On December 20, Zee Entertainment Enterpises Ltd (ZEEL) announced to the stock exchanges that a discussion on an extension of the merger deadline has been agreed upon by Sony Pictures Networks India (now Culver Max Entertainment Private Limited).
Zee announced that it has heard from Sony and that it will deal “in good faith” and “with a view to discuss the extension of the date required to make the scheme effective by a reasonable period of time” in the negotiations.
The deal signed in 2021 said that the merger had to be finished by December 22. However, disagreements about who would run the combined company prevented the two parties from proceeding with the merger, according to sources.
According to an observer, Sony’s readiness to engage in good faith negotiations with Zee is a major relief for the merger since it guarantees collaboration between the two companies.
Following the granting of an extension, the Registrar of Companies (ROC), Ministry of Information and Broadcasting (MIB), and relisting procedure will require regulatory clearances and take three to four months.The combined business is anticipated to go public in March or April of 2024.
Legal experts have noted that a merger does not become effective simply because the National Company Law Tribunal (NCLT) approves the merger scheme; rather, it requires approval from the transferor and transferee companies’ shareholders, the appointment of the CEO, MD, and other directors of the transferee company—in this case, Sony—as well as specific permissions from relevant authorities after the merger scheme is approved.
They also mentioned how frequently large-scale mergers of this kind ask for a delay in the fulfilment of a number of prerequisites before the merger plan is implemented.
The National Company Law Tribunal (NCLT) approved the Zee and Culver Max merger in August, but it was delayed when Punit Goenka, the leader of the plan, was forced to resign as CEO because of a Sebi order that prohibited him from holding important managerial positions in the company or other businesses.
Zee has insisted that Punit Goenka, its chief executive officer, will lead the combined company, but Sony is hesitant to appoint him because of an ongoing inquiry into Goenka by the Securities and Exchange Board of India (Sebi).
