New Delhi: InterGlobe Aviation's board of directors has approved a new policy on related party transactions, sources said on Wednesday, amid promoters feuding over governance issues.
Simmering differences between co-promoters -- Rahul Bhatia and Rakesh Gangwal -- came into the open after the latter sought intervention of markets regulator Sebi to address alleged corporate governance lapses on July 8.
While the allegations have been refuted by Bhatia's group, Sebi and corporate affairs ministry are looking into the issue.
Against this backdrop, the board of InterGlobe Aviation -- parent of the country's largest airline IndiGo -- met on July 19 and 20.
The sources told PTI that the new policy on related party transactions (RPTs) was approved by the board unanimously.
Under the new policy, external advice would be sought for RPTs that are worth over Rs 2 crore and bidding process would be mandatory for any such contracts, the sources said.
Further, any changes in RPTs would have to be unanimously approved by the company's independent directors, they added.
Among other issues, Gangwal had raised concerns that various RPTs involving Bhatia's InterGlobe Enterprises (IGE) Group were executed without seeking the audit committee's approval and without seeking competitive bids from third parties. Another issue was about non-appointment of an independent woman director.
A decision has also been taken to expand the strength of the board to up to ten members, including four independent directors. Also, there would be one woman independent director.
Currently, the board has six members, including Bhatia and Gangwal.
The sources said Bhatia group would nominate five members to the board, including the Chief Executive Officer.
Gangwal and his affiliates hold around 37 per cent stake in InterGlobe Aviation -- the parent of the country's largest airline IndiGo -- while Bhatia's group owns nearly 38 per cent shareholding.
The company, which got listed in 2015, has come under regulatory lens following the complaint by Gangwal.
The sources claimed the issues between the co-promoters stand resolved and the company is on growth path.
While acknowledging that what has happened was unfortunate, the sources exuded confidence that the company would emerge stronger.
The board of directors has decided to amend the Articles of Association (AoA) for expanding the board by up to a maximum of 10 members, including four independent directors, the company said in a regulatory filing on Sunday.
"The said amendment of the articles will be subject to approval of the shareholders at the forthcoming annual general meeting of the company," it had said.
Generally, an AoA pertains to internal rules governing a company.
On July 12, Bhatia's group said the company is well run, financially sound and managed by a competent set of managers as it termed Gangwal's allegations of as much ado about nothing.