New Delhi/Mumbai: Adopting a resolution on the corporate governance issues arisen between the co-promoters of budget carrier IndiGo will convey a false impression, IndiGo Co-founder and Director Rakesh Gangwal said on Tuesday.
In a letter addressed to the airline Board, Gangwal said that he will not vote for a special resolution for "Alteration in Articles of Association of the Company" unless the Rahul Bhatia-controlled InterGlobe Enterprises (IGE) is prevented from getting more powers.
Gangwal said: "I recognize the timing constraints and the need to call an AGM. However, many emails were exchanged after our Board meeting of July 20, 2019, and based on serious unresolved issues, I again reiterate that I am no longer in a position to vote affirmatively on the special resolution for 'Alteration in Articles of Association of the Company'...
"...unless, as discussed in numerous emails, a complementary Board resolution is passed to prevent IGE Group from getting even more rights and abilities than they have today and the new RPT (related party transactions) policy is adopted, language for which has already been agreed."
Gangwal also said that the AGM notice, along with the "unnamed sources"-planted "press reports that the Chairman has brokered peace and matters have been resolved, leaves a misleading and false impression that issues on RPTs and changes to the Articles have the support of both promoter groups".
Besides, he said that the full Board, including the Chairman, agreed on a package deal for RPTs and on the size of the Board, both of which would be finalised at the same time.
"Instead, now, there's a suggestion from the Chairman to get shareholder approval for a Board of 10 Directors (IGE Group with 5 Directors), with the large loophole, while we try and get 'a final view acceptable to all' sometime later," Gangwal said.
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"As for the agreed-upon RPT policy...there is only silence on when or if it gets adopted by the Company. This was not our agreement at the Board meeting and after the Board meeting."
Gangwal said that by seeking shareholder approval for the new size Board without closing "this large loophole" amounts to negligence in governance and tramples on the rights of minority shareholders.
The development assumes significance as last month, IndiGo decided to expand its Board of Directors up to 10 members and that the expanded board would consist of four independent directors.
Currently, the company has six Board members, including the Chairman M. Damodaran, who was earlier the chief of the Securities and Exchange Board of India (Sebi).
On July 19, the company said its board has decided to seek shareholders' approval for expanding, to enable the induction of an independent woman director.
Apart from Bhatia and Gangwal, other members on the board of InterGlobe Aviation are former World Bank executive Anupam Khanna, chartered accountant Anil Parashar and Rohini Bhatia, the wife of Rahul Bhatia.
Following Gangwal's recent allegations of "collapsing" corporate governance, the Corporate Affairs Ministry has sought "information or explanation" from the airline. Market regulator Sebi is also looking into the alleged governance lapses in the company.
