The company says that the proposed amendments were a preparatory step towards the company’s objective to qualify as an Indian Owned and Controlled Company (IOCC)
After Swiggy’s special resolution for amendment of its articles of association fell short of the 75 per cent approval threshold required for a special resolution, the company has clarified that the proposal would not have given any additional control to the founders of the company.
“The proposed amendments do not create any veto rights, affirmative voting rights, committee nomination rights, quorum rights, permanent board seats or any right to appoint a majority of the board,” the company said in an exchange filing.
Last week, the shareholders of the company did not approve the special resolution and the proposal received an overall shareholder approval of 72.36 percent, falling short of the 75 per cent threshold required for a special resolution by 2.64 per cent. The proposal would have allowed the Group CEO and Co-founder Sriharsha Majety to nominate Co-founder Phani Kishan Addepalli and CFO Rahul Bothra to the board.
Reports noted that the proposal had raised governance concerns among some institutional investors. Investors were concerned over the possibility of an increased management influence over board decisions.
“The additional right proposed in favour of Sriharsha Majety, Group CEO and Co-founder, was specific to nominate one senior management professional of the company to the Board, and not a general right for him to appoint any person outside of the company,” the company clarified.
Citing that the company does not have an identifiable promoter group, it said that a governance architecture that provides for representation of the founders and senior management at the board level is both appropriate and necessary, to ensure continuity of domestic management oversight, accountability for the execution of the company’s strategic plan.
“The right proposed in favour of Phani Kishan Addepalli, Co-founder, subsists only so long as he maintains a qualifying economic interest in the company, measured by reference to a combination of his continued employment and vested employee stock options (crystallised and unfettered right to exercise and hold shares) and equity shares,” the company added.
The company also pointed out that ‘neither right is granted in perpetuity, each subsists only while its conditions are satisfied.’ It noted that the proposed amendments were a preparatory step towards the company’s objective to qualify as an Indian Owned and Controlled Company (IOCC) under applicable Indian foreign exchange laws and regulations.
