Etihad to cut no. of directors on Jet board to seek FIPB nod

Eager to get FIPB approval for the Rs 2,058-crore deal to buy stake in Jet Airways, Abu Dhabi-based Etihad Airlines has agreed to reduce the number of directors it will have on the board of the domestic carrier to two, leaving ‘effective control’ with the Indian promoters.

The modified proposal along with other details of amended shareholding agreement (SHA) has been forwarded to the Finance Ministry ahead of the FIPB meeting on July 29 for its consideration.

As per the revised shareholding agreement, Etihad would have two directors on the board after the deal.

Also, Etihad had agreed not to act in concert with Naresh Goyal, the majority shareholder of Jet, while taking decisions.

Under the original proposal, four directors were to be nominated by Jet Airways and three by Etihad, besides seven independent directors of which at least six had to be Indian citizens. The proposal, however, was deferred and not placed for approval before the EGM in May.

The revised proposal seeks to address the concerns of Foreign Investment Promotion Board (FIPB) and market regulator Sebi with regard to ‘effective control’ after the foreign direct investment, which will be the largest FDI in the aviation space.

The agreement says that major decisions, including appointment of independent directors and the chairman and vice—chairman, will now be taken on the basis of majority of votes.

However, there will be no change in the shareholding pattern with Etihad picking up 24 per cent, key promoter Naresh Goyal holding 51 per cent and the remaining 25 per cent with others, including institutions and individuals.

Besides the Finance Ministry, the Department of Industrial Policy and Promotion (DIPP) would be scrutinising the revised proposal over the weekend so that a firm view could be taken at the meeting on Monday.

Shares of Jet Airways jumped 19.36 per cent to Rs 402 in afternoon trade on the BSE.