Left Menu
Development News Edition

As IndiGo faces turbulence, regulators intensify scrutiny of governance lapses

PTI | New Delhi | Updated: 14-07-2019 13:57 IST | Created: 14-07-2019 13:51 IST
As IndiGo faces turbulence, regulators intensify scrutiny of governance lapses
Image Credit: Wikimedia

With promoter spat intensifying at the country's largest airline IndiGo, markets watchdog Sebi and the corporate affairs ministry have started digging deep into allegations of governance lapses and violations that could force the government to override existing arrangements and pacts at InterGlobe Aviation, officials said. Bringing into public the differences between long-time friends and promoters of IndiGo into the open, Rakesh Gangwal has sought Sebi's intervention into alleged corporate governance lapses at the company and even said that 'paan ki dukaan' (betel shop) would have managed things with more grace.

InterGlobe Aviation, which got listed in 2015, has come under the intense regulatory scanner and there are indications of multiple violations of Sebi norms. The role of each and every entity associated with all board members and entities linked to the promoters are being probed amid signs of lapses in complying with governance requirements, fair market trade, and insider trading norms, the officials said. One of the major issues raised by Gangwal was about related party transactions involving co-founder Rahul Bhatia's InterGlobe Enterprises (IGE) Group and the allegations have been refuted by the Bhatia camp.

An official said the corporate affairs ministry would be seeking a "para-wise comments" from the company on Gangwal's complaint and would also be looking at the related party transactions. With the promoter feud igniting concerns over corporate governance practices at InterGlobe Aviation, the ministry would examine whether memorandum, articles, agreements, and resolutions are in consonance with provisions of the Companies Act.

The company could face strict regulatory action, including overriding of existing pacts, in case there are violations of the Act. The official said the ministry can even invoke powers under Section 6 of the Companies Act, 2013.

Section 6 provides powers to override any memorandum, articles, agreements or resolutions passed at the general meeting or by the board of directors in case they violate norms. Following Gangwal's letter to Sebi, the ministry and others, the markets regulator has sought a response from the company by July 19. Against this backdrop, Sebi has also widened its probe, launched a few months ago, into suspicious insider trading violations in the shares of InterGlobe Aviation.

The officials said that a number of executives and board members are likely to be summoned by the markets regulator. Among the issues flagged by Gangwal are that various related party transactions with the IGE Group were executed without seeking the audit committee's approval and without seeking competitive bids from third parties, and non-appointment of an independent woman director.

Regarding the board's decision to reject a request for an extraordinary general meeting, Gangwal alleged that legal requirements and basic governance norms were violated by not providing board members timely material facts prior to voting by the board. On July 12, Bhatia' IGE Group said the company is well run, financially sound and managed by a competent set of managers as it termed Gangwal's allegations of governance lapses as much ado about nothing. Gangwal and his affiliates own around 37 percent stake in InterGlobe Aviation while Bhatia and his IGE Group has about 38 percent shareholding.


TRENDING

OPINION / BLOG / INTERVIEW

5G will be the key driving force for COVID-19 recovery: Here's how?

... ...

Canada’s COVID-19 pitfalls highlight need for integrated health information system

In the globalized world of today where outbreaks can spread far and wide within a matter of days, a global-level integrated health information system is ideal but Canadas provincial barriers show that the country lags much behind in deployi...

Pandemic must be impetus, not obstacle, for clean water access

To make matters worse, there are suspicions that the inadequacy of wastewater treatment methods in California, the rest of the USA, and indeed around the world may help to propagate the disease even more widely. ...

3D printing and the future of manufacturing post COVID-19

The on-demand, customizable, and localized manufacturing of product components facilitated by 3D printing has the potential to redefine manufacturing but there are certain technical, mechanical, and legal limitations that, unless ...

Videos

Latest News

Athletics-Cheptegei smashes 5,000 metres world record at Monaco Diamond League

Ugandas Joshua Cheptegei produced a brilliant display of solo running to break Kenenisa Bekeles 16-year-old 5,000 metres world record by almost two seconds at the Monaco Diamond League meeting on Friday. Cheptegei, 23, had predicted a world...

ICPA requests AI Chairman for intervention on 'illegal pilots termination'

The Indian Commercial Pilots Association ICPA on Friday requested the Chairman of Air India AI for his intervention against illegal pilots termination after the request for withdrawal of resignation of 48 pilots was not accepted by the pers...

UAE's Israel deal met with Arab dismay but quiet welcome in Gulf

From cries of betrayal to fears about falling dominoes, the deal making the United Arab Emirates the third Arab state to forge ties with Israel stirred anger and dismay around the Middle East, but a cautious welcome from the UAEs Gulf allie...

Johnson, streaking Raptors jolt Nuggets

Stanley Johnson scored a season-best 23 points to lift the Toronto Raptors to a 117-109 win over the Denver Nuggets on Friday afternoon near Orlando in the final regular-season game for each team. Several regulars either did not play or had...

Give Feedback