NCLT Gives Nod To ZEE-Sony Merger
National Company Law Tribunal (NCLT) approved the merger between an Indian arm of Sony Pictures, Culver Max Entertainment, and Zee Entertainment on Thursday, granting major regulatory permission for the transaction.
In December 2021, Zee and Sony reached an agreement to integrate their television channels, film assets, and streaming services. After obtaining approvals from various regulatory bodies such as the NSE, BSE, SEBI, and the Competition Commission of India, the company has now sought the tribunal's final approval for the merger.
A significant factor was the legal battle with creditors regarding debt defaults by a subsidiary of the Zee group. Numerous lenders of the Essel Group raised concerns about the inclusion of a non-compete clause in the scheme.
Among the objecting creditors of the Essel Group, who raised objections to this clause, were Axis Finance Limited, JC Flowers Asset Reconstruction Co., IDBI Bank Limited, IDBI Trusteeship Ltd., and Imax Corp.
In addition to the raised objections, the NSE and BSE also officially documented two SEBI orders related to Essel Group entities. These encompassed an order concerning Punit Goenka, the former CEO of Zee, which imposed restrictions on his participation in company boards. The Securities Appellate Tribunal subsequently affirmed this order and sent it back to SEBI for additional evaluation.
The parties contesting the merger contended that the mentioned order held significant relevance to the merger process. This was because a crucial element of the scheme involves appointing Goenka as the managing director of the merged entity. On the other hand, Zee's stance was that this provision is not essential and that the merger should proceed regardless of Goenka's disqualification.
