InterGlobe Aviation Ltd, which is India's largest domestic airline, is going hold an annual general meeting (AGM) on Tuesday. In wake of a recent public spat between co-founder Rahul Bhatia and Rakesh Gangwal, the AGM is unlikely to see fireworks, with Gangwal staying away from the shareholders' meeting and agreeing to support proposed changes in Articles of Association (AoAs). After threatening to oppose the special resolution at the AGM, Gangwal, in his statement on Friday, said he would support the proposed changes in the company's AoAs.
Gangwal had earlier said he would not support the special resolution at InterGlobe Aviation's AGM until the company board passed resolutions to stop Bhatia-led Interglobe Enterprises (IGE) from getting more powers and formulate new related-party transactions (RPT) policy. However, Gangwal said he would support the proposed changes to Articles of Associations after the company board approved the new related-party transaction policy and agreed to increase the board strength to 10. The special resolution to amend the AoA could not be achieved without Gangwal's (who owns 37% in IndiGo) support. This is because it requires the consent of 75% of the shareholders.
"The Board has now approved a new related party transaction policy and to also close an open issue if the Articles of Association are amended at the upcoming August 27 AGM to increase the Board size to 10 Directors," Gangwal said, adding that he would support "the proposed changes to the Articles."
He said though he had seen some progress -- on part of the regulators -- on the governing issues raised by him, much work still needed to be done.
However, some unanswered questions could still cause a rift between the co-founders. For example, if the board strength is increased to 10 from the current six, will Bhatia-controlled IGE have a greater majority? If it does, Gangwal-led RG group could have a problem as IGE group can pass any policy it wants.
Reports suggest if the board proposal of increasing the strength gets a go-ahead at the AGM, IGE group will have the power to appoint five directors, while RG group will be allowed to appoint one director. Rest of the four members will be independent directors.
The Bhatia group, however, had earlier junked Gangwal's claim of violating corporate governance rules and said there was no evidence to suggest allegations of RPTs and other charges levelled by Gangwal. The company will today also seek the shareholders' approval in the appointment of Meleveetil Damodaran as the company's Independent Director for five years with effect from January 23.
Gangwal had in the past challenged Board Chairman Damodaran for not adopting the agreed RPT policy. According to him, Damodaran, who was credited with brokering an agreement between the feuding promoters in late July, should have directed the company to "flag this material fact in the AGM notice in the interest of transparency and for the benefit of the minority shareholders".
Edited by Manoj Sharma