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Attempts by one of the two co-promoters of IndiGo Airlines, Rakesh Gangwal, to get the Articles of Association of the airline changed failed on Wednesday.
“The special resolution as set out in the Notice has not been passed as the votes cast in favour (48.5584 per cent) of the resolution are less than three times the number of votes cast against (51.4416 per cent) the resolution,” IndiGo informed the BSE late on Wednesday evening. Amending the Articles of Association was the only business listed in the notice for the EGM.
Rakesh Gangwal, who along with the RG Group comprising him, Shobha Gangwal and the Chinkerpoo Family and related entities, had called for the EGM, was not present. The Group collectively holds 36.64 per cent of the paid-up share capital of IndiGo airlines.
The EGM witnessed chaotic scenes as investors were furious over the eroding value of Indigo shares. Differences between the two co-promoters over corporate governance practices, Gangwal’s absence at the EGM and reports over his exiting the company were behind the shares shedding value.
Feud over practices
The meeting had been called amidst a war of words between Rahul Bhatia, the other co-promoter, and Gangwal. Last June, Gangwal had written to the Securities and Exchange Board of India (SEBI), alleging that the controlling rights of Inter Globe Enterprise Group, a minority shareholder, had not been judiciously and prudently used in the best interests of the company. Later in the year, Bhatia submitted a request for Arbitration in the London Court of International Arbitration against Gangwal.
To a question by one of the shareholders who was invited to speak, as to why security personnel were not being deployed to maintain order, M Damodaran, Chairman of the Board, replied, “I am hoping better sense will prevail. They are all good people. They will settle down. Do not worry.” Eventually, the security had to intervene to ensure that the EGM proceeded smoothly.
Shareholders also wondered whether the absence of Gangwal was an insult to the fraternity as he had convened the meeting and was himself absent. “When he has called this meeting supporting the resolution, why is he not here? He should have come here and faced the music,” one shareholder said.
Resolution not about shareholding
Eventually, Damodaran concluded, “This resolution (for calling an EGM of InterGlobe Aviation) is not about what happens to whose shareholding. It has nothing to do with it. This is only in relation to amending certain provisions of the Articles of Association where there are some restrictions. Nobody's shareholding is going away; it has nothing to do with shareholding. Shareholders have a right to decide what to do with their shares.”
Damodaran added that the EGM had been called as the Articles of Association inter alia placed restrictions on the major shareholders (of IndiGo airlines). “This is a requisition by Gangwal that the shareholders of the company should decide whether the Articles should be amended in order to take away those restrictions. Selling is not part of the restriction; it is the right of first refusal,” Damodaran said.
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