Zee-Sony Merger Faces New Hurdle; NCLT To Hear Matter In June

The planned merger of Zee Entertainment Enterprises Ltd. and Sony’s India unit could face fresh hindrance after the Indian capital markets regulator’s recent order on Shirpur Gold Refinery Ltd.

The Mumbai bench of the National Company Law Tribunal (NCLT) on 11 May directed both the National Stock Exchange of India (NSE) and BSE to review their earlier approval for Zee-Sony merger scheme and provide their fresh no objection certificates for the same before the next hearing date.

The development came after the counsels of NSE and BSE raised some fresh points related to the scheme of merger and placed the Securities and Exchange Board of India’s (SEBI) 25 April order on Shirpur Gold Refinery for the bench’s cognizance, where the Zee promoters’ names appears in context of diversion of funds, according to the tribunal’s order.

The NCLT also ordered the exchanges to review and confirm that the non-compete clause of the scheme of merger has been reviewed and approved by them and SEBI, as well as the manner of payment of non-compete fee from one Mauritius entity to another is in compliance with the SEBI polices.

The division bench, comprising Judicial Member H.V. Subba Rao and Technical Member Madhu Sinha, will hear the matter on 16 June.

Zee and Sony Pictures Networks India Private Ltd. in December 2021 signed definitive agreements to merge their businesses. The proposal earlier received approvals from the NSE, BSE and Zee shareholders. The Competition Commission of India has also approved the merger with modifications.

The merger scheme, however, has been opposed by Zee’s creditors, including Axis Finance.

IDBI Bank had filed a petition to initiate corporate insolvency resolution process (CIRP) against Zee, claiming a default of about 150 crore rupees ($18 million), but the NCLT dismissed the lender’s petition last week.

Zee also earlier signed settlement agreements with some other creditors to resolve the debt issues.

(Note: $1 = 82.8446 Indian rupees)

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