[Ganesh Rao is a partner at Trilegal] Alok Verma and Karan Trehan’s Investment Funds in India – A Legal Handbook focuses on the legal regime governing investment funds in India and, in doing so, is probably one of the first books to be published in this field. The Securities and Exchange Board of India’s (“SEBI”) SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) are...
CCI’s Market Study on Private Equity: Time to Clear the Air?
[Priya Maharishi is a 4th-year B.A., LL.B. (Hons.) student at Jindal Global Law School, Sonipat, Haryana] The issue of common ownership and its impact on the competition landscape has preoccupied the Competition Commission of India (CCI) for a long time. The concern has become pressing in the light of increase in private equity (PE) investments in India. To show some teeth in the game, the CCI...
Side letter vs Fiduciary Duty: Conflict in Private Equity Firms
[Kaustub N. S. Bhati is a 4th year student at NALSAR University of Law] A private equity (PE) firm generally consists of two types of partners, limited partners (LPs) and general partners (GPs). As the name suggests, LPs are outside investors (like companies, endowments, foundations, and the like) whose liability is commensurate with the extent of their investment, while the GPs are professional...
Negating Negative Covenants: A Deterrence to Private Equity Investment in India?
[Shuchita Goel is a V year B.A., LL.B. (Hons.) student at National Law University Delhi] The Indian corporate landscape is dominated by firms with concentrated ownership, where the controlling shareholders (also known as promoters) play an all-pervasive role in corporate governance.[1] Parties in control of a corporation are in a position to extract private benefits of control that do not accrue...
Private Equity Investors as Promoters in an Initial Public Offer
[Guest post by Rashmi Ramanath, who is a 5th year B.A., LL.B. (Hons.) student at Jindal Global Law School in Sonipat] The Initial Public Offering (IPO) of SKS Microfinance was a first of its kind. It was for the first time that a group of four venture capitalists led by Sequoia Capital India were named as promoters to an issue. Vikram Akula, one of the company’s founders, owned a 6% stake in the...
Further Analysis on Compensation Agreements
[The following guest post is contributed by Rohit Sharma, who is a Research Associate at Vinod Kothari & Co. Two earlier posts on this topic are available here and here.] Introduction The Securities and Exchange Board of India (SEBI) drew attention to the issue of compensation arrangements that take place between the private equity investors (PE) and the promoters, directors and key...
Foreign Investments in Category III Alternative Investment Funds
[The following guest post is contributed by Kemi Gupta, who is a 5th year B.A., LL.B (Hons.) student at NALSAR University of Law] In a matter of only a few years,[1] India’s alternative investment industry has grown to Rs. 20,700 crore in size,[2] and is yet claimed to be in its early stages. Alternative investment funds (“AIFs”) constitute any privately pooled investment...
Promoter Upside Sharing Arrangements in Listed Companies: SEBI Comes Down Hard
[The following post is contributed by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai. For another perspective on the topic, please see an earlier post on the Blog.] The Securities and Exchange Board of India (“SEBI“) has released a discussion paper (“Paper“) to regulate certain arrangements between private equity investors and the promoters/top...
Compensation Arrangements between Private Equity and Company Management: Corporate Governance Issues
In its board meeting held on 23 October 2016, the Securities and Exchange Board of India (“SEBI”) highlighted the issue of compensation arrangements agreed to by private equity (“PE”) firms with the promoters, directors and key managerial personnel (collectively, the “management”) of investee companies that are listed on the stock exchange, and certain corporate governance issues that emerged...
A Move Towards “Pool in India”; However, Room for More Reforms Exists!
[The following post is contributed by Yashesh Ashar, who is a tax and regulatory consultant. Views expressed are personal.] The Finance Bill, 2016 has given in to the much sought-after demand of the domestic private equity (PE) industry by amending the provisions relating to the tax withholding obligations for the category I and category II alternative investment funds (‘AIFs’) registered with...
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