Corporate and commercial law,
from formation to transaction.

Diligence carries the transaction. A legal due diligence exercise typically covers corporate records and share capital history, material contracts and change-of-control triggers, litigation and contingent liabilities, statutory and tax compliance, employment obligations, and title to intellectual property. What comes out of it then shapes the deal itself: the representations and warranties sought, the indemnity caps and survival periods negotiated, the conditions precedent, and the part of the consideration that sits in escrow rather than moving at closing. Where a review is narrowed in scope, the narrowing is better agreed in writing than left implied. On the documentation, the principal instruments are share purchase and subscription agreements, business transfer agreements for slump sales, shareholders’ agreements, and joint venture arrangements. Each of those has a version that suits the party paying and a version that suits the party being paid, and the distance between the two is where the negotiation actually sits.

In shareholder arrangements most of the value sits in the governance terms: board composition, reserved matters requiring investor consent, anti-dilution protection, tag-along and drag-along rights, pre-emption on transfer, and exit mechanics including put options and drag rights on a qualified sale. Those terms interact with the Companies Act, 2013 and, where the company is listed, with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms that read as technical at signature are the ones that decide who controls the company on the day the shareholders stop agreeing.

Boards and committees are subject to directors’ duties, to the requirements that govern related party transactions, and to the board composition and disclosure obligations that follow, under the Companies Act, 2013. Most boards are already doing much of this. What they usually lack is a record showing they did it.

Where foreign investment is involved, the Foreign Exchange Management Act, 1999 applies, with its sectoral caps, entry routes, pricing and reporting. Where a transaction amounts to a notifiable combination under the Competition Act, 2002, clearance from the Competition Commission of India is required before it is given effect, subject to the exemptions available.

When a commercial relationship breaks down, being right is only part of the problem. What the remedy is worth, how long it takes to obtain, and what the dispute takes out of the business while it runs are all part of the analysis. Where the contract carries an arbitration clause the dispute proceeds under the Arbitration and Conciliation Act, 1996; where it does not, it proceeds before the commercial courts. Dispute resolution clauses are drafted at the contracting stage, which is when they get the least attention. Where a clause does exist, its detail decides what it is worth. Whether the arbitration is institutional or ad hoc, where the seat lies, how many arbitrators sit, and how they are appointed will each shape cost and duration more than the substantive law chosen. An institution supplies a rulebook, an administering body and a default appointment mechanism, at a cost.

Interim protection is available from a court under Section 9 and from the tribunal under Section 17 of the Arbitration and Conciliation Act, 1996, and recourse to the court under Section 9 is limited once an arbitral tribunal is in place. In court proceedings, the Commercial Courts Act, 2015 requires pre-institution mediation for commercial disputes of the specified value that do not contemplate urgent interim relief.

Structural decisions taken early are a common source of later difficulty. The choice lies between a private limited company under the Companies Act, 2013, a limited liability partnership under the Limited Liability Partnership Act, 2008, and, for a foreign parent, a branch, liaison or project office instead of a subsidiary. The comparison turns on liability, tax, the ability to take outside investment, the compliance burden each form carries, and how easily the structure can be unwound if the venture does not work. A form that suits a two-person business rarely suits the same business three funding rounds later. Changing form afterwards is possible but carries its own approvals, filings and tax consequences.

The internal arrangements matter as much as the choice of form. Constitutional documents are better drafted for the company than adopted from a template. Founder arrangements need to deal with vesting, with who is responsible for what, and with assignment of intellectual property into the company, and the capitalisation table has to reflect what the paperwork actually says. Then there are the mechanics of issuing capital under the Companies Act, 2013: further issue of shares, private placement, the character of preference shares, and the disclosure of beneficial interest and significant beneficial ownership.

Statutory registers and filings feel administrative until a buyer’s counsel asks to see them.

The contracts that carry a business are seldom the ones that get the most attention. Distribution, supply, manufacturing, services and licensing arrangements set margin, dependency and the ability to exit, and they are frequently signed on a counterparty’s standard form because the commercial team was in a hurry. The provisions that decide outcomes are scope and change control, price adjustment, term and termination for convenience, limitation of liability and the carve-outs from it, indemnities and how they sit against the liability cap, ownership of intellectual property created during the engagement, and confidentiality that survives the relationship. Automatic renewal, notice periods and post-termination transition obligations deserve the same attention and rarely get it, because by the time they bite the people who agreed them have moved on.

Several features of Indian law shape that drafting in ways imported precedents miss. Section 27 of the Indian Contract Act, 1872 renders an agreement in restraint of trade void to that extent, subject to the exception for the sale of goodwill, and restraints operating during the term of a contract are treated differently from post-term restraints. The Specific Relief Act, 1963, as amended in 2018, moved specific performance from a discretionary remedy toward a general rule, and that amendment has been treated as prospective in its application. The Micro, Small and Medium Enterprises Development Act, 2006 provides for payment discipline in favour of registered micro and small suppliers. Under the Indian Stamp Act, 1899 and the corresponding state legislation, an instrument that is not duly stamped is generally inadmissible in evidence until the deficient duty and the penalty are made good, and some instruments cannot be validated by later payment at all. Duty on the issue and transfer of securities in dematerialised form is levied at uniform rates under the Indian Stamp Act as amended and collected through the depositories. Duty on other instruments remains largely a state matter, so the rate, the stamping method and the consequences of getting it wrong depend on where the instrument is executed and what it is treated as covering. On a multi-document transaction that question is worth settling at the drafting stage, when the documents can still be arranged around the answer.

Deals follow a recognisable sequence, and knowing where you are in it is half of managing the risk. The opening documents are a confidentiality agreement and a term sheet or memorandum of understanding. A term sheet is usually expressed to be non-binding on the commercial terms while binding on exclusivity, confidentiality, costs and governing law. That distinction deserves careful drafting, because conduct after signature can give a supposedly non-binding document more weight than its heading suggests. Exclusivity is the buyer’s protection for the work it is about to commission on diligence, and its length is set against a realistic diligence timetable rather than an optimistic one. Diligence then runs alongside the drafting rather than before it, because the findings are what the definitive documents have to absorb. Signing and completion are usually separated where approvals or third-party consents are needed, and the gap between them is governed by conditions precedent, interim conduct-of-business covenants restricting what the seller may do while it still controls the target, and a long stop date after which either party may walk away.

Completion repays rehearsal. Board and shareholder resolutions have to be passed in the right order, instruments of transfer executed and stamped in accordance with the legislation applicable to them, the register of members updated, share certificates endorsed or the depository instructed, directors resigned and replaced, bank mandates and authorised signatories changed, and statutory filings made within their periods. The work does not stop there, and integration planning is better done before the closing date than after it. Escrow and holdback release, purchase price adjustment or completion accounts, transitional services while the target is separated from the seller’s systems, harmonisation of employment terms, and the warranty claim windows that stay open long after everyone has moved on all sit on the far side of completion.