SEBI stated that family members are already disclosed as part of the promoter group and that they are « people who act together. » The voting agreement « implys that Mr. Y.K. Hamied would be the largest representative of voting rights in the target company. » This would have triggered the obligation to offer an open offer, but since the consultation agreement between family members exists, it would be exempt from tax under Regulation 10, paragraph 1, point a) (ii) of 10, paragraph 1) (a) (a) (iv) of the support code, provided certain conditions are met. The organizer and largest associate of Ciplaare Dr. Y.K. Hamied and his family members. Until now, all family members had exercised their right to vote individually and no proxy was appointed to vote on behalf of a member. As part of a voluntary and consensual conception of the family, the family of contractors proposed to enter into a voting contract in which the family would work jointly as a consolidated entity and exercise its voting rights according to the instructions of Dr. Y.K. Hamied and after his death or in the event of inaction by Mr.
.M.K. Hamied. SEBI has published an informal guide on the intersessic transfer of shares between project proponents and voting agreements under the acquisition code. This was published on request by the promoters of Cipla Limited, one of India`s leading pharmaceutical companies. Project proponents approached SEBI to understand whether the voting agreement envisaged above would amount to the acquisition of shares or voting rights under the acquisition regulation, which would create mandatory requirements for open tender. While private equity financing (« EP ») is a preferred vehicle for business growth in India, due to the ubiquitous role of business promoters, existing legislation and a complex regulatory and compliance environment, PE funds prefer to take a minority stake in Indian companies. As a result, PE funds invest in Indian companies in exchange for a share in the company`s profits, either through equity, convertible preferred shares or convertible bonds. As a general rule, the PE fund also requires a number of investor control rights traded as part of the investment, taking into account concerns about minority participation in India. These contractual rights generally do not interfere with the day-to-day management of the business, but serve as a control and balance against the organizer`s opportunism. These rights include making the investor available to participate in the management of the business through the appointment of the board of directors, quorum requirements and veto rights. In the event of liquidation, investors may also demand downward protection in the form of anti-dilution and pre-emption duties and advance payments. However, the nature of these investor control rights is a departure from the delay provisions of Indian corporate law.