IndiGo's Shareholders Approve Removal Of Contentious Clause
Shareholders of InterGlobe Aviation Ltd. passed a resolution with "requisite majority" for removal of a clause in its articles of association that gave its promoters the right of first refusal on each other’s stake.
This comes after an arbitral award directed promoters of India's largest airline IndiGo, Rahul Bhatia and Rakesh Gangwal, to jointly requisition an extraordinary general meeting to vote on a resolution to remove the transfer restriction articles.
The clause led to a bitter feud between the promoters, who between them hold 74.44% stake in the airline. Its removal will now allow either side to sell or transfer shares to a third entity without giving notice to each other.
Gangwal and Bhatia were locked in a dispute since 2019 which led to legal battle between the two on issues ranging from share-transfer restrictions to related-party transactions. Gangwal, who was seeking the removal of these restrictions, had also accused Bhatia of poor governance practices at the airline.
To be sure, shareholders had rejected a similar proposal at an EGM last year, requested by Gangwal. That vote was swayed by Bhatia's opposition.
Bhatia filed for international arbitration and an award issued in September directed Gangwal to pay Bhatia $50,000 for a claim raised by him. It also allowed Gangwal's counterclaim seeking removal of transfer restrictions on the shareholding of the two founders.
With the share sale restrictions lifted, either promoter can sell all or par of his shareholding, sparking speculation on whether Gangwal is seeking to sell part or all of his 36.63% shareholding. Bhatia owns 38.20%.
In January 2020, in the thick of the dispute between the two promoters, there were indications that foreign airlines such as Qatar Airways and Delta Airlines may be interested in India's top carrier.