Gangwal Tells SEBI: No Truce With IndiGo Co-Founder Rahul Bhatia Unless New Board Structure Loophole Is Sorted Out

In a recent letter to the directors of IndiGo airlines, copied to the Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs, IndiGo Co-founder Rakesh Gangwal has stated that he will not sign on any changes until a large loophole in the new board structure is sorted out.

He has alleged that the new company board structure of IndiGo would only add to the powers of InterGlobe Enterprises (IGE) which is owned by fellow co-founder Rahul Bhatia.

Gangwal has effectively clarified that there is no truce between the founders after an extended July 20 board meeting ended, with both sides supposedly agreeing on two issues.

Firstly, they had agreed that the board would be expanded from six directors to 10 directors as well as include a female independent director. Secondly, they had agreed that the company board would have to approve any related party transactions.

However, in Gangwal’s recent letter he has stated that the proposed structure of the new company board has created a huge loophole which would benefit co-founder Rahul Bhatia and his company IGE.

According to Gangwal’s letter, when there are less than four independent directors as per the proposed new board structure, this would allow Rahul Bhatia’s IGE Group to pass any company policy purely because their board members are more than all the other board members combined.

This would defeat the very purpose of expanding the board, Gangwal’s letter stated, asking SEBI to intervene in the matter.

Gangwal has also suggested that the IndiGo board be expanded to seven directors, including a woman independent director so that the loophole is closed automatically due to sheer mathematics and SEBI rules.

Incidentally, the airline is scheduled to hold its AGM on August 27.