Mumbai, Feb. 25: Flamboyant businessman Vijay Mallya

today quit as the chairman of United Spirits - a company founded by his family - after its new majority owner Diageo agreed to pay him $75 million (Rs 515 crore).

Besides, Diageo has agreed that Mallya will have no "personal liability" to the UK-based company in relation to the findings of the alleged financial irregularities at the company that had triggered an acrimonious fight between them.

The allegations, which surfaced after an internal inquiry, related to the period before Diageo bought a controlling stake in USL from the Mallya family.

Under the agreement, Mallya will resign as the chairman and non-executive director of USL, as also from the boards of other USL group companies.

However, his son Siddharth will remain on the board of the USL group company, which owns the Royal Challengers Bangalore IPL franchise and Diageo cannot "seek to remove him from that board for a period of two years". Vijay Mallya will have the honorary title of the team's chief mentor.

Mahendra Kumar Sharma, an independent director, will be the new chairman of USL.

Giving details of the agreement with Mallya, Diageo said it had "agreed to pay $75 million to Mallya in consideration for his resignation and the termination of his appointment and governance rights and his relinquishing of the rights and benefits attached to his position as the chairman and non-executive director".

The payment is also for "his agreement to five-year global non-compete (excluding the UK) non-interference, non-solicitation and standstill undertakings, and his agreement that he and his affiliates will not pursue any claims against Diageo, USL and their affiliates".

Diageo said it would pay $40 million immediately with the rest being payable in equal instalments over five years.

Diageo said it had extended Smirnoff's sponsorship of the Force India Formula 1 team of which Mallya is team principal and part-owner for the next five seasons. Mallya and USL have agreed that USL will not sponsor Mohun Bagan football team and United Racing & Bloodstock Breeders.

On the agreement with Mallya, Diageo's CEO Ivan Menezes said, "India is an exciting growth opportunity, and USL has the management team, strategy and capability to deliver on that opportunity. The agreement announced today is in the best interests of both Diageo and USL and allows USL to build on its strong platform in one of the biggest spirits markets in the world."