Zee Entertainment Enterprises (ZEEL) is preparing to challenge the National Company Law Tribunal’s (NCLT) order issued on May 11 by taking the matter to the National Company Law Appellate Tribunal (NCLAT), according to a reliable source as reported by ET.
The source emphasized that ZEEL intends to contest the NCLT’s order based on two main grounds. Firstly, ZEEL was not given a sufficient opportunity to present its side of the argument. Secondly, the NCLT lacks jurisdiction over matters concerning non-compete fees.
“Within the next day or two, we will challenge the NCLT order before the NCLAT,” the source affirmed.
On May 11, the NCLT Mumbai bench directed the National Stock Exchange and the BSE to reconsider their initial approvals for the Zee-Sony merger. They were instructed to issue updated no-objection certificates prior to the next hearing. This development has presented fresh obstacles for the proposed merger between these two media giants.
The case will be heard by the division bench, headed by judicial member HV Subba Rao and technical member Madhu Sinha, on June 16.
The NCLT has directed the exchanges to reassess and validate the non-compete clause of the merger, which previously received approval from both the exchanges and the Securities and Exchange Board of India (Sebi). This instruction from the NCLT follows an unfavorable interim ruling by Sebi regarding a promoter entity of the Essel Group, which is also the promoter of ZEEL.
The stock exchanges have also been instructed to review the payment method for the non-compete fee between two Mauritius entities to ensure compliance with the relevant Sebi policies.
As per the proposed deal, Sony Pictures Entertainment will indirectly hold a majority stake of 50.86% in the combined company. The founders of Zee will own 3.99%, and the remaining 45.15% will be held by other shareholders of Zee, including the public. Additionally, Sony will pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.
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Basant Kasayap is an entertainment aficionado who delves into the glitz and glamour of the entertainment industry. From Hollywood to Bollywood to regional cinema, she offers readers an insider’s perspective on the world of movies, music, and pop culture.
