Zee-Sony Merger: NCLT to pronounce verdict today

The National Company Law Tribunal, Mumbai, will pronounce its verdict on the scheme of merger between Zee Entertainment Enterprises Ltd. and Culver Max Entertainment Pvt.—also known as Sony Pictures—on Thursday.

The court had reserved its order on July 10.

Zee and Sony agreed to merge their businesses in December 2021. After obtaining the necessary approvals from the NSE, BSE, and other sectoral regulators—including SEBI and the Competition Commission of India—the company approached the tribunal for final sanction of the merger.

The process came to a standstill after several creditors of the Essel Group filed objections against the non-compete clause included in the scheme. According to the clause, Essel Mauritius—an Essel Group entity—will receive Rs 1,100 crore as non-compete fees from SPE Mauritius—a Sony Group entity—in exchange for Subhash Chandra’s right to compete against the resulting entity.

Several creditors of the Essel Group, including Axis Finance Ltd., JC Flowers Asset Reconstruction Co., IDBI Bank Ltd., IDBI Trusteeship Ltd., and Imax Corp., saw this clause as a device to defraud them and objected to it.

In addition to the objections, the NSE and BSE also placed on record two orders of SEBI in the matter of Essel Group entities. This includes an interim order barring Punit Goenka from directorial positions. The Securities Appellate Tribunal later upheld the order and sent it back to SEBI for further consideration.

The objectors had argued that the order was of material importance to the merger as one of the key parts of the scheme is the appointment of Goenka as the managing director of the merged entity. Bloomberg Quint