Market regulator SEBI’s verdict on the validity of the Jet-Etihad foreign direct investment (FDI) proposal may not be the final one if all the ministries concerned do not agree with it.
“While the Foreign Investment Promotion Board has decided to seek SEBI’s opinion on the issue of ownership and control of the company, its advice would be accepted only if all other ministries concerned including Department Industrial Policy & Promotion, civil aviation and corporate affairs are agreeable,” a DIPP official has said.
The FIPB is likely to take a final call on the Jet-Etihad deal on the basis of the company’s revised Shareholder Agreement and Corporate Governance Code, a senior Government official said.
Naresh Goyal-promoted carrier Jet Airways’ proposal to sell 24 per cent stake to Abu-Dhabi based airlines Etihad for over Rs 2,000 crore has run into rough weather over concerns about ownership and control of the company once the deal happens.
“FIPB will also take cognisance of new control formulae, as agreed upon by the Finance Ministry and the DIPP besides other for considering the proposal,” the source said.
The FIPB, which is headed by the Economic Affairs Secretary and includes senior officials from other key ministries, is the top body that decides on FDI proposals that have to go through the approval route.
In its last meeting on June 14, the FIPB decided to defer Jet Airways proposal as the Corporate Affairs and the Civil Aviation Ministries were not happy with the proposed shareholders’ agreement submitted by Jet.
“The company has to give a duly approved shareholders’ agreement and corporate governance code. A separate clarification is not desired. The company is supposed to marry all the facts in approved documents and submit,” the source said.
Jet has been forced to revise its shareholders’ agreement as SEBI officials had objected to it on the ground that even with a 24 per cent stake, foreign carrier Etihad had the powers to manage, veto and control Jet’s operations.
DIPP, which has already floated a Cabinet note revising the definition of control, is hopeful that when the Jet-Etihad proposal finally reaches the Cabinet Committee on Economic Affairs for clearance, the new definition of control would form the basis of the Cabinet’s decision. This is the second deal involving foreign airlines after AirAsia’s proposal to set up a domestic airline in association with Tata and Telestra Group. The AirAsia-Tata proposal has already been cleared by the FIPB and now in the process of getting required approval from the Civil Aviation Ministry.