Gross Negligence And Wilful Misconduct In Investment Transactions

Introduction

A promoter plays a pivotal role in driving a company's growth and significantly contributes to its overall success. They are instrumental in shaping the company's vision, setting its culture, and defining long-term goals. Any deviation from lawful and ethical conduct by a promoter can negatively impact stakeholders, particularly investors of a company.

In recent years, however, there have been multiple instances where promoters have engaged in actions or omissions that amount to wilful misconduct or gross negligence. These developments have led parties to investment agreements to more carefully define the term 'cause', often including such wilful misconduct and gross negligence as grounds for material breach or events of default.