NEW DELHI: The Bombay High Court on Tuesday restrained Invesco Developing Markets Fund and OFI Global China Fund LLC from going ahead with their demand for an extra-ordinary general meeting (EGM) of Zee Entertainment Enterprises Ltd (ZEE L) shareholders.
In a strongly worded judgement in favour of Zee, the High Court said that sometimes a company must be saved from its own shareholders, however well-intentioned.
“If a shareholder resolution is bound to cause a corporate enterprise to run around on the always treacherous shoals of statutory compliance, there is no conceivable or logical reason to allow such a resolution even to be considered,” said the single judge bench of justice GS Patel.
The court concurred with Zee Entertainment’s counsel Gopal Subramaniam’s argument that removal of MD and CEO Punit Goenka — one of the demands of Invesco and OFI Global — would leave a managerial void, and cause non-compliance.
The high court also rejected Invesco’s argument that shareholders have an unfettered right to propose any resolution they choose at an EGM.
The court dismissed this argument by saying that “shareholder primacy or dominion does not extend to permitting shareholder-driven illegality.”
Zee Entertainment had moved Bombay High Court seeking to declare Invesco’s requisition notice as illegal and invalid, and restraining Invesco from acting in furtherance of the requisition notice.
I nvesco has sought the removal of Zee Entertainment MD and CEO Punit Goenka and overhaul of the company board by appointing six new members. In order to force the same, Invesco had called for an EGM on 11 September, which was ignored by the Zee board.
That forced Invesco to move NCLT to enforce their rights as shareholders to call for this EGM of the company.