Abu Dhabi-based Etihad's acquisition of a 24 per cent stake in Naresh Goyal-led Jet Airways, the first foreign direct investment (FDI) in an Indian carrier by an overseas airline, was announced in April 2013 and approved by the Securities and Exchange Board of India (Sebi) last year.
Sources said Sebi is looking afresh at the deal after the Competition Commission of India (CCI) made observations regarding control over Jet Airways. The CCI, while giving its green signal to the transaction in November, had said there were no anti-competitive concerns.
"It is observed that the parties have entered into a composite combination comprising inter alia the IA (Investment Agreement), SHA (Shareholder's Agreement) and the CCA (Commercial Co-operation Agreement), with the common/ultimate objective of enhancing their airline business through joint initiatives.
"The effect of these agreements, including the governance structure envisaged in the CCA, establishes Etihad's joint control over Jet, more particularly over the assets and operations of Jet," the CCI said in its order on November 12.
Besides, the trade watchdog observed that "Etihad's acquisition of 24 per cent equity stake and the right to nominate two directors, out of the six shareholder directors, including the vice-chairman in the board of directors of Jet, is considered as significant in terms of Etihad's ability to participate in the managerial affairs of Jet."
BJP leader Subramanian Swamy had written to Sebi asking Etihad to be considered a 'person acting in concert' with Jet's current promoters for this deal.
While approving the deal, Sebi is believed to have said that Etihad would not be required to make an open offer to Jet shareholders and the two airlines would not be treated as persons acting in concert.
"...The rights proposed to be acquired by Etihad do not, prima facie, appear to result in change in control and consequently, do not attract the provisions of...Takeover Regulation, 2011," it had opined.
On the other hand, CCI's approval for the Jet-Etihad deal has been challenged in the Competition Appellate Tribunal.
Jet and Etihad closed the deal and said all requisite regulatory approvals from Indian authorities had been obtained on November 12, according to a November 20 statement.
Etihad President and Chief Executive Officer James Hogan and Chief Financial Officer James Rigney were appointed as additional directors on Jet's board.