IndiGo Airlines (6E, Delhi International) shareholders have approved a special resolution removing a clause from the articles of association that gave the low-cost carrier’s main backers, Rakesh Gangwal and Rahul Bhatia, the power of the right of first refusal if one of them wanted to sell his shares.
The passage of the resolution at a virtual extraordinary general meeting on December 30 - by 99.9998% of the votes cast according to a filing to the BSE stock exchange in Mumbai - is likely to lead to a resolution in a dispute between the two investors that has been going on since July 2019 when Gangwal alleged corporate governance lapses at the company. InterGlobe had in early December summoned its shareholders to the meeting.
Shares in InterGlobe Aviation gained a New Year’s Eve boost of 1.91% on December 31 after news of the vote emerged, the Press Trust of India reported.
“This is to inform you that the members of the company at the Extraordinary General Meeting held on December 30, 2021, have approved the Special Resolution for amendment to the Articles of Association of the Company by deletion of Articles 1.6 to 1.15 (Transfer of Equity Shares), 1.16 to 1.20 (Acquisition of Shares), and 2A (Other Provisions on Equity Shares), with the requisite majority,” the company said in a separate disclosure on the same date.
The feuding co-founders, who between them hold 74.8% of the company (Bhatia’s lnterGlobe with 38.2%, Gangwal Group with 36.6%), both requisitioned the meeting having been ordered to do so in a London Court of International Arbitration ruling in September. Foreign institutions hold around 17% of the remainder of the shares.
The two founders have clashed over Gangwal, who lives in the United States, alleging irregularities in InterGlobe Aviation’s transactions with companies owned by or connected to Bhatia; over the carrier’s growth strategy, with Gangwal said to favour a more aggressive path; and over appointments of senior management.
Scrapping the clauses in the articles of association will allow either side to sell or transfer shares to a third party without giving each other notice. According to the Indian financial news site Moneycontrol, neither has publicly said they intend to do so, but there has been speculation that Gangwal may dilute his stake in the company.
