Questions raised on Zee Entertainment's warrant plan, proxy firms raised strong objections

News Topical, Digital Desk : India's leading proxy advisory firms have asked Zee Entertainment shareholders to vote against the company's proposal to allot 16.9 crore warrants to the promoters for Rs 2,237 crore. These firms say that there are many serious risks in this proposal. Governance advisory firms have opposed giving more control to Chief Executive Officer (CEO) Punit Goenka. They say that this will harm the interests of public shareholders as there will be a huge loss i.e. dilution in their stake.

If this proposal is passed, Goenka and his family's stake in Zee will increase from 3.99 percent to 18.39 percent. The company informed the stock exchange about this plan on June 16 and voting on this special proposal will be held between July 6 and July 9, 2025. It is worth noting that last year the shareholders rejected the proposal to appoint Punit Goenka as Managing Director. The company does not need any major capital investment Proxy firms also say that the company does not need any major capital investment at the moment. It has been said that when Zee Entertainment already has cash and treasury of about Rs 2,400 crore, then why is there a need for funding of Rs 2,200 crore? According to them, issuing this warrant is unnecessary and this may lead to an unnecessary decline of about 15 percent in the shareholders' stake. This proposal to issue warrants to the promoters will be voted upon at the company's Extraordinary General Meeting (EGM) to be held on July 10, 2025. Shriram Subramaniam, Founder and MD of Ingovern Research Services, has also raised similar concerns. He said that in most cases increasing promoter stake is considered positive, but Zee's recent record, including the failed merger with Sony, problems in promoter funding, loan defaults and pledged shares, calls for a cautious approach. He also said that the source of promoter funds is not clear, and in warrants also only 25% payment will be made in advance while the rest in 18 months. Due to this, dissatisfaction is increasing among investors.

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