SEBI has ruled that Etihad Airways’ acquisition of a 24 per cent stake in Jet Airways does not warrant an open offer as there will be no change in the Indian carrier’s ownership structure after the deal.

The market regulator’s ruling paves the way for the first foreign direct investment in an Indian carrier after the Government relaxed norms for the sector in 2012.

SEBI added that the two airlines have voluntarily made changes to their commercial co-operation agreement (CCA) to ensure that effective control of Jet will remain with its board and Indian nationals.

“All of these voluntary changes (including deletion of a Schedule I to the CCA, that is, with regard to the Governance Procedures) have been made to ensure that there is absolute certainty that ‘effective control’ of Jet is and continues to vest in Indian nationals and the board of Jet,” SEBI’s wholetime member Rajeev Agarwal said in the 17-page ruling.

Amber Dubey, Partner and India head of aerospace and defence at global consultancy KPMG, said: “A welcome decision by SEBI... all the precious man-hours spent by government agencies and regulators on evaluating a subjective concept called ‘control’ in a private corporate entity could have been put to better use”.

SEBI had re-examined the Jet-Etihad deal after the Competition Commission of India had observed that the CCA between the carriers establishes Etihad’s joint control over Jet. In February, the market regulator issued a show-cause notice to Etihad, as part of its takeover code, asking why the Gulf-based airline should not make an open offer to Jet public shareholders.

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