NCLT Mumbai upholds merger scheme between ZEE and Sony

The National Company Law Tribunal (NCLT) at Mumbai on Thursday upheld the merger between Zee Entertainment Enterprises (ZEE) and Culver Max Entertainment (earlier known as Sony Pictures Networks India)..A coram of judicial member Justice HV Subba Rao and technical member Madhu Sinha pronounced the verdict today..The tribunal had reserved its verdict on July 11 after hearing arguments of the creditors who objected to the scheme.The creditors were Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp and IDBI Trusteeship..Culver Max and ZEE entered into a non-binding term sheet agreement in September 2021 to bring together their digital assets, linear network, production operations and programme libraries.As per the scheme of arrangement of the merger, Sony Group would indirectly hold 50.86% of the combined company, while the founder of ZEE would own around 4% and the rest would be distributed amongst the shareholders of ZEE.Sony Group also agreed to pay ₹1,100 crore to Essel Group promoters as a 'non-compete' fee..Both media houses approached the NCLT for sanctioning the merger after receiving approvals from authorities. The creditors opposed the plea, particularly the non-compete clause added to the scheme..ZEE informed the Court that the merger received approvals from the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and regulators like the Competition Commission of India (CCI) and the Securities and Exchange Board of India (SEBI).However, NSE and BSE opposed the merger, pointing out an order passed by the Securities Appellate Tribunal (SAT) against Zee Entertainment group heads. SAT had upheld an interim order of SEBI barring Essel Group Chairman Subhash Chandra and Chief Executive Officer (CEO) of Zee Entertainment Enterprises Limited (ZEEL) Punit Goenka from holding directorial or key managerial posts in listed companies.ZEE, however, contended that the value claimed by creditors was over ₹1,200 crore and by opposing the merger, they were holding the company to ransom..After hearing all parties at length, the coram dismissed all objections and upheld the merger between the two media houses. .Zee was represented by Senior Advocate Janak Dwarkadas briefed by a team led by Advocate Nitesh Jain from Trilegal.