Shares of Swiggy Ltd will be in focus on Friday, after a public holiday on Thursday, as the board of online food delivery platform failed to secure the requisite shareholder approval to amend its Articles of Association, a key requirement for qualifying as an Indian-owned and controlled company (IOCC). This included seeking addtional rights proposed in favour of Group CEO Sriharsha Majety and co-founder Phani Kishan Addepalli.

As per a stock exchange filing by Swiggy, the special resolution for the proposed amendments received an overall shareholder approval of 72.36 per cent, falling short of the 75 per cent threshold required for a special resolution, by 2.64 percentage points. 

Swiggy clarified strong governance, transparency and shareholder accountability are central to how it operates, adding that it was working constructively with all its shareholders to address their concerns and achieve a positive outcome. Swiggy said it would  evaluate any future structural or strategic steps through lawful, transparent and shareholder-aligned processes.

Clarification on governance
Swiggy said 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. 

Similarly, it said, the right proposed in favour Phani Kishan Addepalli, Co-Founder, subsisted 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 and equity shares. 

"The linkage to vested employee stock options reflects the substantive and established form of economic participation of senior management in a company of Swiggy's structure, and demonstrates both economic interest and management stature," Swiggy said.  

It further clarified that neither right is granted in perpetuity - each subsisted only while its conditions are satisfied. 

"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 rights and the individuals recommended were each vetted by the Nomination and Remuneration Committee (‘NRC’), and approved by an Independent Board, and always remains subject to NRC review, Board approval, and shareholder approval for
every nomination," it said. 

Rationale for proposed amendments
Swiggy said it does not have an identifiable promoter group. In a company with a diversified shareholding structure, 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.

It said the board composition required to support the company's Indian Owned and Controlled Company ("IOCC") objectives. "The Proposed Amendments were a preparatory step towards the company’s objective to qualify as an IOCC
under applicable Indian foreign exchange laws and regulations - an objective that is consistent with the direction taken by comparable companies in India and which the company believes will drive long-term shareholder
value," it said.

Further, it noted that the IOCC classification would have additionally required resident Indian shareholding to exceed 50 per cent along with applicable regulatory and shareholder approvals.