In 2009, Reliance (India's biggest corporation) entered into contracts with NDTV (one of India's large and influential media houses) to advance zero-interest "loans" backed by a near zero-value call-option arrangement that gave Reliance the right to take over ownership in NDTV anytime during the 10 year period (of the so-called "loan").
Reading this a few times, it seems like this is a not-so-nicely camouflaged acquisition and the intention wasn't to create a loan or a security, or for that matter a call option.
This is also what it seemed to India's capital markets regulator SEBI. Last week, SEBI has ruled that Reliance and NDTV entered into an elaborate ruse was undertaken to bypass securities regulations that require disclosure and protect existing investors during the time of an acquisition.
It's all common-sensical but many corporate lawyers are losing their heads over this! The set of agreements involving a loan and call option agreements is magic they (we) created. A bad trick perhaps, because avoiding/violating the law by calling an acquisition by other names and reflecting the terms in a circular way in sham agreements doesn't change the facts of the matter.
Here's ET with the details. A gentle reminder to corporate lawyers the law isn't contained in words - it's the spirit.
No, not whisky.