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Abu Dhabi-based Etihad Airways has agreed to reduce the number of directors on the board of Jet Airways. The move is primarily aimed at addressing concerns of the government over the effective control of Jet Airways after the Jet-Etihad deal.
The issue has been holding up the Rs 2,058 crore deal, which had come up before the Foreign Investment Promotion Board (FIPB) on June 14, but was deferred.
Sources with knowledge of the details told The Indian Express that the amended shareholders agreement submitted by the two airlines to the finance ministry says that Etihad would now have only two directors on the 14-member board of Jet Airways, leaving effective control with the Indian promoters.
In addition, the board will comprise seven independent directors. As per the original agreement, Etihad was to nominate three directors and Jet four directors to the board.
The sources added that all the concerns raised by various wings of the government over the deal have been addressed.
The corporate governance code, which had earlier held that board resolutions would be passed with three-fourths majority, too has been altered.
The revised agreement says that major decisions, including appointment of independent directors and the chairman and vice-chairman, will now be taken by the board on the basis of majority of votes. The amendment means that eight board members voting on a resolution would be sufficient to get it passed.
Further, Etihad has also agreed not to act in concert with Naresh Goyal, the majority shareholder of Jet, while taking decisions. There will, however, be no change in the shareholding pattern. Etihad would acquire 24 per cent stake in Jet leaving 51 per cent with Goyal and the remaining 25 per cent with others, including institutions and individuals.
The revised agreement would now be discussed by the FIPB in its meeting on Monday to grant clearance to the deal.
Jet surges 17% on deal hope
Mumbai: Shares of Jet Airways today shot up over 17 per cent on the hope that FIPB will approve its proposed stake sale to Etihad Airways next week amid reports that the Abu Dhabi-based carrier has agreed to changes giving ‘effective control’