Enforceability Of 'Put Options' In Investment Agreements Under Indian Foreign Exchange Laws

Generally speaking the investment agreements have provisions wherein the promoters/founders are obligated to facilitate an exit for the investors upon occurrence of certain trigger events. For example, in case of material breach of the obligations, the investor shall have the right to put their shares to the promoter at a commercially agreed premium amount. This is one of the provisions under which the investors seek to secure their exit in case they are not satisfied with the Company's growth or performance which is represented by the promoters. This article seeks to discuss and analyse the validity of 'put options' in investment agreements under Indian laws.

Provisions Under The Indian Contract Act (ICA)