The Finance Ministry had recently suggested the Department of Industrial Policy and Promotion (DIPP), the nodal agency for foreign direct investment in India to amend the definition of ‘control’.
The present definition of control covers only those situations where there is a power to appoint majority of the directors of the company. However the government opines that the definition of control does not bring within its ambit other indirect ways of control such as lien over voting rights, quasi equity instruments and terms of share purchase agreements.
DIPP has also been suggested to consult the Ministry of Corporate Affairs so that the amended definition is aligned with the Companies Bill, 2011. In response to this, DIPP is presently in consultation to provide definition of control on the lines similar to the one under SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011.