Vi amends shareholders' pact to ease governance for promoter groups

Vodafone Idea lowers qualifying threshold for promoters in shareholders' pact to retain governance rights after government stake rises to 48.9 per cent

Vodafone Idea (Vi) has amended its shareholders’ agreement to lower the qualifying threshold for promoter groups, thereby retaining governance and management rights with the Aditya Birla Group (ABG) and UK-based Vodafone PLC. ABG’s stake in the telco had fallen below the previous ‘qualifying threshold’ earlier this month after Vi converted dues to the government into a substantial 26.3 per cent equity stake.

 

The existing shareholders’ agreement dated 20 March 2017, between certain Vodafone group companies and Aditya Birla group companies, provided that each promoter group would retain governance and management rights so long as it held at least 13 per cent of the company’s equity share capital on a fully diluted basis.

 

Earlier this month, the financially stressed telco converted its outstanding spectrum auction dues worth ₹36,950 crore into equity shares for the government. As a result, the government’s stake in the company surged to 48.9 per cent from 22.6 per cent.

 

Meanwhile, the Aditya Birla Group’s holding fell to 9.5 per cent from 14 per cent, and Vodafone Group’s stake declined to 16.1 per cent from 24.4 per cent.

 

To allow both promoter groups to retain their governance and management rights, the Board of Directors, at a meeting held on Friday, amended specific clauses in the shareholders’ agreement. The qualifying threshold was reduced from 13 per cent to 10 per cent, and for this specific purpose, the equity shares issued to the government were disregarded, Vi stated in an exchange filing.

 

“Additionally, certain provisions relating to equalisation of shareholding between the promoter groups and the creation of security over the company’s shares held by them have also been amended. Also, certain redundant clauses have been deleted and, pursuant to such deletion, other clauses referring to those have been amended,” Vi added.