The documentation package containing representations and warranties, covenants and indemnities are quite common in corporate transactions involving Indian companies, particularly those pertaining to acquisitions, investments and corporate finance. However, despite their popularity, they have not been the subject matter of judicial consideration so as to provide some guidance as to how they may be...
Guest Post: Optionality Clauses Permissible in FDI Instruments – the Heydays for Exit Rights
[This post is contributed by Nidhi Bothra of Vinod Kothari & Co. She can be contacted at [email protected]. This is a continuation of a previous post on this topic, and supplements the analysis in that post.] The optionality clause in equity shares/ compulsory convertible debentures/ preference shares has been a gray area from the regulatory perspective in India for years. These...
FDI in Pharma; Non-Compete
According to the prevailing annual FDI policy notified by the Government in April 2013, foreign direct investment (FDI) in the pharmaceuticals sector is allowed up to 100%. While FDI is allowed in greenfield projects under the automatic route, FDI in brownfield projects requires prior Government permission. Given the numerous acquisitions of Indian pharma players by multinational companies in...
Guest Post: RBI Circular on ‘Options’
[The following post is contributed by Parag Bhide, who is a Principal Associate at Universal Legal, Mumbai] Finally, Foreign Investors investing into India are able to include ‘options’ in their investment agreements. The Reserve Bank of India (“RBI”), through its circular dated 9 January 2013 (“Circular”) has legitimized inclusion of options/right to exit in the Investment Agreements.[1]...
BNP Paribas v UB Holdings: The Karnataka High Court on s 536(2)
In its recent judgment in BNP Paribas v UB Holdings, a Division Bench of the Karnataka High Court has considered an important question of insolvency law. The case has been widely reported in the press, of course, for it set aside a sale of shares to Diageo and made some observations about parallel transactions. But it is important to note that all of the High Court’s comments on the merits of the...
Private Subsidiary of a Foreign Company: Status and Consequences
Since the enactment of the Companies Act, 2013 (the “2013 Act”), several issues relating to its interpretation have been coming up for consideration. One such issue relates to the status of a private company in India that is the subsidiary of a foreign company (being a public company). The specific question relates to whether the Indian private company can continue with its status or whether that...
New Year Wishes
Wishing all our readers a New Year filled with success, happiness and prosperity.
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