If you thought that the issue between the two founding promoters of Indigo, the profit-making airline, you may have to revisit that since Rakesh Gangwal does not appear to have been pacified yet.
After he flagged certain issues and the board of directors of the company, under Chairman M Damodaran was asked to resolve them within themselves, the board did meet and it was decided that the articles of the association of the company would be altered to allow for a 10-member board with 4 independent directors and the Chairman being an independent entity. Of the four independent members one would be a female director.
Now, Rakesh Gangwal has found a loophole in this arrangement and has demanded that the size if the board be limited to 7 and not 10. This has since been turned down by the Chairman. There has been an exchange of correspondence on the subject.
The way Gangwal has presented his case is that if at any point in time, there is a vacancy for the position of one independent director and a new one as replacement is not inducted, the IGE Group led by his co-promoter Rahul Bhatia could push through decisions at the board level putting him at a disadvantage.
The reason for Gangwalâ€™s apprehensions is that in the proposed 10-member board arrangement, there will be five nominees from the IGE side and one from Gangwalâ€™s side and the remaining four, independent directors.
Chairman Damodaran has explained that the possibility of the scenario depicted by Rakesh Gangwal may not present itself for more than one reason. He has said there is a sequence to be followed in the induction of the additional directors to the companyâ€™s board once the AGM approves the changes in the AoA. In that sequence, the IGE nominee will be the last to be inducted. It will start with the independent woman director to be appointed first followed by a wholetime/executive director and another independent director in that order.
The Chairman has pointed out that there is already a mechanism in place to identify and appoint independent directors. He has also requested Gangwal not to jump to conclusions and to have some faith in the people who hold such responsible positions.
All eyes will be on the August 27 AGM where these decisions will have to be ratified by the shareholders of the company. After this happens and the reconstitution of the board is undertaken, the issue of related party transactions which was the main issue flagged by Rakesh Gangwal in his letter to the SEBI Chairman that set this entire crisis in motion.