Thursday, March 31, 2016

Delaware Court on the Question of “Control”

We have been debating on this Blog (here, here and here) the concept of “control” in a company in the light of the Securities and Exchange Board of India’s (SEBI’s) consultation process that is currently underway. In this context, it would be useful to consider developments from elsewhere that may be instructive. This post considers a recent decision of the Delaware Chancery Court that called into question the concept of “control”, and provided some indication of what would amount to control of a company.

In Calesa Associates L.P. v. American Capital Ltd,[1] American Capital was a shareholder holding 26% shares of Halt Medical Inc. (the Company). Through a series of contractual arrangements between American Capital and the Company, American Capital sought to increase its shareholding in the company that would not only have made it a majority shareholder of the company, but it would have also substantially diluted the other shareholders. In this background, the plaintiff Calesa Associates (one of the Company’s shareholders) initiated an action against American Capital, the Company and its directors. The plaintiffs alleged that by virtue of its actions, American Capital breached its fiduciary duties as a controlling shareholder that it owed to the minority shareholders of the Company.[2] Relevant to our analysis was the question whether American Capital was indeed the controlling shareholder of the Company in that it exercised “control” over it.

Based on previous Delaware case law, the Court stated that a “stockholder is controlling, and owes fiduciary duties to the other stockholders, “if it owns a majority interest in or exercises control over the business affairs of the corporation””. Hence, control could be achieved either through majority interest or by virtue of the shareholder’s exercise of control over the business affairs of the company. It is the second aspect which was of concern here. Since American Capital had only 26% shares, the Court found that it must be shown to have exercised “actual control” over the Company at the time of the relevant transactions.

At the outset, the fact that American Capital had entered into contractual arrangements with the Company (that enabled it to exercise contractual rights over the Company) was found to be insufficient to constitute “control”. On the other hand, the Court embarked upon an analysis of whether American Capital exercised influence over at least a majority of the board of directors of the Company. Such control or influence over the board is a factual determination to be arrived at specifically in each case. The Court found that merely because a director was appointed by a shareholder was insufficient to indicate the control or influence of the shareholder over such a director. The Court instead embarked upon a fact-specific analysis of whether at least four out of the seven directors of the Company were beholden to, or influenced, by American Capital. After going through the background and various relationships of these four directors with American Capital, the Court found that there were sufficient facts to support an inference that a majority of the board was not disinterested or lacked independence from American Capital.

Although the case is under Delaware law, which bears significant differences with Indian corporate law on the question of fiduciary duties of controlling shareholders, it does provide some guidance on the issue of “control” that SEBI is currently grappling with. As this case indicates, “control” often tends to be a factual question to be determined with reference to the specific circumstances in each case. That is consistent with the current definition of control under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. However, it is due to the lack of certainty under that dispensation that SEBI is looking at reform process to introduce a bright-line test. The continued use of a qualitative and subjective understanding of control may function well in jurisdictions like Delaware where courts play an important role in developing the law through principles, but whether it would be suitable in a jurisdiction like India which may call for more objective standards is a different question. But, at least the case suggests that any criteria for control cannot ignore such subjective factors, although reliance upon those can be limited to specific circumstances and not as a general matter.

[1] An analysis of this decision is available on the Harvard Law School Forum on Corporate Governance and Financial Regulation at

[2] Note that Delaware law in that sense is dissimilar to corporate law in India where controlling shareholders do not owe fiduciary duties either to the company or to the minority shareholders. But that distinction is not germane to the discussion of how “control” ought to be determined.

Wednesday, March 30, 2016

FDI Reforms in E-Commerce: What Do They Entail?

In a post on this Blog earlier this month, Satyajit Gupta and Saurabh Sharma elaborately discussed the background to the foreign direct investment (FDI) policy in the e-commerce sector. Ambiguities in the policy have not only given rise to uncertainties to players in the sector, but have also resulted in multiple rounds of litigation. As they demonstrate, the dominant e-tailers have gravitated towards the “marketplace” model of e-commerce, in some ways by taking advantage of the ambiguities in the policy. Yesterday, the Government issued Press Note No. 3 (2016 Series), which clarifies the position on FDI in e-commerce, and legitimizes the marketplace model, but with some significant riders. The purpose of this post is to examine this important FDI reform with a view to determining the extent of impact it may have on the e-commerce sector.

Pre-existing Position

Under the FDI Policy Circular, FDI has permitted up to 100% in e-commerce activities. Importantly though, this covered only B2B trading and not retail trading (i.e. B2C). B2C trading was permitted through limited ways such as where (i) a manufacturer of products in India could sell online, and (ii) a single brand retail entity could sell products online as a means of supplementing its brick and mortar sales. However, pure-play B2C trading activities were out of bounds.

In order to overcome these restrictions, as Satyajit and Saurabh point out, various e-commerce companies began carrying out retail trading through the marketplace model whereby the companies would only provide a technology platform to enable trades to take place between various sellers and purchasers of goods. One may consider this to be a form of regulatory arbitrage. Although investigated by the authorities and challenged in courts, there was nothing unequivocal to indicate the illegality of the model.

It is in this milieu that the Government yesterday issued Press Note 3 to clarify the regulatory position regarding FDI in B2C e-commerce. The current uncertainty has been put to an end, as the Government has declared the marketplace model to be an acceptable one so long as it has been accompanied by compliance with certain stringent conditions the Government has prescribed.

Nature of the Reforms

The principal effort of Press Note 3 is to define e-commerce and to bifurcate it in to the (i) marketplace model and (ii) inventory based model. It then goes on, from an FDI perspective, to conditionally embrace the former while conclusively shunning the latter.

The press note defines marketplace model as one that provides “an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between a buyer and a seller”. It also defines the inventory based model as one “where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly”. While 100% FDI under the automatic route is permissible under marketplace model, FDI is prohibited under the inventory based model: two diametrically opposing results depending upon which model is chosen.

More importantly, the liberal FDI in the marketplace model is subject to several conditions. It would be helpful to touch upon some of those. E-commerce entities are entitled to provide support services to sellers. However, the policy clearly prevents them from taking on ownership over the goods sold. If they do so, they will be treated instead as an inventory based model (which will cause them to be in breach of the FDI policy).

A condition that has attracted some level of controversy relates to that fact that no more than 25% of an e-commerce entity’s sales can relate to one vendor or its group of companies. Evidently, this is an anti-abuse provision, in order to ensure that the true nature of the marketplace model is preserved, and that an inventory based activity is not carried on in the garb of a marketplace. This would prevent entities from creating marketplaces that are effectively extensions or outsourced vehicles of trading arms. This would call into question some of the currently marketplace structures, which operate as platforms for group entities that effect the sales of the goods.

Consistent with the marketplace model, the responsibility for sales, after-sales services and customer satisfaction will lie with the sellers, and cannot be assumed by the e-commerce entity. Similarly, any warranties or guarantees relating to the product are only the responsibility of the sellers.

Another condition that has invoked a great deal of discussion relates to pricing and discounts, which would now lie only with the sellers of the goods. The policy is explicit in stating that the e-commerce entities “will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field”. This is ostensibly with a view to ending the discount wars that are prevailing between various e-tailers and which enable them to compete more effectively with brick and mortar traders. In other words, the marketplace model is a true reflection of the fact that the e-commerce entity provides nothing but the platform, and can in no way influence or intervene in the commercial terms of the transaction, which is purely a matter between the seller and the buyers of the goods. While the underlying concern behind this seems to be to protect small businesses and brick and mortar stores against discounted products offered online, it remains to be seen how this condition can be implemented. How does one determine “influence”, whether direct or indirect that the e-commerce entity can exercise over the sellers? Much would be left to the discretion of the regulators, which may therefore leave some uncertainty in the process.


The Press Note is welcome in that it clarifies the position regarding FDI in e-commerce, which has been shrouded in uncertainty until now. It is likely to reduce any possibility of regulatory arbitrage that has been rampant in the sector. Activities in the form of the marketplace model that were being carried out under the prevailing uncertain regime have now been legitimized with conditions. While some of the existing players may now have to reorient their affairs to meet with this more onerous conditional regime, it may open up the space for other players and investors who have been waiting in the wings for a clearer regulatory regime.

The policy has received opposing reactions with equal strength. On the one hand, some believe that the heavy conditionalities accompanying the marketplace model make it virtually unviable. Others believe that the opening up of the e-commerce sector itself poses a threat to domestic brick and mortar businesses. This is not surprising given that FDI in the retail sector has been an emotive issue for a number of years. While the earlier debates were largely steeped in the perceived threat of large shopping chains owning mega stores across the country, this round has been focused on sales through electronic means. Apart from a variation in the mechanics of how the browsing and shopping takes place, the real issues and controversies are rather similar. Given the polemic nature of the issue, the debates are likely to continue, as are the legal challenges before courts.

Tuesday, March 29, 2016

SEBI’s Interim Order in the Sharepro Case

Last week, SEBI issued an ex-parte ad-interim order in a case involving Sharepro Services (I) Private Limited, which is a registrar and transfer agent (RTA) for a number of companies. Based on certain complaints, SEBI began investigating into the affairs of Sharepro and found a number of irregularities. For example, dividends which were to be transferred into the Investor Education and Protection Fund were instead diverted to the accounts of certain parties related to the promoters and a senior employee of Sharepro. Similarly, dividends payable to registered shareholders were instead paid to certain related parties. Share transfers too were incorrectly effected to benefit such related parties at the cost of the real owners of the shares. In all, the facts of the case are egregious and indicate a deliberate set of actions on the part of Sharepro to enrich its promoters, senior management and their related parties to the detriment of the companies that are its clients (as well as their shareholders). Moreover, Sharepro appears to have taken efforts to mask the trail of transactions, and also to mislead the investigation process.

Based on its investigation and the information currently available before it, SEBI passed the order restraining certain persons from accessing the capital markets. It also asked companies who are clients of Sharepro to conduct a thorough audit of the records with respect to dividends and transfer of securities. SEBI finally advised clients to switch their activities to an alternative RTA or move those in-house.

The purpose of this post is not to discuss the merits of Sharepro case, which is subject to further determination by SEBI (as this is only an interim order). Instead, this post touches upon the effectiveness of the interim order. While the order restraining the parties from accessing the capital markets is understandable, it leaves the victims to resort to self-help. The order does not provide any protection as such to the shareholders who have been deprived of their rights due to the actions of Sharepro and its promoters and management. Granted this is only an interim order, but it is somewhat intriguing that Sharepro’s clients have been “advised” to take their own action in moving activities either in-house or to an alternative RTA. The question arises as to whether further preventive measures ought to have been ordered at this stage. As Mobis Philipose suggests, these measures may to too little too late. Professor J.R. Varma goes further to argue that the control of Sharepro must be taken over by the Government, as was the case with Satyam Computers. Although a number of possibilities exist, rapid action would be of the essence to prevent any further damage, and to protect the interests of various stakeholders.

Sunday, March 27, 2016

Equity-Based Crowdfunding as an Early-Stage Financing Alternative: Critique of the Regulatory Proposals in India

[The following guest post is contributed by Shwetha Chandrashekar, who is a Senior Associate in Bangalore, India at GameChanger Law Advisors. She can be contacted on]

With over 4200 start-ups, India is the fastest growing start-up ecosystem worldwide. It has the third-largest number of start-ups in the technology sector following the US and the UK.[1] However, India is experiencing an exodus of start-ups to jurisdictions with more favourable regulatory regimes. Singapore, for instance, offers many benefits for start-ups including less stringent compliance requirements, tax credits for investors, zero capital gains tax and grants for research and development.[2] In contrast, Indian start-ups suffer from high taxation on angel investments[3], weak patent laws[4] and excessive bureaucracy in both incorporation and fundraising stages.

Recognizing start-ups’ potential in boosting the economy, the securities market regulator, Securities and Exchange Board of India (“SEBI”) has introduced reforms aimed at improving access to funds for start-ups and small-to-medium enterprises (“SMEs”). SEBI amended the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) to regulate ‘angel funds’. Relaxations in SME listing norms were introduced under Chapter XB of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”) to allow for stock exchanges to have a separate SME trading platform. Keeping up with this positive trend, in 2014, SEBI released a ‘Consultation Paper on Crowdfunding in India’ inviting suggestions from all stakeholders on regulatory proposals.

This post aims to analyse equity-based crowdfunding as an early-stage financing alternative in India in light of SEBI’s proposals. The first part introduces crowdfunding and examines its benefits and risks, underlining the need for a regulatory framework. It then discusses financing avenues available to start-ups to study if existing regulatory provisions can be used to regulate crowdfunding. Finally, it critically analyzes SEBI’s Consultation Paper to understand if economic objectives of crowdfunding are fulfilled and provides recommendations on the way forward.

Equity-Based Crowdfunding: Benefits And Risks

Equity-based crowdfunding involves solicitation of funds by start-ups from investors through an intermediary online platform in return for issuance of securities such as equity shares.[5]

Crowdfunding has recently gained traction as a viable fundraising alternative, with jurisdictions around the world introducing laws to regulate it.[6] The recent global economic meltdown has made access to secured loans difficult for start-ups that have little or no collateral to offer. Private equity (“PE”), venture capital (“VC”) investments and public offerings are inaccessible to many start-ups which are usually sensitive to a higher cost of capital and are not far enough in their life cycle for conventional financial intermediaries to adequately assess risk and commit to an investment.[7]

Therefore, crowdfunding serves to benefit start-ups by improving much-needed access to early-stage capital. Owing to the nature of crowdfunding, investment risk is spread out[8]. On a macro level, providing easier access to funds to start-ups stimulates economic growth by facilitating capital flow. This triggers positive socio-economic impact through job creation and can be a much-needed alternative source of financing in a capital-scare economy. Crowdfunding offers retail investors a lower cost and potentially high return investment vehicle, helping them diversify their portfolio.

However, crowdfunding poses a unique potpourri of regulatory complexities associated with public issue (such as disclosure and due diligence requirements) coalesced with risks of PE and VC investments (such as default, failure and fraud). Failure statistics reveal that nine out of ten start-ups fail.[9]  The most popular example of risks of fraud is that of Bubble and Balm, a UK-based soap company which was one of the first companies to be funded through equity-based crowdfunding, which in 2011 after raising £75,000 abruptly closed its business in 2013 leaving its investors in the lurch.[10] 

Owing to the absence of a secondary market, investors cannot sell their securities to recover their investments.[11] Further, accurate valuation is problematic as financial activities of young start-ups are difficult to analyse and forecast.

Prohibitive disclosure costs result in a start-up’s inability to meet high disclosure standards.[12]  The resulting information asymmetry coupled with lack of investment experience of retail investors is a problematic combination. Therefore, crowdfunding calls for a finely-balanced regulation that recognizes the need for raising low-cost capital, facilitating access to funds and increasing liquidity on the one hand and the importance of ensuring investor protection and lowering systemic risks on the other.

Existing Routes of Financing and the Regulatory Regime in India

Presently, the regulated routes of fundraising in India are:

- Seed or Angel Investments are regulated under the Companies Act, 2013 (“Act”) for private placement (an offer by a company to a select group of persons[13] to subscribe to its securities) for unlisted companies. Listed companies need to further adhere to the ICDR Regulations.

- PE and VC Funds are regulated under the Act and AIF Regulations.[14]

- Initial public offers (“IPO”) or follow-up public offers are governed by the Act and ICDR Regulations.

The private placement route will not apply to crowdfunding as the latter entails solicitation of small-sized funds from a large number of unidentified investors. Smaller retail investors, who are likely to contribute far less capital per individual, would not meet the minimum investment criteria stipulated under the current regulations pertaining to PE and VC.

A public issue involves the appointment of merchant bankers, filing of a prospectus with SEBI, previous track record requirements, minimum promoter’s contribution etc., apart from detailed disclosures. An IPO usually occurs later in the lifecycle of a company, requiring the issuer to disclose among other things, minimum net tangible assets, distributable profits and net worth for a historical track record of a certain number of years. In contrast, crowdfunding being an early-stage fundraising alternative, aims at helping start-ups kick-start their business ideas. For a young venture with limited funds, fulfilling these requirements is daunting and impractical.

The existing regulatory climate necessitates creating carve-outs from current financing regulations and formulating a de novo regulatory framework for crowdfunding. It poses avenues for regulatory arbitrage by fraudulent fundraisers as was demonstrated in a recent Supreme Court case, Sahara India Real Estate Corporation v. SEBI.[15] This case involved one of the biggest investor frauds in India in which Sahara raised over USD 3 billion from nearly 30 million investors from amongst their intricate network of associated group companies, employees and other related individuals. It argued that its capital raising methods were not governed by IPO regulations because it did not intend to list its securities on any stock exchange. Therefore the investment route neither qualified as a private placement nor as a public issue but was akin to a crowdfunding model without the involvement of any online intermediary platform. In that case, the Supreme Court clamped down on the funding model used by the companies.

The case highlights the potential and reach of crowdfunding as a financing alternative and the need for a crowdfunding regulatory regime. It further exhibits SEBI’s proactive watchdog role prompted by the lack of knowledge and experience of retail investors.

As a result of the Sahara case, a provision was introduced in the Act which states that irrespective of whether a company intends to list its securities, if an offer to allot securities is made to more than fifty persons, it would be deemed to be an IPO. This would currently bring crowdfunding squarely under the IPO regulatory umbrella.

Recognizing the potential and need for crowdfunding as a financing option for start-ups, SEBI floated the Consultation Paper in 2014 to address the lacuna in current regulations. The next section analyses the proposals to ascertain whether they adequately fulfil crowdfunding objectives.   

SEBI Consultation Paper on Crowdfunding in India, 2014: A Critical Analysis

Some of the key SEBI proposals are:

- Only ‘Accredited Investors’[16] may invest;

- Qualified Institutional Buyers (“QIBs”) to hold atleast  5% of issued securities;

- Retail Investor contribution: Minimum- INR 20,000 and maximum- INR 60,000;

- Maximum number of retail investors- 200;

- Only start-ups less than two years old eligible to participate;

- Disclosure requirements such as anticipated business plan, intended usage of funds, audited financial statements, management details etc.;

- Registered crowdfunding platform to conduct regulatory checks and basic due diligence of start-ups and investors; and

- Constitution of ‘screening committee’ by each platform comprising 10 persons with experience in capital markets, mentoring start-ups etc.

SEBI’s definitions of ‘Accredited Investors’, ‘Eligible Retail Investors’[17] and the requirement for QIBs to collectively hold a minimum of 5% of issued securities, are contrary to the economic objectives of crowdfunding. While the intention is to ensure investor protection by permitting investments from only sophisticated investors, this requirement may render crowdfunding inaccessible to other classes of retail investors.

VCs and QIBs tend to invest in ventures that are typically 2+ years into their lifecycle that can provide reasonably accurate projections and viable business models. The proposals target start-ups less than 2 years of age, which makes crowdfunding an unlikely investment opportunity for VCs and QIBs due to information asymmetry. Without achieving the requirement for QIBs to collectively hold a minimum of 5% issued securities, the start-up cannot raise capital through the crowdfunding route. Hence, this stipulation should be deleted as it may defeat genuine fundraising efforts.

To protect the interests of unsophisticated investors, the maximum investment amount should be in proportion to ERI’s net income as opposed to net worth. The minimum investment amount requirement must be removed to facilitate smaller investments from larger number of investors. To facilitate optimal access to this investor group, the definition of ERIs must be expanded.

The restriction on maximum number of retail investors per crowdfunding round contradicts the bedrock concept of crowdfunding, ‘safety in numbers’. 5000 investors investing USD 100 each is easier to secure and provides greater individual investor protection than 100 investors investing USD 5000 each. The in-built protection of ‘wisdom of the crowd’ embodied in crowdfunding, ensures that over time the crowd of unsophisticated retail investors mostly make sound investments in genuine ventures weeding out fraudulent ones.  A survey conducted in the UK reveals that majority of investors in equity-based crowdfunding are retail investors with no previous investment experience.[18]  Interestingly, New Zealand, one of the most crowdfunding-friendly jurisdictions, does not differentiate between sophisticated and retail investors.[19]

SEBI proposals restrict crowdfunding to only unlisted public companies. In practice, most start-ups in India register as private limited companies. Therefore, the crowdfunding route should be expanded to include other types of corporate entities to enable them to leverage the benefits of crowdfunding.  

The stringent disclosure norms laid out by SEBI closely resemble existing private placement requirements. While the importance of adequate disclosures to safeguard investor interests is undisputed, associated prohibitive costs need careful consideration. Instead, the crowdfunding platform should bear costs associated with disclosures and recoup those costs by levying a nominal fee on the investors and start-up, thereby reducing the burden on start-ups and achieving transparency.

Formulating guidelines with respect to differential voting rights will help young ventures devise an investment policy to facilitate subsequent investment rounds. The crowdfunding platform should have industry-based advisory committees comprising of industry-experts for mentoring start-ups on long-term fundraising strategy. This combined with appointment of a trustee to represent the investors’ collective interests and rights will help adequately balance investor-investee interests.

Owing to the involvement of internet and social media, crowdfunding could transcend borders where foreign investors could participate in crowdfunding rounds by Indian start-ups and vice-versa. The proposals are silent on whether cross-border crowdfunding is proposed to be permitted. If yes, how will foreign investors be treated vis-à-vis Indian investors? In case of fraud in foreign jurisdictions, how will Indian investors be protected?  SEBI must therefore create adequate safeguards to tackle cross-border crowdfunding issues and jurisdictional arbitrage.


The emergence of India as a start-up hub and its burgeoning start-up ecosystem necessitate finding alternate fundraising modes for these enterprises to start, scale and succeed. The Sahara case experience demonstrates why the extant fundraising regulatory environment is inadequate and not aligned to crowdfunding objectives. There is clearly a case for a balanced crowdfunding regulation that lowers cost of capital and increases liquidity while ensuring adequate investor protection and minimizing investment risks.

An analysis of the Consultation Paper reveals a rather cautious approach by SEBI that tends favourably towards investor protection and falls short in upholding the economic objectives sought to be achieved by crowdfunding. In order to make equity-based crowdfunding a viable early-stage financing alternative in India, SEBI must consider making amendments to its proposals in line with recommendations made in this paper and from other stakeholders.

- Shwetha Chandrashekar

[1] National Association of Software and Services Companies, ‘Start-up India – Momentous Rise of the Indian Start-up Ecosystem’ (Report) (October, 2015) accessed January 16, 2016.

[2] P. Abrar, ‘India’s Tech Stars Shifting to Silicon Valley’ The Hindu (June 30, 2015) .

[3] 33% ‘Angel Tax’ on angel investments received by the start-ups taxed as ‘Income from other Sources’ in accordance with Section 56(2) of the Income Tax Act, 1961.

[4] P. Kilbride, ‘Explained: Why India ranks second last in global IP index and how it can improve’, (February 05, 2016) .

[5] E. Kirby and S. Worner, ‘Crowd-funding: An Infant Industry Growing Fast’ (IOSCO Research Department, Staff Working Paper No. [SWP3/2014]) (‘Kirby’).

[6] Title II (Accredited Crowdfunding) and Title III (Retail Crowdfunding) of the Jumpstart Our Business Startups Act, 2012 (US); Decreto Crescita Bis, 2012 (Italy); Financial Conduct Authority Regulation on equity crowdfunding, 2014 (UK); Securities and Investments Commission, ‘Guidance Note on Crowdfunding’ (2012) [12-196MR ASIC] (Australia).

[7] Vidhi Centre for Legal Policy, ‘Responses to SEBI Consultation Paper on Crowdfunding’ (July 16, 2014) p. 3 (‘Vidhi’).

[8] Kirby (4).

[9] E. Griffith, ‘Why Startups Fail, According to their Funders’ Fortune (September 25, 2014) <>.

[10] L. Warwick-Ching, T. Powley and E. Moore, ‘Alarm Bells For Crowdfunding As Bubble Pops For Soap Start-Up’ Financial Times (July 31, 2013) .

[11] Kirby (20).

[12] R.S. Weinstein, ‘Crowdfunding in the US and Abroad’ (2013) 46 Cornell International Law Journal 434.

[13] The maximum number of investors that are permitted to participate in a private placement under the Companies Act are 50 per investment round or 200 in a financial year.

[14] The PE and VC regulations call for strict corporate compliance and governance framework with a heightened focus on investor protection. Some of the mandatory requirements are (i) Maximum 1000 investors; (ii) Minimum corpus of each AIF fund/scheme must be at least INR 200 million; and (iii) Minimum investment from each investor must be at least INR 10 million.

[15]  Sahara India Real Estate Corporation Limited& Ors v. Securities and Exchange Board of India & Anr (2013) 1 SCC 1.

[16] Accredited Investors under the SEBI proposals are: (i) QIBs; (ii) Companies with a minimum net worth of INR 200 million; (iii) High Net Worth Individuals with a minimum net worth of INR 20 million or more; or (iv) Eligible Retail Investors

[17]Eligible Retail Investor” or “ERI” shall mean a retail investor who has received professional investment advisory or availed of the services of a portfolio manager and has a minimum annual income of INR 1 Million and who has filed an income tax statement for atleast the last 3 financial years.

[18] Nesta, ‘Understanding Alternative Finance: The UK Alternative Finance Industry Report 2014’ (Report) (November 2014) <>.

[19] Financial Markets Conduct Act, 2013 (New Zealand) <>.