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IndiGo parent to hold EGM on Jan 29 as Rakesh Gangwal seeks changes in AoA

The development comes over six months after Gangwal flagged concerns over corporate governance lapses at InterGlobe Aviation.

IndiGo parent to hold EGM on Jan 29 as Rakesh Gangwal seeks changes in AoA The meeting is being convened following request by Rakesh Gangwal (RG) Group and related entities, who together hold a 36.64 per cent stake in InterGlobe. (Representational Image)

InterGlobe Aviation, the parent company of India’s largest airline IndiGo, Friday announced convening a meeting of shareholders on January 29, at the request of co-promoter Rakesh Gangwal, for removing various provisions in the company’s Articles of Association (AoA).

In signs that the feud between the two promoter groups is continuing to persist, Gangwal — who co-founded IndiGo with Rahul Bhatia — is seeking to delete certain rules in the company’s AoA that give Bhatia the ‘right of first refusal’ (ROFR) should Gangwal choose to sell his shares. The extraordinary general meeting (EGM) would discuss deleting various Articles pertaining to transfer and acquisition of the company’s shares, including ‘ROFR’ and ‘Tag Along Right’, in the firm’s AoA, according to the meeting notice posted by IndiGo with stock exchanges.

The development comes over six months after Gangwal flagged concerns over corporate governance lapses at InterGlobe Aviation. The meeting is being convened following request by Rakesh Gangwal (RG) Group and related entities, who together hold a 36.64 per cent stake in InterGlobe.

The group comprises Rakesh Gangwal, Shobha Gangwal and the Chinkerpoo Family Trust (Trustee: Shobha Gangwal and JP Morgan Trust Company of Delaware), as per the stock exchange notice.

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The differences between the co-founders and co-promoters, Rakesh Gangwal and Rahul Bhatia, came to the fore last July after Gangwal sought the Securities and Exchange Board of India’s intervention to address alleged corporate governance lapses at the company. Bhatia and affiliates — InterGlobe Enterprises (IGE) Group — have around 38 per cent stake in InterGlobe Aviation.

Gangwal also wants to remove an article that prevents either of the co-founders from buying publicly-listed shares in InterGlobe Aviation and potentially triggering an open offer for the rest of the company. Shares of InterGlobe, which fell early Friday due to a spike in oil prices, climbed over 6 per cent from the day’s lows, before closing higher 2.1 per cent.

On December 24, a request for EGM was made by Gangwal and InterGlobe Aviation’s Board of Directors, on December 31, approved convening such a meeting.

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The company received a letter on November 13, 2019 from Gangwal seeking changes in the AoA, the filing said. An AoA typically provides the regulations for operating a company. The shareholders’ agreement expired on the fourth anniversary of the company’s initial public offering on November 10, 2019.

However, the AoA contains many provisions of that agreement. As these provisions have now expired, RG Group seeks an amendment to the AoA to remove those expired provisions, as per an annexure in the communication, dated December 24, from Gangwal seeking convening of EGM.

Gangwal has sought deletion of various Articles pertaining to transfer and acquisition of the company’s shares, including ‘ROFR’ and ‘Tag Along Right’. If any member of the IGE Group, led by Bhatia, or RG Group wants to transfer shares to a third party, then the non-transferring group will have the ROFR subject to certain conditions.

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Similarly, the non-transferring group will also have the ‘Tag Along Right’ wherein it would have the option to sell some part of the shareholding.

First published on: 04-01-2020 at 08:45:11 am
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