New Development: IndiGo promoters call EGM to amend AoA

The company’s shareholders had rejected a similar proposal of co-promoter Rakesh Gangwal to amend the AoA in January 2020.

The differences between Gangwal and Bhatia came out in the open in July 2019 after Gangwal sought Sebi’s intervention to address alleged corporate governance lapses at the company. Recently, an arbitration award was also passed relating to the dispute, the details of which have not been disclosed.
The differences between Gangwal and Bhatia came out in the open in July 2019 after Gangwal sought Sebi’s intervention to address alleged corporate governance lapses at the company. Recently, an arbitration award was also passed relating to the dispute, the details of which have not been disclosed.

InterGlobe Aviation, which operates the country’s biggest airline IndiGo, has once again called for an extraordinary general meeting (EGM) later this month to amend the company’s articles of association (AoA), which among other things, stipulate that one promoter needs the approval of the other before selling shares to a third party. The company’s board has approved holding the EGM on December 30, according to a regulatory filing on Monday.

The company’s shareholders had rejected a similar proposal of co-promoter Rakesh Gangwal to amend the AoA in January 2020.

Co-promoters of IndiGo, Rahul Bhatia and Rakesh Gangwal, have been locked in a bitter dispute now for more than a year.

Gangwal’s RG Group had in the earlier EGM called in January 2020 sought the removal of the clauses that give the right of first refusal of shares to Bhatia whenever the former intends to sell. RG Group owns a 36.64% stake in InterGlobe Aviation while Bhatia holds over 38% in IndiGo through his company InterGlobe Enterprises (IGE). Though the shareholder agreement between Gangwal and Bhatia expired in October 2019, the AoA still continues.

According to the AoA, if any member of the Bhatia-led IGE Group wants to transfer shares to a third party, the non-transferring group will have the RoFR subject to certain conditions. Similarly, the non-transferring group will also have the ‘tag along right’ wherein it would have the option to sell some part of the shareholding.

The differences between Gangwal and Bhatia came out in the open in July 2019 after Gangwal sought Sebi’s intervention to address alleged corporate governance lapses at the company. Recently, an arbitration award was also passed relating to the dispute, the details of which have not been disclosed.

Gangwal had levelled allegations of corporate governance lapses against Bhatia and the IGE Group, stating that Bhatia had carried out related-party transactions without the approval of the audit committee. In his complaint, Gangwal had sought intervention of the ministry of corporate affairs and Sebi. The allegations were, however, rejected by Bhatia, who insisted his IGE Group followed all the stipulated norms.

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