National Company Law Tribunal (NCLT) allow the merger of Zee Entertainment Enterprises and Culver Max Entertainment, aka Sony Pictures Networks India. This order by the Mumbai bench, by H V Subba Rao and Madhu Sinha, will pave the way for the creation of a $10 billion (approx. Rs. 82,700 crore) media company, the biggest in India.
The tribunal also dismiss all objections regarding the merger.
The NCLT, on 11th July 2023, had reserve its order on the merger after hearing objections from many creditors.
It heard arguments from creditors, including Axis Finance, JC Flower Asset Reconstruction, IDBI Bank, Imax and IDBI Trusteeship.
In December 2021, Zee Entertainment and Sony Pictures agreed to merge their businesses.
Both media houses approach the tribunal for sanctioning the merger after obtaining permissions from the National Stock Exchange, BSE and sectoral regulators such as the Competition Commission of India and the Securities and Exchange Board of India.
But, the process stop at the tribunal when a few creditors raise objections.
Many creditors of Essel Group raise objections against the non-compete clause adds to the scheme.
NSE and BSE had inform the Mumbai bench of NCLT about two orders relate to the Essel Group entities, where the promoters allegedly divert funds from the list entity for the benefit of their associate entities.
This also include the Securities Appellate Tribunal (SAT) order against Punit Goenka barring him from holding a directorial position in any list company.
SAT upheld Sebi the Securities and Exchange Board of India’s (Sebi’s) interim order which restrained both Zee Entertainment promoters Subhash Chandra and Punit Goenka from holding board positions in public list companies for a year on account of alleged fund diversion.
According to the creditors objecting to the merger, the order has a direct bearing as one of the integral parts of the scheme of the merger is the appointment of Punit Goenka as the Managing Director of the merge entity.
As there is a regulatory bar on Punit Goenka holding such positions, the merger shouldn’t go through, they submit.
