The boardroom crisis in Indigo, the top performing Indian airline, may finally come to an end. There were two key issues raised by one of the co-founders of the airline, Rakesh Gangwal in a letter that he sent to the SEBI Chairman. One related to the appointment of independent directors. The other major issue was the related party transactions.
According to a Mint report, a compromise has been arrived at between the warring founders and both these issues will be directly addressed. The company’s Articles of Association (AoA) itself is being amended to increase the number of directors on the board to 10 from the current six. Secondly, every related party transaction will be put through a scrutiny by the independent directors.
If these are indeed the proposals being worked out, then Rakesh Gangwal may have no issues left. And with the airline is doing well and continues to earn profits, this was the best move to protect the interests of the airline and the thousands who work in it.
The best part in this compromise formula is that though the Articles of Association will require an amendment to increase the strength of the board of directors, there is no need to rework the shareholders’ agreement. This also means Rahul Bhatia and his IGE will get to continue to run the airline and make important appointments like the CEO.
In the new dispensation, there will be 10 directors, of which 4 will be independent, including the SEBI Chairman and six through the promoters; one Rakesh Gangwal and his nominee and Rahul Bahtia and his three nominees. The new arrangement has been conveyed to the statutory authorities through filings. Their actual implementation on the ground may take a few days more.
Most of these issues were deliberated upon in the company’s last board meeting held on July 20.