Currently, the company’s board has six members with two independent directors.
Without the support of Gangwal, who owns 37 per cent in the airline, a special resolution to change the Articles of Association will not succeed because that requires the assent of 75 per cent of the shareholders.
“The board also has now approved a new related-party transaction policy and to close an open issue if the Articles of Association are amended at the AGM on August 27 to increase the board size to 10 directors. In the light of this positive and important development, I will be supporting the proposed changes to the Articles. While much work lies ahead, including mending some fences and the regulators completing their investigation on the governance issues raised with them, it is gratifying to see progress towards better governance,” Gangwal said in a statement on Friday.
The support from Gangwal comes after the company's board agreed that no policy decisions would be taken unless the board had full strength. This will prevent a situation where in the event of the resignation or retirement of an independent director, partner Rahul Bhatia's InterGlobe Enterprises will not have disproportionate strength.
IndiGo's board has finalised a policy for related-party transactions, by which any related-party transaction of more than Rs 2 crore will require the approval of an external audit committee.
Gangwal said earlier this month he would not support the resolutions because subsequent to the board meeting on July 20, he realised there would be periods when the company would have fewer than four independent directors due to retirements and resignations. This, Gangwal feels, will give Bhatia’s InterGlobe Enterprise disproportionate strength.
Gangwal, however, said he would wait for the findings of the enquiry by the Securities and Exchange Board of India (Sebi) and Ministry of Corporate Affairs (MCA). Bhatia and Gangwal, who together hold 75 per cent in the company, fell out after the latter wrote to Sebi, alleging lack of corporate governance in the company. He also took his complaint to the corporate affairs ministry. Gangwal alleged Bhatia, who controls the company, had used it to enter into questionable related-party transactions.