Will shareholders back Invesco to dislodge Goenka?

At the time of the EGM, Invesco must have sufficient support from the remaining 40% of the shareholders to ensure that the resolutions which they want to go through will actually be approved by the majority of the shareholders, says HP Ranina, Senior Advocate, SC.

Invesco’s fresh salvo coming in for and the timing of this one is very interesting. Invesco’s second call for an EGM and removal of Punit Goenka is coming in just a week after Zee Entertainment signed and made an announcement on merger with Sony. What do you make of the timing?
Both are separate issues. One is the merger and the other is removal of Mr Goenka and calling an extraordinary general meeting. Shareholders with more than 10% equity shareholding are entitled to call for an extraordinary general meeting and they can put such an item on the agenda that is deemed fit. It has nothing to do with the merger because the merger is still in the process of being negotiated with Sony Entertainment and one does not know whether it will go through or not.

But of course, Invesco must have enough voting power so even if they can call for an EGM, at the time of the EGM, they must have sufficient support from the remaining 40% of the shareholders assuming that Invesco has at least 10%, to make sure that the resolutions which they want to go through will actually be approved by the majority of the shareholders.

What could this mean for the fate of Punit Goenka? According to the contours of the merger with Sony, Punit Goenka was asked to stay for five years but Invesco and OFI Global China Fund — who have almost 17% stake in the company — are seeking his removal.
The future will depend on the big shareholders mustering the requisite numbers — more than 50% of the votes. Now even assuming that NCLT does not agree, even at the time of merger, an EGM will be held and at that stage, the majority of the shareholders can vote against the resolution if they have enough voting power.

So everything boils down to one thing — do they have enough voting power — 50% or more to make sure that these merger was true. Whether Mr Goenka should continue or not is a matter of shareholder democracy. We have to see whether enough shareholders back Invesco in their attempt to dislodge Mr Goenka. That is a crucial point.