Private equity and investment funds
Funds, family offices and portfolio companies work under the SEBI (Alternative Investment Funds) Regulations, 2012 and the FEMA framework, and the disputes that follow an investment are usually about the exit terms rather than the entry terms.
Reviewed
What this covers
- AIF registration and SEBI regulatory compliance
- FEMA and RBI approvals for foreign investment
- Investment agreement structuring and negotiation
- Shareholder disputes and enforcement of exit rights
- Drag-along, tag-along and anti-dilution disputes
- Portfolio company governance and board questions
- Fund restructuring and wind-down
- Cross-border investment and repatriation compliance
The notes behind these capabilities
Since 9 September 2025 a Category I or Category II alternative investment fund (AIF) may offer its accredited investors a co-investment in a portfolio company through a separate co-investment scheme of the fund itself, and no longer only through a co-investment portfolio manager. Each such scheme holds one investee company, cannot borrow, exits when the main scheme exits, and caps an investor's co-investment at three times what that investor put into the same company through the main scheme. Multilateral and bilateral development financial institutions, State Industrial Development Corporations and entities established, owned or controlled by the Central Government, a State Government or a foreign government, including central banks and sovereign wealth funds, are outside the cap.
A United States company may subscribe to shares of an Indian company under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 without prior approval where the sector is on the automatic route and the sectoral cap is not crossed, at a price not below the fair value of the shares, and the Indian company must report the issue to the Reserve Bank of India in Form FC-GPR (Foreign Currency-Gross Provisional Return) not later than thirty days from the date of issue. No bilateral investment treaty with the United States appears on the Department of Economic Affairs register, so protection rests on Indian law and on contract. Dividends paid back are taxed at up to 15 per cent under Article 10 of the India-United States tax convention if the company holds at least 10 per cent of the voting stock, and otherwise at 20 per cent, the domestic rate, because the treaty ceiling of 25 per cent is higher.
A Put Option Against a Resident: What Makes It Enforceable, and at What Price
A put option given by an Indian promoter to a foreign fund is enforceable in India, and has been since 2013, but it survives three separate tests rather than one. Securities law asks whether the option is a lawful contract at all. Exchange control asks when the investor may exit and at what price, and its answer is that no exit price may be assured at the outset. Company law asks whether the restriction binds anyone beyond the two parties who signed it. An option drafted against one of the three and silent on the others is the one that fails.
Under the India-Mauritius and India-Singapore double taxation avoidance agreements (DTAAs) as amended in 2016, gains on Indian shares acquired on or after 1 April 2017 may be taxed in India, while shares acquired before that date stay taxable only in the investor's State of residence, subject in Singapore to a limitation of benefits clause. The 50 per cent concession for the transition period ended on 31 March 2019. Two further tests sit over both treaties: the General Anti-Avoidance Rule (GAAR) in Chapter XI of the Income-tax Act, 2025, which Section 159(6) applies even where it is not beneficial to the assessee, and a principal purpose test in a 2024 protocol to the Mauritius treaty, whose notification and entry into force we have not confirmed from an official source. The Supreme Court's judgment of 15 January 2026 in Tiger Global holds that a tax residency certificate does not by itself settle the question.
Reference
Regulators in this sector
Forums
Practice areas that apply
- Boardroom and corporate
- Transaction advisory
- Capital markets
- Banking, SARFAESI and DRT
- Insolvency
- Civil disputes
- PMLA
- Technology, data and product
- Taxation and fiscal
- White-collar and cyber defence
- AI, data and emerging technology
- Cyber crime
- Money recovery
- Foreign exchange (FEMA)
- Prevention of sexual harassment (POSH)
- GST disputes
Advocates in this sector
Other notes in this sector
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