial statements show that little has been done to completely unwind all abusive related party transactions. The audit committee has not ensured that the put option is properly recognised in the books, according to the accounting standards, and some of the related party transactions have led to the promoters’ shareholding being reduced to 3.99 per cent,” said InGovern.
Zee is probably one of the few companies where promoters retain significant control over the company with very little shareholding, it said, adding that promoter director Goenka has been given a 46 per cent remuneration increase to Rs 13.16 crore, at a time when other employees received zero raise.
On the other hand, IiAS said the board must bring in the right mix of professionals who have an understanding of the media and digital business. “Further, having the erstwhile promoters on the board may impede the directors’ ability to take hard decisions,” it said.
Last week, Dish TV also announced that YES Bank had sent a communiqué to the company, seeking removal of the present MD, Jawahar Goel, and other independent directors over lapses in corporate governance. Dish was part of Essel Group and is run by Zee Group patriarch Chandra’s brother.
The voting results on various resolutions, including on annual accounts, will be out after two days. Zee has denied all charges made by the proxy advisory firms, saying there are three other proxy advisory firms endorsing the current management. Business Standard