A guard stands opposite a banner of Zee television at an film studio in Mumbai.
NEW DELHI Reuters - India's Zee Entertainment is locked in legal battle with one of its biggest foreign investors, Invesco, after it called for the ouster of the TV network's CEO citing concerns around corporate governance.
Zee has said it tightened its governance processes. The dispute comes at a fraught time for one of India's largest news and entertainment television groups as it has recently started merger talks with the local unit of Japan's Sony Group Corp.
Here's what the Invesco-Zee dispute is all about:
Invesco's legal filings reviewed by Reuters - which are not public - show it is investing in Zee for the sake of corporate governance and financial irregularities that have plagued the company and even flagged by India's market regulator.
Invesco's Developing Market Fund and its OFI Global China Fund LLC own a near 18% stake in Zee. They have suggested six new independent Board Members to be appointed and remove Zee's current CEO, Punit Goenka.
Zee asked Invesco on Sept. 11 to call an extraordinary general meeting of shareholders to consider its demands.
Zee rejected Invesco's request to revamp the board on Oct. 1, saying that the move had legal infirmities.
Invesco then went to the tribunal of India where it is trying to force Zee to call the meeting, saying Zee's behaviour is oppressive Zee has two weeks to respond, as per a tribunal order on Friday.
The Indian television giant says that it has implemented corrective plans to address the concerns raised by the market regulator and follow highest standards of governance. It remains unclear how shareholders will vote if a meeting is called, but Zee's founder Subhash Chandra, father of CEO Goenka, has accused Invesco of plotting a hostile takeover?
They want to take over the company against Indian laws, Chandra has said. Invesco hasn't commented on the allegation.
While Invesco was pushing for a Zee shareholder meeting, the Indian giant announced its merger talks with Sony. The terms of the deal say Goenka plans to continue to be the CEO of the merged entity and will be owned mostly by Sony.
In India's jurisprudence has said it is not against Zee-Sony plan, but its filing does criticize how the two entered into talks.
The Sony deal would allow Chandra's family to raise their shareholding to up to 20%, from 4% now, Invesco said, adding that it was plainly an attempt to distract the general public and stall the convening of a shareholder meet.
An unusual public diatribe, Chandra made a prime-time TV appearance on Zee's Hindi news channel this week.
I urge Invesco to be as a shareholder not the owner If you want a fight then I will fight back, Chandra said teary-eyed as he spoke about Zee's journey in India.
Zee, which has provided dozens of entertainment channels and shows in many local languages in India for years, is a household name. Boney Kapoor remains in the passionate hands of an original Indian entrepreneur, film producer Pray Zee Entertainment posted on Twitter.