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Here’s Why Zee Entertainment Shares Zoom Over 30% On Tuesday

Zee Entertainment-Invesco

Zee entertainment stock rallied over 30% intraday on NSE  Tuesday, trading at a price of almost Rs 250 at mid-day. The stock has gained almost 34% from the previous day close of Rs 186.85. 

 The stock opened at a gap up, following the outbreak of information concerning the boardroom coup. 

Here’s Why Zee Entertainment Shares Zoom Over 30% On Tuesday!

Invesco Developing Markets Fund and OFI Global China Fund Llc which together own a 17.88%  stake in Zee Entertainment Enterprises Ltd (ZEEL), called a special shareholders’ meeting of the Indian media conglomerate to oust Punit Goenka as director.

Goenka is the son of Essel Group founder and chairman Subhash Chandra who is also the managing director and chief executive officer of ZEEL.

Here’s Why Zee Entertainment Shares Zoom Over 30% On Tuesday!In a late evening statement to the Indian bourses, According to Zee Entertainment, the funds requested the nomination of six of their nominees to the board of directors. The promoters, the Subhash Chandra family, control just 4% of the firm and were forced to sell it to repay a debt of Rs 13,000 crore taken on by the promoter companies of ZEEL when they defaulted.

Just ahead of the AGM on Tuesday, Ashok Kurien and Manish Chokhani, two independent directors resigned from their position with immediate effect. The resignation came in after the proxy advisory firm Institutional Investors Advisory Services (IiAS) had cautioned serious corporate governance concerns in the company by asking the shareholder to refrain from re-appointing the duo on the company’s board at the AGM.

Appointment of the new independent directors are subject to the approval of the Ministry of Information and Broadcasting, said Invesco. Invesco has enclosed the relevant declarations and information needed from each of the proposed Independent Directors. “Accordingly, we request the company submit an application with the Ministry seeking approval for the appointment of the proposed independent directors at the earliest,” it said.

The names of potential new independent directors include Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta.

Also, as per the Business Standard report, IIAS had asked shareholders must vote against the re-appointment proposal of Kuriend as he was the founder of the Zee group and the company had reclassified him as a non-promoter without any regulatory filings or shareholder approval and hence the voting will classify him as a promoter.

“Kurien was a member of the audit committee in FY20 and is accountable for the losses on account of related party transactions as well as governance concerns outlined by previous independent directors, which resulted in significant erosion in shareholder wealth,” the IIAS had said.

“We believe that the board must bring in the right mix of professionals who have an understanding of the media and the digital business. Further, having the erstwhile promoters on the board may impede the directors’ ability to take hard decisions,” it said.

Chokhani’s five-year tenure as an independent director has come to an end, and the Zee Entertainment board is seeking to re-appoint him as a non-executive non-independent director, according to IIAS. Chokhani served on the audit committee in FY20, according to IIAS, and is responsible for losses related to related party transactions, which resulted in a significant loss of shareholder wealth.

Other Zee group subsidiaries like– Zee Learn soared almost 17 per cent to Rs 15.20 at mid-day. 

Dish TV soared almost 10 per cent to Rs 21.31 at the time of writing, whereas Zee Media Corp was trading with a gain of almost 5% at Rs 10.40. 

About the author

Harshita Sharma

A financial news enthusiast and a keen observer of the stock market, I bring to you all the updates from the world of business, and finance. So, check out my posts and stay tuned with the major (informational) happenings.

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