Etihad agrees to cut number of directors on Jet Airways board

Abu Dhabi-based Etihad Airlines has agreed to halve the number of directors on the Jet Airways Board to two posts under the Rs 2,058-crore deal, giving the Indian promoters 'effective control' of the carrier.

This, alongwith other details of an amended shareholding agreement (SHA), has been forwarded to Finance Ministry ahead of the FIPB meeting on July 29 to consider the proposal.

As per the revised shareholding agreement, Etihad would have two directors on the board after the deal, as against the earlier proposal of four directors in the 10-member board, sources said.

This 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 is the largest FDI in the aviation space so far.

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 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.

Jet shares end up 17.4%
Shares in Jet Airways ended up 17.4 per cent on Friday after traders said the Foreign Investment Promotion Board was likely to approve a planned stake sale to Etihad Airways.

Jet Airways and Etihad Airways officials were not immediately reachable for comment on the market speculation. A spokesman for the finance ministry, which oversees FIPB, declined to comment.

The FIPB, which clears foreign direct investment proposals, is scheduled to consider the Jet-Etihad deal at its meeting on Monday and traders said it may be approved. The FIPB last month deferred a decision on Jet's plan to sell a 24 per cent stake to Etihad.