IndiGo co-founder Rakesh Gangwal has warned the airline's board that there is a real consequence of regulators stepping into the boardroom if the board does not decide to close "the large loophole" after the transition period.
As per Gangwal, "the large loophole" indicates a situation where there is a possibility of questionable policy decisions if the number of IGE (Rahul Bhatia's InterGlobe Enterprises) group directors outnumber him and all independent directors.
"I again reiterate that I am unable to support the special resolution on the articles without closing the large loophole. The failure to pass the changes to the articles has the real consequence of regulators stepping into our boardroom," Gangwal wrote in an e-mail response to Chairman Damodaran.
It is important to recall here that Gangwal informed all board directors on August 5 via an e-mail that he won't be able to support the special resolution regarding amending articles of association for expanding board size from six to 10 as the new policy for related-party transactions and resolution for board size have not been implemented or approved by the board yet.
While Gangwal and independent director Dr Anupam Khanna have demanded the implementation of a new related party transaction (RPT) policy and circulation and approval of a resolution on board size ahead of the AGM, Chairman Damodaran has told them that these decisions will be taken after the annual general meeting (AGM), which will take place on August 27.
Gangwal said that there are no open issues regarding sequencing of independent directors and there is an agreement on contractual language for the RPT policy, the board size, the composition of board size, independent woman director and sequencing before transition period. However, there is still no agreement on closing 'the large loophole' after the transition period.
He has also questioned Chairman Damodaran's proposal to call board meetings to clear a new RPT policy and appoint an independent woman director after the AGM.
"Your sense of urgency to call these board and committee meetings after the AGM is perplexing," Gangwal wrote to Damodaran.
"Checks and balances are important, and I ask why have an independent director as chair of audit committee or even have any independent directors on listed companies--we should leave it to the fiduciary responsibilities of the promoter directors," Gangwal said in a response to comments made by Damodaran in his letter, where the chairman had called the concerns of IGE group (Rahul Bhatia's InterGlobe Enterprises) pushing through questionable decisions as unfounded.
"The fear that, in the interim, the IGE group will push through questionable decisions, does no credit to the IDs that will be on the board, or to the fiduciary responsibilities of the directors including those nominated by the IGE group," Damodaran had said in his email on August 5 to the board of directors, company secretary Sanjay Gupta and CEO Ronojoy Dutta.
First Published: IST