In a relief to Zee Entertainment Enterprises NCLAT on Friday sets aside the NCLT order on the Zee-Sony merger case asking both the stock exchanges NSE and BSE to review grant of NOC for violation of both principles of natural justice. It will listen to both sides and then make a decision.
It also said The National Company Law Tribunal should have heard Zee before directing BSE and NSE to review their approval to merger.
The Zee-Sony merger case was supposed to be heard on May 25, 2023 but a two-member bench of the National Company Law Appellate Tribunal (NCLAT) asked the counsel for Zee to remove defects in the plea and direct it to list the matter the next day.
NCLT directed BSE and NSE to reconsider initial approval for merger
This decision by the NCLAT comes after NCLT had directed both the exchanges to reconsider their initial approval for the merger between Zee and Culver Max Entertainment that was earlier known as Sony Pictures Networks India. NCLT had asked the exchanges to relook the non-compete fee under the clause of the merger.
The order was challenged by Zee before the NCLAT stating that the company was not given adequate opportunity to present its side. The company further stated that NCLT doesn't have jurisdiction over non-compete issues.
Share holding post merger
According to the arrangement between both the companies Sony will indirectly hold 50.86 per cent stock of the combined company and the founder of Zee will have close to 4 per cent where as the rest will belong to ZEEL. Additionally, Sony will have to pay a non-compete fee of Rs 1,100 crore to the promoters of the Essel Group.
Earlier this month, the Chairman and CEO of Sony Group Corporation, Kenichiro Yoshida said the expects the merger to be completed within the first half of this fiscal.
Both the companies had entered into a non-binding term sheet in September 2021, to combine their assets, libraries, networks and operations making it the largest entertainment network in India. This meant that the combined entity would own over 70 TV channels, two fil studios and two video streaming services.
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