Sony unhappy with Zee developments, merger may unravel

Sony’s board of directors is said to be unhappy with developments is looking at invoking force majeure and material adverse clause in the shareholder agreement in the proposed merger with Zee Entertainment in India.

The lawyers on both sides, Shardul Shroff representing Sony Pictures Entertainment India and Economic Law Practice for Zee will be busy in the next few days as the unravelling of one of the expected biggest entertainment media mergers takes place.

Whether this will lead to Damages for Reps and Warranties Breaches remains a matter of conjecture?

In its reply to the Securities Appellate Tribunal (SAT), the Securities and Exchange Board of India (Sebi) said urgent action was warranted against the promoters of Zee Entertainment Enterprises Limited (ZEEL) in the alleged fund diversion case to safeguard the management and protect investors and other stakeholders.

It termed the applications made by Essel Group Chairman Subhash Chandra and ZEEL Managing Director (MD) and Chief Executive Officer (CEO) Punit Goenka as “completely false and misleading” in its response submitted to SAT on June 17.

“We have a situation before us where the chairman emeritus and the MD and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons. The appellant’s conduct is telling in this regard. Not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings,” Sebi said in a 197-page affidavit to SAT.