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Need for Tweaking ‘ Growth Capital’ Model in the Indian context? By: Ms. Seema Jhingan (Partner)

Need for Tweaking ‘ Growth Capital’ Model in the Indian context? By: Ms. Seema Jhingan (Partner). Revival of the ‘Growth Capital’ Model. Its time for the Investor-Entrepreneur dynamics to change. Investor Expectations Need to Change…. … the ‘Minority Stake with Majority Rights’ Attitude.

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Need for Tweaking ‘ Growth Capital’ Model in the Indian context? By: Ms. Seema Jhingan (Partner)

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  1. Need for Tweaking ‘Growth Capital’ Model in the Indian context? By: Ms. Seema Jhingan (Partner)

  2. Revival of the ‘Growth Capital’ Model • Its time for the Investor-Entrepreneur dynamics to change

  3. Investor Expectations Need to Change… • … the ‘Minority Stake with Majority Rights’ Attitude.

  4. Board Level Participation • Nomination on Board – not commensurate with investment • Mandatory Quorum Requirement

  5. Voting and Reporting Rights • Reserved Matters / Affirmative Voting Rights • Operational Interference • Reporting Requirements

  6. Pre-emptive and Restrictive Rights • Anti-Dilution, Ratchet and other Pre-emptive Rights • Lock-in on Transfer of Promoter Shares • ROFO and ROFR • Tag Along and Drag Along

  7. Complicated Exit Options – Do they work? • Public Offering • Buy-Back • Put options • Strategic Sale - with Drag Along

  8. Entrepreneur Expectations Need to Change... • …the mindset of ‘playing’ with Investors’ money.

  9. Investors’ Money... • …is NOT free Money !

  10. Assumed Obligations... • …need to be complied with.

  11. Diversion of Funds... • …to unapproved business plans is…

  12. Exit Options... • …are for keeps.

  13. Successful Growth Capital Model Cooperation Compliance Contribution Harmony Space Reasonableness Delivery Performance

  14. C-10, Gulmohar Park New Delhi – 110049 Tel: +91-11-41662861 Fax: +91-11-41662862 E-mail: sjhingan@lexcounsel.in

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