IndiGo promoters call EGM on Dec 30 to amend share clauses

The promoters of India’s largest airline, IndiGo, have called an extraordinary general meeting (EGM) on December 30 to scrap a clause in the company’s articles of association (AoA), which gives them the right of first refusal (RoFR) over acquisition of each other’s shares.

A removal of the clause will allow either side to sell or transfer shares to a third entity without giving each other notice.

On Monday, IndiGo informed the stock exchange that it had received a joint requisition from co-founders Rahul Bhatia of InterGlobe Enterprises and Rakesh Gangwal and his family for removing transfer restriction articles from the AoA. Together, the two promoters own 74.44 per cent stake in the airline.

The call for the EGM follows a London Court of International Arbitration’s September order which directed an amendment to the AoA to scrap the clause regarding RoFR. The London court had granted the parties 90 days to implement the order.

In October, Gangwal had moved Delhi High Court, seeking directions for calling the EGM. However, the court disposed of his petition.

The agreement between the promoters provides for an RoFR and tag-along rights over acquisition of each other’s shares. This clause was to be valid for four years from the listing of the airline in 2015. However, the clause was not scrapped in 2019 since the two promoters were locked in bitter dispute over corporate governance issues in the airline.

The differences between the promoters became public in July 2019 after Gangwal wrote to the Securities and Exchange Board of India, seeking its intervention to address corporate governance lapses at the company. Bhatia’s IGE Group had rejected the allegations. In 2019, both sides initiated arbitration to resolve the dispute.

In September, the airline had informed the stock exchange that no directions had been issued by the London Court of International Arbitration to the company.