Swiggy Shareholders Approve Proposal for Indian-Owned Company Status
Swiggy's shareholders have approved a proposal to cap the company's foreign ownership at 49.5%, paving the way for it to qualify as an Indian-owned and controlled company (IOCC).
Swiggy, a food delivery and quick commerce firm, has received shareholder approval to cap its aggregate foreign ownership at 49.5%. This move is expected to allow the company to qualify as an Indian-owned and controlled company (IOCC).
The approval was given in a special resolution, as informed by Swiggy in a regulatory filing on Tuesday. This decision is a significant step towards Swiggy's goal of qualifying as an IOCC.
The Indian-owned and controlled company status would enable Swiggy to directly own and sell inventory through its quick commerce brand Instamart. This is expected to improve margins and strengthen supply chain control.
In contrast, rival Blinkit, owned by Eternal, follows an inventory-led model. Swiggy has been trying to qualify as an IOCC for some time, having previously failed to secure the necessary shareholder approval in May.
Besides approving the foreign ownership cap proposal, Swiggy's shareholders also approved an alteration to the Articles of Association (AoA) to align with India's FEMA (Foreign Exchange Management Act) regulations.
Under current FEMA rules, a company can qualify as Indian-owned and controlled only if both ownership and control rest with resident Indian citizens or eligible Indian entities, including through a board composition and nomination framework that supports domestic control over the board.
## Swiggy's Path to IOCC Status
Swiggy's journey to becoming an IOCC has been a long and challenging one. The company has faced several setbacks, including the rejection of a similar proposal in May. However, with the recent shareholder approval, Swiggy is now one step closer to achieving its goal.
## Implications for Swiggy and the Industry
The approval of Swiggy's proposal has significant implications for the company and the industry as a whole. By qualifying as an IOCC, Swiggy will be able to directly own and sell inventory through its quick commerce brand Instamart. This is expected to improve margins and strengthen supply chain control.
The decision also sets a precedent for other companies in the industry, highlighting the importance of aligning with India's FEMA regulations. As the industry continues to evolve, it will be interesting to see how other companies respond to this development.
## Table: Comparison of Swiggy and Blinkit's Ownership Structures
| | Swiggy | Blinkit | | --- | --- | --- | | Foreign Ownership Cap | 49.5% | N/A | | Ownership Structure | Indian-owned and controlled | Inventory-led |
