Zee Telefilms Calls Egm On June 23 Over Fii Stake

The Subhash Chandra-promoted Zee Telefilms Ltd (ZTL) has reconvened an extraordinary general meeting (EGM) on June 23 for seeking shareholder approval to hike foreign institutional investors (FIIs) stake in the company from 24 to 30 per cent.

The company had, on April 29, 1998, adjourned the EGM called for the same purpose following opposition from minority shareholders. The opposition was primarily on the ground that the proposed media policy sought to cap foreign equity in media companies to 20 per cent.

A section of the shareholders said that if the policy came into force, FIIs would have no choice but to offload their holding. This, they said, would send the ZTL share price crashing.

 

The company has stated in its EGM notice that the proposed broadcasting policy restrictions will apply to companies which are in the business of broadcasting.

It adds that the ZTL board feels the major strength of the company is in the business of being content providers. ZTL, it says, has been very successful in providing the best TV shows.

It proposes to increase its base by acquisition, production, commissioning of TV shows, movies and entertainment programmes.

"The proposed broadcasting policy does not cover content providers. Therefore, we should not unnecessarily fear the proposal. Today, most of the software companies have increased the stake for FII," the EGM notice states.

Shareholders had also voiced fears at the earlier EGM that if the FII stake increased to 30 per cent, they will be in a position to block crucial board resol-utions.The ZTL management has discounted such fears.

"The board of directors have considered all pros and cons of the increase in the existing limit of 24 per cent to 30 per cent for the investment by FIIs\NRIs\OCBs, and is of the opinion that such increase will not affect the present management as apprehended by some of the members.

In fact, it is expected to have positive impact on the prices of the company's equity shares, and thus will increase the market capitalisation of holdings of existing shareholders.Besides, it will improve the foreign exchange inflow into the country," the notice adds. At the earlier EGM, Subhash Chandra had made it clear that he had the necessary shareholding strength, alongwith various proxies, to push through the resolution.

The decision was being deferred in the interest of unanimity. He also promised to bring out a white paper on the subject. The white paper states that Zee is confident of facing the challenge from foreign broadcasters.

The paper also says that the proposed cap on foreign equity is likely to be prospective and not retrospective.