Puts and Calls in India: Enforceability Under the Earlier Regime and the Current. (1st April 2015)

• Record Type: Journal Article
• Authors: Gogoi, Ranjini
• Is Part Of: Journal of corporate law studies. Volume 15:Number 1(2015:Jun.)
• Page Start: 33
• Page End: 53
• Publication Date: 2015-04-01
• Subjects: Corporation law -- Periodicals; 346.06605
• DOI: 10.5235/14735970.15.1.33
• Languages: English
• ISSNs: 1473-5970

Abstract

Abstract : On 3 October 2013, the Securities and Exchange Board of India issued a notification validating, among other things, put and call options in investment agreements in India. It was met with much approval in business circles and has been hailed as a godsend for foreign investment in the country. Following this, other changes were also made in the regulatory regime regarding puts and calls. However, since the notification is only prospective in nature, existing contracts have been left out of its purview. In light of this, the present paper is an examination of the legal scenario under the Securities Contract Regulation Act, 1956, the Companies Act and the foreign direct investment policy, and the complications caused by the regulatory changes in the regime, including their impact on already existing contracts. Also presented is an argument for the validity of options under the old regime.