Media company Zee Entertainment (Zee) on Wednesday said three directors had resigned from its board, two of them citing related-party transactions, among other reasons, for quitting. The disclosure comes two days after Subhash Chandra stepped down as chairman of the board. Zee had also reconstituted its board on Monday, appointing three independent directors — IAS officer R Gopalan, retired IPS officer Surendra Singh, and art collector Aparajita Jain.
Zee said independent directors Neharika Vohra and Sunil Sharma had stepped down on November 22 and November 24, respectively. Non-independent director Subodh Kumar had also resigned, Zee said, on the same day that Vohra stepped down. It added that the disclosures were part of its corporate governance policy.
While Sharma had tendered his resignation after the sale of shares by the promoter group to financial investors on November 21, Kumar and Vohra had indicated that the board had not implemented certain decisions that were taken after a meeting on October 17.
Kumar and Vohra had also said it had not taken action against Dish TV and Siti Cable for outstanding amounts they owed to the company as well as for lack of clarity on how corporate social responsibility (CSR) amounts were spent by the company.
Proxy advisory firms said resignations of Vohra and Sharma were a surprise.
“It is not clear why two independent directors have to resign from the board. There is lack of transparency pertaining to some transactions,” said Shriram Subramanian, founder of proxy advisory firm InGovern.
Some analysts tracking Zee said there will be pressure on the stock in the near term.
On Wednesday, the Zee stock was down 0.06 per cent, closing at Rs 319.5 per share on the BSE. Since Monday, Zee’s stock has declined by 7.02 per cent or Rs 24.15 per share.
“Clearly, the latest disclosure is a negative for Zee. But issues in the company continue to be a work in progress. With just 5 per cent stake, the promoters would be careful with corporate governance issues, given minority investors would have the ability to impact decisions via voting rights,” said Abneesh Roy, executive vice-president, research (institutional equities), Edelweiss.
Kumar and Vohra said film advances had been given from 2018 to 2019 amounting to Rs 2,200 crore. “Information has already been disclosed in the annual report and clarified in various investor interactions,” was the company’s reply to this.
Zee also said the corporate social responsibility (CSR) funds had been allocated in compliance with the law, which was certified by the chairman of the CSR committee.
Kumar and Vohra also said the management had not taken legal action against a bank which had appropriated Rs 200 crore of the company’s fixed deposits towards promoter loans.
“Issues pertaining to the wrongful revocation of the bank guarantee stands resolved with the company having been secured by the promoter companies and appropriate legal notices were sent to the bank at the relevant time,” Zee said in reply to the allegation.
In addition, Zee also said it had a definitive plan in place to recover the outstanding amounts from Dish TV and Siti Cable, and that it was monitoring the situation closely.