IndiGo's non-executive and non-independent director Rakesh Gangwal has resigned from the company's board with immediate effect, according to an exchange filing. Gangwal's resignation came as he intends to slowly reduce his stake in the company over the next five years.
"My current intention is to slowly reduce my equity stake in the Company over the next 5 plus years. While new investors should benefit from the potential future growth in the Company’s share price, a gradual reduction of my stake should also allow me to benefit from some of the upside. Like any plan, future events may impact my current thinking," Gangwal wrote in his resignation letter.
"However, I am concerned about the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information (UPSI). As you are aware, on an ongoing basis, the Company provides us information and some of this is UPSI. Being a co-founder, co-promoter and director, this issue takes on great significance," he added.
Gangwal and his related entities own around 37 per cent stake in this company. Rahul Bhatia and his related entities own around 38 per cent in InterGlobe Aviation.
Gangwal had been locked in a battle over the running of the airline with IndiGo's other co-founder Rahul Bhatia.
IndiGo this month named Bhatia as managing director.
Both the co-founders had called an extraordinary general meeting (EGM) in December last year to scrap a clause in the company’s articles of association that gives the two owners the right of first refusal over the acquisition of each other’s shares.
This would allow either side to sell or transfer shares to a third party without giving each other notice.
"Members of the company at the EGM held on December 30, 2021, have approved the special resolution for amendment to the Articles of Association by deletion of articles 1.6 to 1.15 (transfer of equity shares), 1.16 to 1.20 (acquisition of shares) and 2A (other provisions on equity shares), with requisite majority," IGA had said in a regulatory filing.
What Is The Conflict About?
The dispute between the two started in 2019 when Gangwal accused Bhatia of indulging in "questionable related-party transactions" between InterGlobe Aviation and Bhatia group entities.
Gangwal also flagged the unusual rights that give Bhatia control over the board and that have allegedly led to governance failures.
Gangwal had in 2019 alleged several irregularities in InterGlobe Aviation's related-party transactions.
The two founders also differ over the strategy for IndiGo’s growth.
The feud between the two promoters -- Bhatia and Gangwal -- came into public domain after Gangwal had written to market regulator Sebi in July 2019 and sought its intervention to address the alleged corporate governance lapses at the company, charges that have been rejected by the Bhatia group.
In 2019, both the promoters had moved the London Court of International Arbitration to resolve their disputes.
The court had passed its order on September 23 last year, following which the aforementioned extraordinary general meeting was called to amend the company's AoA.