SEBI, MCA Asks Indigo To Submit All Documents, Including EY Report Which Had Examined Related-Party Transactions

The Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA) have asked IndiGo to submit all documents, including the EY report that examined the issue of related-party transactions.

The MCA has also specifically asked IndiGo for a point-by-point reply to the 10 issues raised by promoter Rakesh Gangwal.

Additionally, SEBI has also asked for the shareholders’ agreement Earlier, auditor EY was asked to study related-party transactions between IndiGo and firms affiliated to co-promoter Rahul Bhatia’s IGE Group in past five years.

Later, a board committee was set up to examine some protocols suggested by the EY report, which could not be implemented due to differences between the two promoters.

SEBI also plans to examine the role of directors to see if there has been any violation of securities laws.

Incidentally, Rakesh Gangwal holds about 37% in IndiGo while copromoter-turned rival Rahul Bhatia holds close to 38%. Bhatia has special rights, including the prerogative to appoint three out of six directors as well as the chairman of the board. Bhatia also has the right to name the managing director, the CEO and the president.

As per norms, the shareholder approval has to come through a special resolution, and SEBI will examine if that is indeed the case.

SEBI has asked for all documents from the company and is expected to look at whether it got relevant approvals from shareholders for any special rights. All issues raised in the complaint will be examined by SEBI.