The Venture Intelligence Blog

Extract from the Preface by  Suhail Nathani, Managing Partner : In the first budget, post the thumping victory in the elections, the Finance Minister has been rich on intent and has something to offer every constituency – from startups to NBFCs and everyone in between. There are full marks for the path ahead – reform in FDI, ‘ease of living’ through ‘less government and maximum governance’, infusion of capital in the PSU banks, government guarantees for lending to NBFCs, strategic disinvestment and promise of several other reforms. Even in the taxation realm, while there are increase in tax surcharges for those earning above 2 crores per year (clearly not welcomed by those already paying high taxes), 99.3% of corporates will see tax rates remain the same or reduced. The administration of tax is also reformed – most notably with a plan to reduce legacy litigation in indirect taxes breaking free from years of prolonged litigation and uncertainty. Specifically, on ...

CYBERTURFING – SHROUDED PERILS IT POSES AND THE APPLICABLE LAW ‘Cyberturfing’ is the online equivalent of the off-line ‘astroturfing’, a term said to be coined by a US Senator back in 1985 and is understood to be  a type of deceptive marketing or practice designed by marketers to create a false impression that a campaign has developed authentically and organically but in reality is powered by someone else behind the scenes 1 . Classic astroturfing involves the use of paid agents to falsely represent popular sentiment surrounding a product or a service 2 . As a result, consumers ‘follow the herd’ 3  as against the authentic grass root movements which operate at local level with community volunteers having a primary goal to support a local or a global cause considered good for the society or environment 4 . Emergence of Cyberturfing in the Digital Age Cyberturfing has become a powerful and efficient strategy of many organizations. Internet has offered a broader ...

Press Release Private Equity and Venture Capital firms invested $5.9 Billion (across 190 deals) during the quarter ended June 2019, according to data from  Venture Intelligence , a research service focused on private company financials, transactions and their valuations. The investment value fell 39% compared to the $9.6 Billion (across 206 transactions) recorded in the same period in 2018 and 45% lower than the immediate previous quarter (which had witnessed $10.5 Billion being invested across 193 transactions). (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate). The latest quarter witnessed 16 PE investments worth $100 million or more (with 4 of them $400-M or above) compared to 26 such transactions in the same period last year. The largest investment reported during Q2’19 was Singapore sovereign wealth fund GIC's $600 million investment in an SPV of Indian Hotels Company . The SPV will be used to acquire and manag...

‘ORDINARY COURSE OF BUSINESS’ IN INVESTMENT AGREEMENTS: IS IT USEFUL DEFINING THE PHRASE? It is quite common to notice the phrase ‘ordinary course of business’, used across various investment and acquisition agreements. The phrase is used in VC/PE shareholder agreements to allow promoters/founders of investee companies the flexibility to operate without obtaining investors’ consent. Activities or business decisions that are in the ‘ordinary course’ are usually exempt from the requirements of obtaining investors’ permission. In acquisition and subscription agreements, the phrase is used across warranties to provide generic exemptions to the warrantors. Depending on the language of the warranty used, it could either be beneficial for the warrantors or the investor seeking the warranty. Often the phrase is defined with such subjectivity that it defeats the purpose of having a definition in the first place. In this context, it may be useful to understand the legal connotation of the...

Supreme Court of India Clarifies Retrospective Applicability of Amended Section 148 of Negotiable Instruments Act, 1881 The Negotiable Instruments Act, 1881 (“ NI Act ”) was amended last year and two new provisions, section 143A and section 148, were inserted  in  the NI Act, which were necessitated to deal with the delay tactics of drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings, leading to frustration  in enforcement of section 138 of the NI Act. The amendments came into force with effect from September 1, 2018 vide the Negotiable Instruments (Amendment) Act, 2018 (“ NI Amendment Act ”). In  accordance with the new section 143A, the trial court may direct the drawer of the cheque to pay an interim compensation to the payee/complainant, which shall not exceed 20% of the cheque amount  in  dispute. Further, as per section 148, the appellate court may direct the drawer  in  an appeal agains...

Revised FDI policy on e-commerce: Ensuring Fair Play? Authors: Madhavan Srivatsan Law Office of Madhavan Srivatsan “ It is the spirit and not the form of law that keeps justice alive. ”                                                                             ― Earl Warren The recently revised FDI policy on e-commerce as introduced by the Government vide Press note no. 2 of 2018, has introduced new conditions and restrictions upon e-commerce marketplace entities (EMEs). The revised policy was required to be complied by EMEs before 1 st February 2019. There are few interesting changes to be note...

The Insolvency and Bankruptcy Code, 2016 (Code) was legislated with the intent to resolve the banking crisis The Insolvency and Bankruptcy Code, 2016 (Code) was legislated with the intent to resolve the banking crisis that had engulfed the Indian economy. While the Code provides banks and other financial creditors a theoretically faster mechanism to resolve their bad debts, the infrastructural and procedural aspects surrounding the resolution process are leading to delays. The National Company Law Tribunals ( Tribunal ) which are the adjudicating authorities under the Code, are understaffed to deal with the vast number of cases being filed. Faster resolution of debts has further been complicated by frequent amendments to the Code. The jury is still out on whether the Code and related enforcement mechanisms have rendered substantial benefits to the banking industry. However, a welcome beneficiary of the Code has been the domestic and/or foreign vendor supplying goods or rendering ...