Context:
The National Company Law Tribunal approved the merger of Zee Entertainment Enterprises with Culver Max Entertainment (formerly Sony Pictures Networks India).
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Sony-Zee Merger: Uniting Media Giants
- National Company Law Appellate Tribunal (NCLAT)
- National Company Law Tribunal (NCLT)
Sony-Zee Merger: Uniting Media Giants
Merger Initiation:
- In 2021, Sony Pictures Networks India and ZEEL embarked on a merger journey, targeting consolidation of linear networks, digital assets, and production operations.
- A non-binding term sheet was signed to pave the way for integration.
Ownership Structure:
- Under the arrangement scheme, Sony will hold an indirect 50.86% stake in the combined entity.
- Zee’s founder secures approximately 4% ownership, while the remaining shares belong to ZEEL’s other shareholders.
- Shareholder Assent and Regulatory Approvals:
- Shareholders of ZEEL greenlit the merger, supporting the move.
- Regulatory clearances from BSE, NSE, and Competition Commission of India were prerequisites for the merger.
NCLT Intervention and Challenge:
- The National Company Law Tribunal (NCLT) instructed NSE and BSE to reconsider their prior approvals for the merger of ZEEL and Culver Max Entertainment.
- ZEEL contested the NCLT order before the appellate tribunal (NCLAT), asserting insufficient opportunity to present its viewpoint.
- ZEEL argued that NCLT lacks jurisdiction over non-compete matters.
NCLAT’s Verdict:
- In May 2023, NCLAT overturned the NCLT’s order, nullifying the directive to NSE and BSE to reevaluate their approval for the Zee-Sony merger.
National Company Law Appellate Tribunal (NCLAT)
- NCLAT, established under the Companies Act, 2013, serves as a quasi-judicial entity in India.
- It hears appeals against rulings issued by the National Company Law Tribunal (NCLT).
- Founded in 2016, the NCLAT’s headquarters is located in New Delhi.
- It holds the status of the second-highest forum for company law disputes, following the Supreme Court.
Jurisdiction and Authority:
- NCLAT’s decisions are binding and conclusive, and its orders can only be contested in the Supreme Court.
- It possesses the authority to entertain appeals pertaining to insolvency, bankruptcy, mergers, acquisitions, and various company law matters.
- NCLAT assumes the role of an Appellate Tribunal for Competition Commission of India (CCI) orders and National
- Financial Reporting Authority matters.
Composition:
- NCLAT is led by a Chairperson and comprises judicial and technical members, all appointed by the Central Government.
National Company Law Tribunal (NCLT)
- NCLT operates as a quasi-judicial authority, mandated to address civil disputes under the Companies Act.
- The bench consists of a Judicial member, usually a retired or serving High Court Judge, and a Technical member from the Indian Corporate Law Service.
Primary Functions:
- NCLT adjudicates corporate law issues, encompassing disputes between companies and stakeholders, alongside handling insolvency and bankruptcy cases.
Diverse Responsibilities:
- Resolving proceedings linked to the Companies Act, such as arbitration, arrangements, compromise, reconstruction, and company winding-up.
- Serving as the Adjudicating Authority for insolvency proceedings as per the Insolvency and Bankruptcy Code, 2016.
- Handling cases pending before the Board for Industrial and Financial Reconstruction (BIFR) and under the Sick Industrial Companies (Special Provisions) Act, 1985.
- Assimilating cases from the Appellate Authority for Industrial and Financial Reconstruction.
-Source: Indian Express
