The proposed governance changes were part of the company’s broader effort to align with FEMA norms governing Indian ownership and board control structures
Food delivery and quick commerce platform Swiggy has failed to obtain the shareholder backing required to amend its Articles of Association, a move that was central to its plans to eventually qualify as an Indian-owned and controlled company under foreign exchange regulations.
In a stock exchange filing issued on Thursday, the company said the special resolution seeking approval for changes to its Articles of Association secured 72.36 per cent of shareholder votes, missing the mandatory approval threshold by 2.65 percentage points.
The proposal had been put before shareholders through a postal ballot conducted via remote e-voting. Alongside the amendments, shareholders were also asked to vote on the appointment of Renan De Castro Alves Pinto as a Non-Executive, Non-Independent Nominee Director.
While the amendment proposal did not pass, shareholders overwhelmingly approved the board appointment, with 98.98 per cent voting in favour, the filing added.
Push For IOCC Classification
Swiggy had earlier informed investors that the proposed revisions to its board nomination structure formed part of a wider strategy to eventually attain the status of an “Indian Owned and Controlled Company” (IOCC) under Indian foreign exchange regulations.
The company issued the clarification after institutional shareholders sought greater transparency regarding the purpose and implications of the proposed governance changes.
“The company wishes to clarify that the Proposed Amendment also forms part of a broader endeavour by the company to become an Indian Owned and Controlled Company (IOCC) under applicable Indian foreign exchange laws and regulations, as and when the resident shareholding in the company increases beyond 50 per cent with necessary regulatory and shareholder approvals,” Swiggy said.
FEMA Framework On Ownership And Control
Under the Foreign Exchange Management Act (FEMA) framework, a company can be categorised as Indian-owned and controlled only when both ownership and effective control remain with resident Indian citizens or qualifying Indian entities. This also extends to board composition and nomination rights that ensure domestic control over the company’s governance structure.
