Unhappy shareholders boot a record 25 directors from Dish TV board in 3 years

Shareholder fury has put a revolving door on the boardroom of Dish TV India Ltd, as investors throw out every new nominee proposed by the company, and the company naming new independent directors who meet the same fate. Investors have ousted a record 25 directors from the Dish TV board in a little over three years, including two on Thursday, as the company continues to reject shareholder demand for a special meeting. Also read | Every three months, Dish TV names new directors to maintain the mandatory minimum boardroom strength of three, only for the shareholders to reject their candidature.

Though there is no explicit violation of any rule, the stalemate holds the potential to hurt company operations and shareholder value. In August, shareholders also rejected a resolution seeking their approval to raise 1,000 crore debt, apart from rejecting resolutions to adopt the company’s financial statements multiple times in 2022. Unhappy with promoters Public shareholders, who collectively own just under 96% of the company, are unhappy with Dish TV's promoters and are seeking an extraordinary general meeting to reconstitute its board.



However, promoters holding 4.04% stake have not given in to this demand for over three years now. In the latest instance, the candidatures of independent directors Amit Singhal and Parag Agarawal were rejected by shareholders, voting results disclosed on Thursday showed.

Slightly over 80% of the votes cast were against the resolution to ratify their appointments. Also read | In turn, the company appointed Mayank Talwar and Gurinder Singh as independent directors with immediate effect. Chief executive officer and executive director Manoj Dobhal is the third director on the board and the only one to receive shareholder approval in the past three years.

Dish TV did not respond to Mint’s emails seeking comment. A similar situation is brewing at Pune-based Finolex Cables, where 14 directors have been booted out in just over three years. However, in Finolex’s case, the ousters were an outcome of friction between two warring promoter factions.

Lopsided shareholding The stalemate at Dish TV stems from the relatively small shareholding of the promoters Essel Group, despite their perceived control over the management and operations of the company. To be sure, the promoters, including former managing director Jawahar Lal Goel, presently hold no positions in the company. Meanwhile, public shareholders, who own most of the company, have complained about having no say in its running.

Zee Entertainment Enterprises, Essel Group's flagship firm, faces a similar situation, with promoters holding just under 4% stake. Also read | JC Flowers Asset Reconstruction Co. is Dish TV's largest shareholder with a 24.

19% stake. The distressed assets buyer had acquired the stake from Yes Bank in December 2022. Essel Group founder Subhash Chandra, the elder brother of Jawahar Goel, had borrowed over 5,000 crore from Yes Bank, but his inability to repay the loans led the bank to invoking the shares of Dish TV that were pledged as collateral.

Other large shareholders include Aditya Birla Sun Life Mutual Fund (1.59%), Deutsche Bank (1.52%), and Barclays (1.

09%). Onus on JC Flowers “It is up to JC Flowers, as the largest shareholder, to take the lead to resolve the dispute with the promoters. It is not clear whether they are having any conversations.

Otherwise, shareholders' value will erode, and in a competitive market, the company will lose further market share," said Shriram Subramanian, the managing director of proxy advisory firm InGovern. Subramanian made a case for the authorities to step in. “The MCA has the power to supersede the board and appoint a new board.

There is precedent from the case of Ltd when the government appointed a board led by Deepak Parekh to stabilize the company," he said. MCA is the ministry of corporate affairs, which oversees the administration of the Companies Act, 2013. JC Flowers ARC did not comment.

Also read | Last year, Chandra agreed to pay JC Flowers 1,500 crore against dues of 6,500 crore to buy back Dish TV shares, Mint reported citing sources. However, no payment has been made so far. Dish TV has also been fined multiple times by the stock exchanges for flouting the Securities and Exchange Board of India’s (Sebi) Listing Obligations and Disclosure Requirement (LODR) for not meeting various board constitution requirements.

The latest was on Wednesday, when the BSE and the National Stock Exchange of India levied a fine of 6.4 lakh each on Dish TV for not having a woman director on its board and not adhering to guidelines for forming the nomination and remuneration committee..