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Swiggy makes move to bar investors from sitting on Uber’s board

Mar 12, 2019 by The Passage Team
Swiggy makes move to bar investors from sitting on Uber’s board

Image: Sujith Sukumar

Amidst the talk of food delivery company Swiggy acquiring UberEats, the former has taken a decision that would restrict all its investors from sitting on the board of Uber or any of its subsidiary companies.

Swiggy, estimated to be valued at USD 3.3 billion, has 13 investors including Naspers, Meituan Dianping, Hillhouse Capital Group, Tencent Holdings, Wellington Management, DST Global and Coatue Management.

In its filing to the Ministry of Corporate Affairs (MCA), Swiggy has made changes to its articles of association that bars each Swiggy investor from holding an aggregate of more than 4.99% of Uber’s entities. Additionally, the aggregate amount invested in such entities cannot exceed 20% of the total assets under management of the investor and its affiliates.

The story was reported by Mint that sourced MCA documents from business intelligence firm

This will ensure that decisions for Swiggy are not made by Uber’s investors, thereby protecting itself from competitors who will have common investors. “In this case, (if) Swiggy would be acquiring the India business of Uber Eats, there are other geographies where they could still be competitors if Swiggy looks to expand its presence outside India,” a top executive at a consumer internet firm told Mint, requesting anonymity.

A similar change was made when Walmart bought Flipkart for USD 16 billion last year. The clause banned shareholders from selling their stake to Alibaba Group without first offering it to Tencent Holdings, which has a strategic relationship with Walmart on retail. Tencent competes with Alibaba through its stake in

“It is about boardroom dynamics—Swiggy wouldn’t want Uber investors to be in a position to make decisions for the company in the future. Such clauses are definitely not uncommon when large investors are involved," a legal expert told Mint, requesting anonymity.

In 2017, cab-hailing service Ola had also amended its articles of association to ensure Japanese fund SoftBank and its affiliates would have to take approval from Ola founders and board members to purchase additional shares from stakeholders.

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