July 11, 2019

SEBI Starts Investigation Into Alleged Governance Issues At IndiGo, Urges Company Respond To Allegations By July 19

[ By Bobby Anthony ]


The Securities and Exchange Board of India (SEBI) has started a preliminary enquiry into alleged corporate governance issues at InterGlobe Aviation, which operates IndiGo, and sought further details from promoters of the company.

The market regulator has already asked the company to give its response to the allegations by July 19.

Earlier, Indigo co-promoter Rakesh Gangwal had sought SEBI’s intervention, alleging that the other co-promoter Rahul Bhatia had misused powers to enter into related party transactions with IndiGo airlines.

The market regulator is also expected to ask the IndiGo airlines board has to explain the reason for not having adhered to governance norms which specify that listed companies should have an independent woman director on board.

According to information filed with stock exchanges by Interglobe Aviation Ltd’s co-promoter Rakesh Gangwal on July 8, corporate governance norms as well as the company’s code of conduct for directors had been violated by Indigo Airlines co-founder Rahul Bhatia.

The letter also accused Rahul Bhatia of executing various related party transactions without seeking the audit committee’s approval. Various related party transactions were executed without seeking competitive bids from third parties, while other related party transactions were signed, allegedly with retrospective effect (back dated), Gangwal’s letter stated.

Gangwal’s letter had stated that he wants shareholders at an EGM to vote on two resolutions. The first resolution would be to ensure that the company, its board of directors and senior management adhere to requirements in the company's Code of Conduct for Directors and Senior Management.

The second resolution would be to recommend to the board and audit committee, certain reasonable procedures as well as safeguards to be put in place regarding entering into related party transactions with Rahul Bhatia and his affiliates (IGE Group).

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