1. RBI Circular on Options We had carried two guest posts (here and here) on RBI’s notification dated 9 January 2014 relating to options and convertible instruments. This notification has generated a great deal of debate and its precise scope and contours are still being carefully ascertained. For a flavour of the further debate, the following...
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]...
SEBI Proposal for Infrastructure Investment Trusts
Recognizing the deficit in financing infrastructure development in India, SEBI has floated a proposal for a separate investment vehicle for infrastructure investments. Last week, it issued a Consultation Paper on Infrastructure Investment Trusts, on which comments are invited from the public by January 20, 2014. SEBI’s rationale is to ensure that the lack of an effective investment framework does...
The Resurgence of REITs
More than 5 years ago (in December 2007), SEBI had issued a consultation paper and draft regulations with a view to paving the way for the introduction of real estate investment trusts (REITs) in the Indian markets (which we had the opportunity to discuss here). However, the plan seemed to have gathered moss for a number of years. Earlier this month, it was revived when SEBI issued another...
Analysis of SEBI Notification on Pre-emption Rights and Options – Part 2
[This is a continuation of a previous post on the topic. It has been contributed by Ms. Sikha Bansal of Vinod Kothari & Company, who can be reached at [email protected]] 4. Legality of option contracts Option contracts conferring exit opportunities to investors are, in commercial practice, important in view of the growth of funding...
Unlisted Companies: Raising Capital Abroad
In the late 1990s, it was possible for Indian unlisted companies to raise capital overseas and list on overseas stock exchanges without having a primary listing in India. Companies such as Rediff and Sify had taken advantage of this mechanism and listed on the US stock exchanges. However, a few years ago, this route was effectively blocked when the Government of India stipulated that a primary...
SEBI Notification on Pre-Emption Rights, Put and Call Options
The enforceability of pre-emption rights and put and call options in securities of Indian companies has been fraught with difficulties for a number of years. These have been discussed in detail in this paper, with arguments made for streamlining these provisions to recognise such rights and options in investment agreements. Although the Securities and Exchange Board of India (SEBI) had been...
Committee Report on Reforming Regulatory Environment in India
Last year, the Government had appointed a committee under the chairmanship of Mr. Damodaran, former Chairman of SEBI, to recommend reforms to enhance the regulatory environment for doing business in India. This was in response to the annual Doing Business rankings put out by the World Bank, where India has not been performing satisfactorily with little improvement or the last few years. The...
Paper on Private Equity in India
In the past, some readers have asked if we could cover matters pertaining to the private equity sector in greater detail. Often, the difficulty we encounter is that private equity is not recognised specifically as an investment class under the Indian laws and regulations. As far as foreign private equity investments are concerned, they are generally treated as part of the foreign direct...
FDI and the “Control” Question
Eons ago, an English judge remarked that “public policy” is an unruly horse and once you get astride it you will never know where it will carry you. Lately, corporate India has been left to contend with another unruly horse in the form of the concept of “control”, whose scope and meaning have been stretched in different directions without the requisite precision, often altering according to time...
Recent Comments