Even most of the public institutions voted against the resolution. Of the 84 per cent of such large public shareholders who voted, 51.65 per cent rejected the move. Institutions own nearly 21 per cent stake in InterGlobe Aviation.
Queries on voting results sent to Gangwal didn’t elicit any response till press time. He stays in the US and didn’t attend the EGM.
The resolution, proposed by co-promoter Rakesh Gangwal, sought to relax rules on the sale and purchase of shares by its main shareholders making it easier for the promoters to raise or cut stake in the company. Among the 16 clauses that Gangwal intended to remove are restrictions that confer the right of first refusal on the partner who’s prepared to stay on in the event of a stake sale by the other partner.
That clause prevents either of the co-founders from buying publicly-listed shares of the company, potentially triggering an open offer for the rest of the company and another one that prevents staggered sale by a partner.
To be clear, promoters’ right to board seats and their nomination rights are not linked to shareholding and will continue even if their stake falls below 50 per cent. So, Bhatia’s IGE group continues to retain the right to nominate the chairman, the CEO & MD, and the president.
It also has the right to appoint five out of 10 directors in the board. Two days ago, the company appointed CEO Ronojoy Dutta- an IGE appointee--as a whole time director on the board.
The Gangwal family had pointed out in its notice that EGM was necessary to remove the restrictive clauses of share transfer, that were part of shareholders’ agreement (SHA).
The clauses remain embedded in the Article of Association (AoA) despite the expiry of the SHA. The SHA, signed between Bhatia and Gangwal according to the conditions, expired last November-- four years after the listing of the company in 2015.
There was much drama at the EGM over the absence of Gangwal, who had called the meeting. Worried that the value of their shares was getting eroded as a result of infighting between the two co-promoters and with little clarity on what the new resolution would mean, shareholders raised alarm resulting in chaotic scenes. While Chairman M Damodaran called for peace, investors refused to pay heed.
“There is no requirement of changing any articles of the company when everything is going so good. We have got dividends from the company. Don’t want anything to change,” said a shareholder Anil Saxena, who travelled from Pune.
“We are all grown up people and I request you to please sit down,” Damodaran kept requesting as he tried to clarify that the resolution coming to vote doesn’t mean a promoter is quitting the company. In the midst of the pandemonium, Damodaran was heard saying that ‘’nobody's shareholding is going away’’ and that ‘’shareholders have a right to decide what to do with their shares’’.
IndiGo’s stock has been under pressure, falling close to 30 per cent since the feud broke out. But it has regained close to 10 per cent in the year-to-date period.