YES Bank gets tough on DISH TV promoters, calls EGM to replace firm's board

The lender owns 25% in DISH TV while its promoters, led by Jawahar Goel, own only 6%

Taking a tough stand against Dish TV promoters, the company's lender YES Bank has called an extraordinary general meeting of shareholders to remove the entire board of directors led by Jawahar Goel and replace it with its own nominees.

In a communication to the company’s board of directors today, YES Bank said instead of placing its resolutions in the annual general meeting to be held on September 27th, the company has postponed the AGM thus delaying the entire process. Hence, the bank asked Dish TV to call an EGM to induct its seven nominees on the board and remove Goel and four directors.

YES Bank owns a 25 per cent stake in DISH TV while its promoters led by Goel own only 6 per cent (see chart). YES Bank had lent Rs 3,000 crore to Essel group promoters but as the Essel group promoters defaulted on loans, the Bank invoked pledged shares of the promoters in May last year. Goel is the younger brother of Subhash Chandra whose flagship firm, ZEE Entertainment Enterprises announced a merger with its rival, Sony to create a $2 billion entertainment major.

Giving reasons for replacing the board, YES Bank said the present board of directors has approved a rights issue process, pending objections raised with the board several times, the company went ahead with the rights issue solely to dilute its shareholding and prejudice the interests of the bank which is the single largest shareholder of the company as of date.

“The board is not acting in line with good corporate governance standards and is not a fair representation of the incumbent significant shareholders of the company being various banks and financial institutions holding about 45% shareholding in the company. The Dish TV board is purportedly acting at the behest of certain minority shareholders holding merely 6% of the shares in the company,” YES Bank said in notice to the company.

“This is reflected from the fact that even though the bank, through various letters issued to the board, asked the DISH TV board to cease and desist from approving/conducting the proposed capital raising exercise by way of rights issue, the Board, without consulting the significant shareholders of the company, went ahead to make a press announcement dated May 28, 2021 regarding its intention to proceed with a Rs 1,000 crore rights issue,” it said.

YES Bank said DISH TV board has completely sidelined the multiple requests of the bank to reconstitute the board, by appointment of the nominee directors. “’In this regard, the bank had issued a letter dated June 19, 2021 to the board emphasising the need for reconstitution of the board and not to proceed with the rights issue process till such time as the board is reconstituted,” it said.

The bank in another letter dated June 25, 2021 sought induction of Akash Suri and Sanjay Nambiar as additional directors on DISH TV board who are part of the top management team of the bank and have vast experience in their respective fields to take on the role of directors on the board. "However, the Board has not acted on the legitimate request of the Bank and Dish TV board has acted in complete haste and taken arbitrary decisions to proceed with the rights issue process," the bank said.

The board also completely disregarded other viable and possible options for fund raising that would be in the best interest of the company and its stakeholders. This is solely to cause prejudice and to defeat/dilute the rights and entitlements of the significant shareholders by diluting their stake in the company, and even after being aware that the matter is under consideration before the Securities and Exchange Board of India and the stock exchanges pursuant to our letter dated June 19, 2021, the bank said.

DISH TV had earlier notified the bank on September 6th, 2021 that the change in directorship requires prior approval of the Ministry of Broadcasting and hence the resolutions for removal and appointment of directors cannot be placed before the shareholders at the AGM. The Bank accordingly issued revised notices to the company on September 9, 2021, wherein the effectiveness of the change in directorship of the company was made subject to receipt of the MIB approval.

Further, the bank said in its letter dated September 18, 2021 submitted details of the proposed directors to enable the company to apply to the Ministry and seek their approval. “However, instead of placing the resolutions before the shareholders of the company at the AGM on September 27 the company is now seeking an extension of the date of holding the AGM based on unfounded reasons. In light of the company engaging in dilatory tactics in placing the resolutions before the shareholders, the Bank is constrained to issue the present notice under Section 100 of the Companies Act, 2013 for holding an extraordinary general meeting of the Company,” the bank said asking for the EGM to appoint its nominees on the board and sack Goel and other directors.