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S. No.

Key Issues Remarks Promoters Comments

1. Milestones (Page 1- Point C) As we Discussed we can put As discussed, the Promoters will
Milestone based on -- provide the milestone figures.

1-Number of Car to be purchased

As the investments to be made by you
in the second and third tranche are 2- Revenue to be achieved
contingent on us achieving certain
milestones, and these milestones have for third tranche of Mar 2016.
not been defined in the agreement,
therefore, we would first need to reach
an agreement on these milestones being
contemplated by you. Also, if the
technology is not being provided prior
to the second tranche or third tranche,
the milestones will have to be mapped
to the current business. If however,
technology is provided prior to any of
the tranches, the milestones can be
mapped to the other businesses
operating on the same model. However,
since we will not have the first mover
advantage and also for the fact that our
model may not be completely in sync
with other operators, these factors
should be suitably factored while
determining the milestones for such
2. IRR IRR ensures minimum return on In case the Investor is looking at
investment to the investors which getting a fixed IRR, then, the
Clause 1.1 (qq) can be say 15% investment is a pure private equity
investment and the Investor will not
The exit value for the investor has been be entitled to sweeping management
defined with reference to the IRR being rights in the company. Accordingly,
valued at 30% of the investment the management rights of the
amount paid by the investor. However, Investor in the company including
we have not had any discussion on this the affirmative voting rights would
earlier. need to be appropriately trimmed

Negotiation Limit: In any event, the

IRR should not exceed 8%.

3. Special Rights We can propose a threshold for The special rights should kick-in
these rights, say 4% of shareholding once the entire investment has been
made in the company by the
However, the rights should kick-in Investor.(Third closing)
Special rights under the Shareholders from the Second closing.
Agreement to kick in only when the
entire investment has been made by the
investor. Also the special rights given to Further, the threshold for falling
the investor will cease if it is diluted away of these rights could be when
below a particular level. Special rights the Investor ceases to hold at least
include share transfer restrictions, 10% of the shareholding.
affirmative voting items, board seat
(while an observer can be appointed), Negotiation Limit: 10%
non-compete, assured exit and pre-
emptive right.
4. Material Adverse Effect This is a subjective requirement. We suggest a figure of 20%
However, we can still provide a
Clause 1.1 (v), (zz) threshold, say 10% erosion of Negotiable Limit above the
valuation/revenues from last proposed 10% is fine.
The definition of this provision refers to audited financial statement.
a financial material adverse effect on
the business or operations or assets etc.
of the Company, which would
ultimately result in an event of default
whereby the investor can seek an exit.
We would like to discuss this and add a
financial threshold to the same.

5. Seed CCCPS Investor to get preference shares Ok.

and promoters to get equity.

We need to decide the nature of

security to be issued to the investor and
promoters.(Please note that there is no
provision under the Subscription
Agreement for equity infusion by the

6. Rights in subsidiary company The definition of Subsidiary The definition of Subsidiary under
already takes care which is As the Companies Act, 2013, is very wide
Clause 1.2 (xv) per the Companies Act 2013. and would include in its scope any
entity in which the company would
The Shareholders Agreement refers to hold 51% or more of the paid-up
all the rights available to the investor in share capital. We understand that the
the current venture being made Investor proposes to have special
available to the investor in any rights in all such companies as well,
subsidiary company as well, or most however, this may not be feasible,
nearly affected in the subsidiary keeping in view that the subsidiaries
company. We would like to change this may attract investments from other
point to the extent that if the current investors, who may hold a significant
venture funds the new company to the stake in the subsidiary.
extent of certain percentage of
shareholding in the new subsidiary, In view of the above, we suggest that
then only such rights be made available the Investor may get special rights in
to the investor in the subsidiary. only such subsidiaries in which the
company holds say 90% of the paid-
up share capital.

Negotiable Limit: 80% - Necessary

point to consider is that they only
hold 20% shares in the parent

7. Board of Directors and Observer We are fine with -- There should be odd number of
directors on the board to prevent a
1 Director by the Investor and 3 by deadlock. We suggest 1 director by
promoters. Investor and 4 by the promoters.
It may be advisable to have odd
number of directors on the board to One Observer from Investor will be We do not want any observer on the
avoid deadlocks. Hence, it is imperative there. board by the Investor Since the
to appoint one more director on the Promoters have agreed to 1 Director,
board which will be on the basis of pro there is no requirement of an
rata shareholding. Since the proportion Observer (Negotiable)
of shareholding as on the date of full
investment will be 4:1, the director
appointment should also be in the same
ratio. Also, right of the investor to
appoint directors on the board will
cease if the shareholding of the investor
falls below a particular threshold.

Moreover quorum will always be of

two directors and two shareholders
unless an affirmative voting item is to
be discussed.

8. ROFR Clause 6.2 There can not be any transfer Mutual lock-in of 2 years is
restriction on the shares held by the acceptable.
RORF has been inserted in the Investors.
agreement keeping in mind the The ROFR should be available to the
investors interest. Given the skewed 2 years lock-in. Not to apply in case promoters in case of any proposed
shareholding pattern, we would like to of default. transfer of shareholding by the
make this a mutual right available to Investor. This is because the
the investor and the promoters. ROFR No transfer restriction on Investors promoters would in any case be the
can be exercised only post expiry of majority shareholders in the company
certain lock-in period which will be and if the promoters are willing to
applicable to both the parties. purchase the shares of the Investor at
the same price which the Investor is
getting from a third-party purchaser,
then, the Investors rights would not
be prejudiced.

The ROFR would in any case be

completed in a time-bound manner.
Non negotiable As we are willing to
buy at the value the Investors are
getting from the market.

9. Tag Along Right Clause 6.3 Same as above. The promoters should also have a
proportionate tag along right when
Tag Along Right has been inserted in the Investor is selling its shares to a
the agreement keeping in mind the third party.
Investor's interest. We would like to
make this a mutual right available to
the investor and the promoters.

The drag can only be exercised Drag along right is not acceptable,
upon expiry of the Exit Period - 5 given that the promoters would be
10. Drag Along Rights years if the Company fails to holding 80% of the shareholding of
provide an exit to the Investor. the company.

Therefore, this should be retained. In any case, buy-back and 3rd party
This right needs to be deleted from the sale are given as an option to the
agreement given the skewed -Buy back is given as an option Investor.
shareholding pattern.
-3rd Party option Non Negotiable.

The obligation of the Period of IPO- 7 years.

Company/Promoters to provide an
11. Exit Rights exit by way of an IPO will have to Please see our comments above on
be within the exit period. the issue of IRR.
Clause 7, 7.7
Exit only at FMV is not acceptable,
We would like to discuss the way
forward on when to consider an IPO. At it should be at IRR 15%
this stage, it may be too premature to
determine the same. Further, any exit to 5 years exit period
be given to the investor will be at FMV
and not IRR or assured return.

12. Exit Default Rights To be discussed. To be discussed.

This will be contingent on our IPO/5yrs exit default right after

agreement on the IPO. 6monthsof expiry of 5 yrs

13. Pledge of Equity & Issuance of Fine with promoters with prior Promoters should not require prior
Guarantee written consent. written consent of the Investor to
pledge their shares for raising finance
However, Investor cannot agree to for the business of the company. The
such obligation. same could be built into the
The promoters should be allowed to document in the first instance itself.
pledge their equity to raise finance for (Non negotiable)
the business. Also, we need to discuss
whether the investor will be required to We are fine with Investor not
pledge its share of equity or issue pledging its shares for the purpose.
guarantee if so required by the bank or
14. Deadlock Resolution The idea is to address a situation
where the business of the company is
The proposed mechanism can not stalled because of a deadlock on the
work in case of AVM matters. In reserved matters.
In the event of a deadlock between the such position Investors consent is
parties on any affirmative voting items mandatory. A mechanism should be agreed in the
on repeated basis, the promoters shall document itself to deal with such a
give exit to the investors on FMV. situation. We are open to Investors
suggestions as to the mechanism for
the same, in case our proposed
mechanism is not acceptable to the
15. Dispute Resolution Fine with India Ok

Clause 24.2

Dispute resolution provision refers to

the arbitration rules of the Singapore
International Arbitration Centre. We
need to change this to India as both the
parties are located in India itself.
Ok to delete Ok

16. Tax Gross Up

Clause 25.6

Grossing up of taxes while making

payments to the investor is not
acceptable. Please delete this.
We can agree upfront to a percentage
so that decisions can be taken quickly
in case a new investor is brought into
17. Superior Rights Can be considered case to case basis the company- say if the new investor
with the consent of Investor. proposes to hold 25% or more of the
Clause 25.9 equity (thereby giving such investor
the right to block a special
The agreement states that all superior resolution), then, such rights cannot
rights that are given to any new be made available to the Investor
investor in the Company, should also holding 20% equity in the company.
be made available to the investor. We
need a leeway for investors who may be (As per law)
investing significant amount of money
and may not agree to such provision.
While all business related to the
current taxi business will be routed
18. All business to be routed to the Fine, with prior approval of the through the company, however, if the
Company Investor. promoters wish to commence any
other line of business, it is not
necessary to route it through the
company and may be done through
To ring-fence the verticals, it may be separate verticals.
advisable to do some of the business
through separate entities which may be
subsidiaries of the Company.
++ We can discuss it once we have seen
the modified clause.
19. Liquidation Preference Issues if any ??

Clause 11 is being changed

This needs to be discussed.