scorecardresearch
Friday, Jan 27, 2023
Advertisement

As IndiGo faces turbulence, regulators intensify scrutiny of governance lapses

InterGlobe Aviation, which got listed in 2015, has come under the intense regulatory scanner and there are indications of multiple violations of Sebi norms.

IndiGo,IndiGo probe, IndiGo violation of Sebi norms, Sebi norms, InterGlobe Aviation, Indian Express news One of the major issues raised by Gangwal was about related party transactions involving co-founder Rahul Bhatia’s IGE Group and the allegations have been refuted by the Bhatia camp. (File)

With promoter spat intensifying at the country’s largest airline IndiGo, markets watchdog Sebi and the corporate affairs ministry have started digging deep into allegations of governance lapses and violations that could force the government to override existing arrangements and pacts at InterGlobe Aviation, officials said.

Bringing into public the differences between long-time friends and promoters of IndiGo into the open, Rakesh Gangwal has sought Sebi’s intervention into alleged corporate governance lapses at the company and even said that ‘paan ki dukaan’ (betel shop) would have managed things with more grace.

InterGlobe Aviation, which got listed in 2015, has come under the intense regulatory scanner and there are indications of multiple violations of Sebi norms. The role of each and every entity associated with all board members and entities linked to the promoters are being probed amid signs of lapses in complying with governance requirements, fair market trade, and insider trading norms, the officials said.

One of the major issues raised by Gangwal was about related party transactions involving co-founder Rahul Bhatia’s InterGlobe Enterprises (IGE) Group and the allegations have been refuted by the Bhatia camp.

Subscriber Only Stories
Replacing addresses with three words… the world of What3words
Delhi Confidential: Pro-public on Republic Day
Meet the woman who found name missing from voter list in UP — and took th...
At DGP meet, officers flag Islamist, Hindutva outfits in radicalisation

An official said the corporate affairs ministry would be seeking a “para-wise comments” from the company on Gangwal’s complaint and would also be looking at the related party transactions.

With the promoter feud igniting concerns over corporate governance practices at InterGlobe Aviation, the ministry would examine whether memorandum, articles, agreements, and resolutions are in consonance with provisions of the Companies Act.

The company could face strict regulatory action, including overriding of existing pacts, in case there are violations of the Act.

Advertisement

The official said the ministry can even invoke powers under Section 6 of the Companies Act, 2013.

Section 6 provides powers to override any memorandum, articles, agreements or resolutions passed at a general meeting or by the board of directors in case they violate norms. Following Gangwal’s letter to Sebi, the ministry and others, the markets regulator have sought a response from the company by July 19.

Against this backdrop, Sebi has also widened its probe, launched a few months ago, into suspicious insider trading violations in the shares of InterGlobe Aviation.

Advertisement

The officials said that a number of executives and board members are likely to be summoned by the markets regulator.

Among the issues flagged by Gangwal are that various related party transactions with the IGE Group were executed without seeking the audit committee’s approval and without seeking competitive bids from third parties, and non-appointment of an independent woman director.

Regarding the board’s decision to reject a request for an extraordinary general meeting, Gangwal alleged that legal requirements and basic governance norms were violated by not providing board members timely material facts prior to voting by the board.

On July 12, Bhatia’ IGE Group said the company is well run, financially sound and managed by a competent set of managers as it termed Gangwal’s allegations of governance lapses as much ado about nothing.

Gangwal and his affiliates own around 37 percent stake in InterGlobe Aviation while Bhatia and his IGE Group have about 38 percent shareholding.

First published on: 14-07-2019 at 17:52 IST
Next Story

Wimbledon 2019 Final: Novak Djokovic defeats Roger Federer to win the title

Latest Comment
Post Comment
Read Comments
Advertisement
Advertisement
Advertisement
Advertisement
close