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IndiGo dips 5% as Gangwal alleges 'loophole' in proposed board structure

In the letter, Gangwal has alleged that "the proposed (new) board structure created a large loophole that gives the IGE Group additional powers that they don't have today."

SI Reporter  |  New Delhi 

Illustration by Ajay Mohanty
Illustration by Ajay Mohanty

Shares of InterGlobe Aviation, the parent company of IndiGo airline, slipped 5 per cent to Rs 1,413 on the BSE in early morning deals on Tuesday after co-founder Rakesh Gangwal alleged that the new structure of the IndiGo board will only add to the powers of InterGlobe Enterprises -- owned by fellow co-founder Rahul Bhatia.

According to a BSE filing by InterGlobe Aviation, Gangwal wrote a letter to all the board members, a copy of which has also been sent to the SEBI, the Ministry of Corporate Affairs, and BSE and NSE. READ THE BSE FILING HERE

In the letter, Gangwal has alleged that “the proposed (new) board structure created a large loophole that gives the IGE Group additional powers that they don't have today,” READ THE LETTER HERE.

“When there are less than four independent directors, it will allow the IGE Group to pass any company policy that they want just on the basis of their board numbers being larger than all the other board members combined, he said.

Gangwal said he would stay away from the vote unless the IndiGo Board clears a complementary resolution that prevents the IGE group, headed by Bhatia, from getting more powers and a new Related Party Transaction policy is in place.

At 10:40 am, the stock was trading at Rs 1,460 per share, down 2 per cent, as against a 0.41 per cent rise in the benchmark S&P BSE Sensex.

During its Board meeting last month, the airline had decided to have up to 10 members on its board, including four independent directors. READ HERE

The company, in an exchange filing, had said that it has decided to amend the Articles of Association (AoA) for expanding the board. Currently, the board has six members, including the chairman.

Gangwal’s recent letter has kindled corporate governance issues between the two co-founders, which was first flagged on July 9. READ HERE

First Published: Tue, August 06 2019. 10:54 IST
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