Confirming what Rakesh Gangwal had claimed in his letter of complaint to the SEBI last year, the investigating team from Securities and Exchange Board of India (SEBI) has found that there are related party transaction in InterGlobe Aviation Ltd, Indigoâ€™s parent company that are not above board, reports Mint.
Related party transactions or RPTs were one of the main complaints made by Gangwal against his partner and co-founder of Indigo, Ramesh Bhatia. Bhatia had responded then saying the value of RPTs donâ€™t exceed even half a percent of the companyâ€™s turnover and therefore there was no need for any board approvals for such transactions.
The SEBI team says it did find transactions of value above this threshold limit and that the boardâ€™s approval had not been obtained. In some cases, they found the audit committee of the board had given post-facto approvals after the contracts had been given to related parties. Where shareholdersâ€™ approvals were to be taken were not also taken, the SEBI team says in its report.
While this news had an immediate impact on the shares of Indigo on the stock markets, there is another contentious issue to be sorted out between the feuding partners.
This relates to the shareholder agreement entered into between Bhatia and Gangwal where it states that Gangwal cannot sell his shares in Indigo unless they are first offered to Bhatia and he turns them down. Gangwalâ€™s attempt to have this agreement amended also fell through by a narrow margin with more than 51% of the shareholders opposing any change to the agreement. Legal experts are of the opinion though the shareholders have ratified the agreement as it is, SEBI has the powers to take a look at it and if the interests of small shareholders are in anyway affected, they can call for an amendment.