Boardroom brawl at ZEEL: Management stands behind directors against two largest shareholders

The boardroom brawl at Zee Entertainment Enterprises Ltd (ZEEL) took an interesting turn on Thursday with the company’s current board standing behind two of its former Directors Ashok Kurien and Manish Chokhani who resigned just days before a call was given by two of its largest shareholders for an extraordinary general meeting to fire some existing directors, including Chief Executive Officer Punit Goenka who is the son of Essel Group founder and chairman Subhash Chandra.

ZEEL is currently fighting a battle between the current management and two of its largest shareholders – Invesco Developing Markets Fund, and OFI Global China Fund. These shareholders have called an EGM to oust the existing board members over concerns on corporate governance while simultaneously appointing new Independent Directors.

In a statement issued on Thursday, the existing board of ZEEL strongly condemned the allegations made by certain proxy advisory firms against its former Non-Executive Directors.

“The Board of ZEE Entertainment Enterprises Ltd unanimously applauds Mr Ashok Kurien and Mr Manish Chokhani, commending their professional conduct during their association with the Company. It has been our privilege to have such esteemed members as part of the Board, and their contributions towards the Company remain significant,” ZEEL Chairman R. Gopalan said.

A company statement further said Kurien and Chokhani have added immense value in the overall process of Board reconstitution, thereby strengthening it further with the induction of eminent Independent Directors. “The reconstituted Board comprises highly qualified individuals with immense experience, who will continue to ensure highest compliance practices and governance and set the benchmark for management accountability and transparency to further enhance the value of the Company,” it said.

When contacted, Gopalan refused to give further details of action planned over the ensuing boardroom drama but said they were evaluating all options on further action required over the issue.

In a late evening filing on Monday, ZEEL said Invesco and OFI Global China Fund had sought an extraordinary general meeting for Goenka’s ouster and other changes in the board.

Last week, proxy advisory firm Institutional Investor Advisory Services India (IiAS) had raised corporate governance issues at ZEEL and asked shareholders to vote against resolutions. IiAS had asked shareholders not to support resolutions to reappoint Chokhani and Kurien and reject adoption of financial statements.

Both Kurien and Chokhani were members of the audit committee in FY20 and are accountable for the losses of related party transactions and governance concerns, IiAS had alleged. The company had denied all allegations.

Though the boardroom drama is yet to reach a finality and all eyes are now on the EGM which ZEEL is obliged to organise in 21 days, otherwise Invesco may hold its own within 45 days and pass resolutions with simple majority. The two largest ZEEL shareholders currently own 17.88 per cent of the broadcaster.