New Delhi: Foreign Investment Promotion Board (FIPB) on Monday cleared Abu Dhabi-based Etihad Airlines buying 26 per cent stake in Jet Airways for Rs 2,058 crore with some conditions.
FIPB cleared the deal with some riders, sources attending the FIPB meeting said.
The conditions include Jet seeking prior Government of India approval for any changes in the Share Holders Agreement (SHA) with Etihad. Also, any arbitration would have to be under Indian law and not English law as proposed in the revised SHA submitted by Jet-Etihad to FIPB.
Once Jet-Etihad agree to the conditions, the deal would go to the Cabinet Committee on Economic Affairs (CCEA) for approval.
Ethiad has already agreed to reduce the number of directors it will have on the board of domestic carrier to two from three previously proposed, leaving 'effective control' with the Indian promoters.
In the run-up to FIPB meeting, Etihad had made significant concessions in favour of its Indian partner, Naresh Goyal, so as to persuade authorities to clear the deal.
Besides reducing its representation from three to two on the 12-member board of Jet Airways, it has agreed to vest Goyal, the founder chairman of Jet, with the right to deliver a "casting vote on any matter".
In the revised SHA, the Abu Dhabi-based airline agreed to make only recommendations about suitable candidates for top positions in Jet Airways as opposed to it getting the right to source senior management in the original agreement.
Under the original proposal, four directors were to be nominated by Jet Airways and three by Etihad, besides seven independent directors of which at least six had to be Indian citizens.
The revised proposal seeks to address the concerns of FIPB and market regulator Sebi with regard to 'effective control' after the foreign direct investment, which will be the largest FDI in the aviation space.
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 25 per cent with others, including institutions and individuals.