IndiGo Promoter Dispute: InterGlobe Aviation To Expand Board Strength To Up To 10 Members
IndiGo Airline’s owner InterGlobe Aviation is looking to expand its board to up to 10 members, including four independent ones.
InterGlobe Aviation Ltd. is considering expanding its board strength to up to 10 members, including four independent directors, at a time the operator of India’s largest airline awaits shareholders’ nod to include a woman on its board.
The proposal to amend the Articles of Association of the company will have to be approved by shareholders at the upcoming annual general meeting, the company said in an exchange filing.
On Saturday, the company said it would seek shareholders’ nod at the AGM to add a woman independent director — as directed by the market regulator in April 2019.
The absence of an independent woman director on the board of IndiGo’s parent was one of the issues that promoter Rakesh Gangwal had raised while alleging of lack of corporate governance in the company.
InterGlobe Aviation’s board currently has six directors. These include Chairman M Damodaran, Rakesh Gangwal, Rahul Bhatia, his wife Rohini Bhatia, Anupam Khanna and Anil Parashar. Of these, only Damodaran and Khanna are non-executive independent directors.
The board is also peculiarly constituted due to a shareholder agreement that the two promoters signed when the airline was founded. The agreement gives co-founder Bhatia the right to appoint three of the six directors on board, including a nomination for the chairman. The voting arrangement requires Gangwal and his affiliates to vote alongside Bhatia group on the appointment of directors.
Gangwal claimed these “unusual rights” are being abused to allow such related party transactions and governance failures.
Expanding the board was a point of contention between the two promoters, according to a letter Bhatia wrote to the board on June 12. The letter said Gangwal offered to expand the board to eight members. The offer, the letter said, was motivated by the fact that expanding the board would be subject to the Gangwal group being relieved of its obligations under the shareholder’s agreement that expires in October 2019 and also under the Articles of Association of the company.
Bhatia owns about 38 percent stake in InterGlobe and Gangwal nearly 37 percent.
Shares of InterGlobe Aviation rose as much as 2.8 percent today, but soon pared gains to trade 1 percent lower. The stock has declined 6.7 percent over the last one month after dispute between promoters Bhatia and Gangwal came into light.
