Need for Tweaking ‘Growth Capital’ Model in the Indian context?

By: Ms. Seema Jhingan (Partner)

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Its time for the Investor-Entrepreneur dynamics to change

Revival of the ‘Growth Capital’ Model

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… the ‘Minority Stake with Majority Rights’ Attitude.

Investor Expectations Need to Change…

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Nomination on Board – not commensurate with investment

Mandatory Quorum Requirement

Board Level Participation

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Reserved Matters / Affirmative Voting Rights

Operational Interference

Reporting Requirements

Voting and Reporting Rights

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Anti-Dilution, Ratchet and other Pre-emptive Rights Lock-in on Transfer of Promoter Shares

ROFO and ROFR Tag Along and Drag Along

Pre-emptive and Restrictive Rights

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Public Offering Buy-Back

Put options Strategic Sale - with Drag Along

Complicated Exit Options – Do they work?

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…the mindset of ‘playing’ with Investors’ money.

Entrepreneur Expectations Need to Change...

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…is NOT free Money !

Investors’ Money...

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…need to be complied with.

Assumed Obligations...

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…to unapproved business plans is…

Diversion of Funds...

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…are for keeps.

Exit Options...

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Cooperation

Successful Growth Capital Model

Reasonableness

ContributionCompliance

Space

Delivery

Harmony

Performance

C-10, Gulmohar ParkNew Delhi – 110049

Tel: +91-11-41662861Fax: +91-11-41662862

E-mail: sjhingan@lexcounsel.in