IndiGo promoters' feud simmer; shareholders meet on Jan 29 to discuss AoA changes

In signs that promoters' feud are far from over, InterGlobe Aviation on Friday announced convening a meeting of shareholders on January 29, at the request of co-promoter Rakesh Gangwal, for removing various provisions in a key document of the company.

The extraordinary general meeting (EGM) would discuss deleting various Articles pertaining to transfer and acquisiton of the company's shares, including 'Right of First Refusal' and ' Tag Along Right', in the company's Articles of Association (AoA).

The development comes more than six months after Gangwal flagged concerns over corporate governance lapses at InterGlobe Aviation, the parent of the country's largest airline IndiGo.

The meeting is being convened on January 29 following request by Rakesh Gangwal (RG) Group and related entities who together hold 36.64 per cent stake in the company, a regulatory filing said on Friday.

The group comprises Rakesh Gangwal, Shobha Gangwal and The Chinkerpoo Family Trust (Trustee: Shobha Gangwal and J P Morgan Trust Company of Delaware).

The differences between co-founders and co-promoters -- Rakesh Gangwal and Rahul Bhatia -- came to the fore in July 2019 after Gangwal sought market regulator Sebi's intervention to address alleged corporate governance lapses at the company. In the wake of the feud, arbitration proceedings are also going overseas between the two promoters' sides.

Bhatia and affiliates -- InterGlobe Enterprises (IGE) Group -- has around 38 per cent stake in the company.

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

The company received a letter on November 13, 2019 from Gangwal seeking changes in the AoA, the filing said.

Generally, an AoA provides the regulations for operating a company.

The shareholders' agreement expired on the fourth anniversary of the company's initial public offer -- 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 the EGM.

Gangwal has sought deletion of various Articles pertaining to transfer and acquisition of the company's shares, including 'Right of First Refusal' and 'Tag Along Right'.

One of the Articles that is sought to be removed pertain to each group agreeing not to acquire additional shares or voting rights of the company that might trigger an open offer requirement under Sebi's takeover regulations.

If any member of the IGE (InterGlobe Enterprises) Group -- led by Rahul Bhatia or RG Group -- wants to transfer shares to a third party, then the non-transferring group will have the 'Right of First Refusal' subject to certain conditions.

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.

Another Article is that the transferring shareholder would not be entitled to transfer shares without prior written consent of the non-transferring shareholder.

"As per the legal advice received by the company, there are provisions in the Companies Act, 2013, as amended (the 'Companies Act') which give rights to the members to requisition on EGM," the explanatory statement to the EGM notice said.

Amid the promoters' feud, IndiGo CEO Ronojoy Dutta in November 2019 said there was "zero impact" on the carrier right now as they are on the same page over the airline's strategic direction.

Shares of InterGlobe Aviation rose over two per cent to close at Rs 1,360.95 on the BSE.