Published on: 24 May 2023 at 11:59 IST
According to a source familiar with the matter, Zee Entertainment Enterprises (ZEEL) plans to challenge the National Company Law Tribunal’s (NCLT) order issued on May 11 by filing an appeal with the National Company Law Appellate Tribunal (NCLAT).
The source explains that the grounds for the challenge include the allegation that ZEEL did not receive sufficient opportunity to present its arguments and that the NCLT lacks jurisdiction over matters concerning non-compete fees.
The source states that the appeal to the NCLAT will be made within the next day or two.
On May 11, the NCLT’s Mumbai bench directed the National Stock Exchange and the BSE to reconsider their initial approvals for the proposed merger between Zee and Sony. They were instructed to issue updated no-objection certificates before the next hearing, which has been scheduled for June 16. The NCLT division bench, headed by judicial member HV Subba Rao and technical member Madhu Sinha, will preside over the case.
The NCLT’s directive to the stock exchanges follows a negative interim ruling by the Securities and Exchange Board of India (SEBI) concerning a promoter entity of the Essel Group, which is also the promoter of ZEEL. The exchanges have been tasked with reviewing the compliance of the payment method for the non-compete fee between two Mauritius entities in accordance with relevant SEBI policies.
As per the proposed deal, Sony Pictures Entertainment would indirectly hold a majority stake of 50.86% in the merged company, while Zee’s founders would own 3.99%, and the remaining 45.15% would be held by other Zee shareholders, including the public. Additionally, Sony would pay a non-compete fee of ₹1,100 crore to the Essel Group promoters.