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Abu Dhabi-based Etihad Airways has agreed to reduce the number of directors on the board of Jet Airways to address concern raised by Indian authorities that effective control would shift to foreign hands after the acquisition of stake by the West Asian carrier.
The revision in the agreement between the two airlines came ahead of the Foreign Investment Promotion Board (FIPB)’s meeting on Monday to grant clearance to the deal.
Sources told Business Standard that Jet Airways and Etihad Airways had addressed all issues raised by regulatory authorities. According to the modified proposal and the amended shareholders agreement submitted by the two airlines to the finance ministry, Etihad would now have only two directors on the 14-member board of Jet, leaving ‘effective control’ with the Indian promoters.
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According to the original agreement, Etihad was to nominate three directors and Jet four directors to the board. Besides, there will also be seven independent directors.
The corporate governance code, which had earlier held that board resolutions would be passed with three-fourths majority, too, has been altered. The revised agreement says major decisions, including appointment of independent directors and the chairman and vice-chairman, would now be taken by the board on the basis of majority of votes. In simple terms, the amendment means that the votes of eight board members would now be sufficient to pass a resolution. Etihad has also agreed not to act in concert with Naresh Goyal, the majority shareholder of Jet, while taking decisions.
The finance ministry and DIPP would be examining the revised proposal over the weekend.
