India’s start-up wave

It was in the 80’s that the word entrepreneurship gave way to start-ups. Infosys, Tata, TCS launched their software ventures and became giants over time. The 90’s saw the internet companies such as, and MakeMyTrip take the country by storm. By the turn of the 20th century, powered by the internet and online services, the country has seen start-ups in virtually in spheres – from Paytm,to RedBus, from Flipkart to Zomato India has witnessed and will continue to witness one success after the other.

The tide was turning in favour of start-ups despite hiccups in the form of finding suitable funding options. Initially, there was no option for start-ups to be listed on stock exchanges. With growing start-up requirements, many start-ups looked global. In fact in 2010, MakeMyTrip was one of the first start-ups to be listed on Nasdaq alongside already listed Indian corporates – Infosys, HDFC, Dr. Reddy’s Laboratories etc.

The current government gave a new pitch for such start-up to level play with existing successful corporates. To this effort, the market regulator SEBI played a great role. However, that changed in 2015. SEBI launched the “Institutional Trading Platform” (ITP). The ITP was established as a trading platform for start-ups to be listed. Many rules and regulations were stipulated to this effect.

SEBI’s great pitch

Recently, SEBI announced a host of measures to relax norms for start-ups with a view to encourage their listing on the stock exchange(s). This is particularly encouraging for start-up ventures in fields like biotechnology, e-commerce, data analytics and related areas as it would pave the way for them to raise funds relatively easily.

The core group

In June, 2018 SEBI constitute a core group consisting of experts and stakeholders from various start-ups, lawyers, bankers, merchant bankers, venture capitalists and stock exchanges to brainstorm on effective ways of encouraging start- ups in listing and trading on stock exchanges. They submitted their recommendations and was followed by publishing a paper for public to share their recommendations as well.

Proposals that have been approved by SEBI

Primarily, the “Institutional Trading Platform” (ITP) has been re-visited. The ITP was created by SEBI in 2013 to enable Small and Medium Enterprises (SME’s) and Start-ups to list their securities on the ITP without actually having to go through an initial public offering (IPO). This intended to give more visibility to such start-ups and enable them to raise capital without spending too much money and time on compliance. It also provided credible and transparent dealings to entities interested in investing in such start-ups. Besides renaming the ITP as “Innovators Growth Platform”, the SEBI has approved the following proposal / recommendations:

  1. The minimum trading lot has been reduced from Rs. 10 lakhs to Rs. 2 lakhs. While this is intended to encourage more start-ups to list their securities, it is intended to help them with their liquidity.
  2. 25% of the pre-issue capital should be with qualified institutional buyers (QIB’s) for at least 2 years. Such QIB’s should be a family trust with a net worth of at least Rs. 500 Crores.
  3. A new class of investors has been introduced – “accredited investor”. An individual investor  with a gross total income of Rs. 50 lakhs per annum and a minimum liquid net worth of Rs. 5 Crores. For a corporate entity, it has to be a net worth of Rs. 25 Crores. Such accredited investors can hold up to 10% stake before listing.
  4. The post issue capital holding of 25% (by investors) in start-ups has been removed. Now investors can hold more than 25% post issue capital holding. This will encourage more investment in start-ups.
  5. Previously, it was mandatory to make a minimum net offer of 75% to be allocated to institutional investors and 25% to non institutional investors. Now there is such no minimum reservation for any category of investors. SEBI has also done away with the hitherto requirement of limiting allocation at 10% for a single institutional investor.
  6. Institutional investors holding at least 25% of the investment should stay invested in the start-up for a minimum period of 2 years.
  7. Start-ups can now allot shares to a minimum of 50 allottees as compared to the earlier minimum requirement of 200 allottees.
  8. Hitherto, start-ups had to wait for a time period of 3 years to migrate from the start-up trading platform to the main bourses. That waiting period has been brought down to 1year, subject to compliance of the exchange requirements.
  9. The minimum offer size of start-ups registering with ITP has been fixed at Rs. 10 crores. This is intended to bring in credible investors and also ensure sizeable volume of investments for start-ups.
  10. Other recommendations include for investors in such start-ups to have voting rights, board representation and corporate governance requirements. These are under consideration by SEBI

The bottom line

Continuing the efforts towards “ease of doing business in India”, the SEBI announcements relaxing norms listing for start-ups are a bunch of Christmas goodies gifted to Start-ups. This is especially true for India start-ups who have preferred to source funding through private equity instead of through the listing route given the challenges in fulfilling the compliance requirements. This has also pushed for them to prefer listing outside (For instance, MakeMyTrip got listed in Nasdaq a couple of years ago).

While most start-ups are still at a very nascent stage figuring out the best business model / strategy that will work for them, SEBI has lent out a helping hand by easing the listing norms and encouraging giving boost to new age companies in their start-up stage. With AI and drones topping the list of start-ups to take on India in 2019, watch this space for more!



We debuted our “What’s brewing” section in Law Tree edition #29 with drones – their evolution, development, uses and the need to be regulated by law.

To recapitulate, in a nut-shall, remotely piloted aircraft is widely known as ‘drone’. Drones are piloted from a remote pilot station.

Almost a year later, drones are making news again for finally beginning to be regulated by law. In August, 2018 the Director General of Civil aviation (DGCA) put out a draft policy thereby ending years of speculation and ambiguity. The policy which became effective from 1st December, 2018 clearly laws down provisions that govern use of drones.

Starting 1st December, 2018 the National Drones Policy has come into effect. Called the “Drone Regulations 1.0”, the policy lays down where, when, how and who can operate drones legally in India.

In fact, the Ministry of civil aviation has begun online registration of drones in India. A look at the highlights of the policy:

  1. 1. The DGCA has classified drones into 5 categories – (i) Nano (ii) Micro (iii) Small (iv) Medium and (v) Large. This classification seems to be based on the weight of the drones ranging from 250 grams or lesser up to 150 kgs and more.
  2. Nano drones which weigh less than or equal to 250 grams do not require registration or license to be used. Drones in all remaining other categories will required mandatory registration /license for use.
  3. In accordance with the Aircraft Act and Rules, those drones getting registered will be issued a Unique identification number (UIN) or Unmanned Aircraft Operator (UAOP) Permit subject to fulfilment of requisite conditions and  payment of prescribed fee. Such registration / license is valid for a period of 5 years. It can be flown only by persons above 18 years of age, with minimum under graduate qualification and having undergone practical training as approved by DGCA.
  4. All categories of drone flights should happen only in day time and within the “Visual Line of Sight”.
  5. No Remote pilot can operate more than one unmanned aircraft at any time. There should not be human or animal loads on them.
  6. Drone flights should not cause danger to the general public and property.
  7. Manned aircrafts will continue to get priority for flight approvals.
  8. Insurance shall be made mandatory to cover third party loss or damage.
  9. The Ministry of civil aviation is in the process of demarcating areas into various zones – “Green zone”, “Yellow zone” and Red zone”. While no permission is required to fly in green zones, permission is mandatory to be obtained to fly in yellow zone. No drone flights are allowed in the Red zones.
  10. Besides the above, several restrictions have been put in place – Remote Piloted Aircrafts (RPA’s) cannot be flown within 5 kms of the perimeter of all major airports and within 3 kms from the perimeter of any other airport. They cannot be flown in temporary or permanent prohibited, restricted and within 25 kms from international border including the LoC as defined in the policy. It cannot fly beyond 500 meters into sea and within 3 kms- 5kms from the perimeter of military installations, Government buildings and Secretariat and Parliament. Prior permission has to be obtained for flying within Eco sensitive zones National parks and wildlife sanctuaries.
  11. Violations will attract penal provisions under the Indian Penal Code, 1860 as well as the Aircraft Act 1934.

The opening of the skies (literally) for the use of drones in a legitimate manner has opened up a Pandora’s box of uses. From hospitals wanting to transport organs for transplant, Food delivery services such a Zomato acquiring drone start up for using drone to deliver food, municipal corporations using it to survey properties, construction industry using it in an efficient and timely completion, using it in dense forests and hostile terrains, prevent disasters and help in disaster management, improve farming and general surveillance drones are being put to effective use. It is no more a mere play thing. If used appropriately they will go a long way in the development of the society.  In order to make the drone legislation more effective, the Ministry of Civil aviation has constituted a task force to make recommendations of Drone Policy 2.0. Watch out! A drone could be hovering above your head!!


The Year that was - A look at  Supreme Court  decisions that changed the  fabric of the society

For the legal fraternity, 2018 will go down as historic and landmark year. Several judgments were passed by the Supreme Court having significant impact on the social and economic fabric of our society. The year started  dramatically, 4 senior-most Judges of the Supreme Court stunned the nation by organizing a press conference headed by Justice Chalameswar.The trigger -  the rejection of demand for senior bench to hear the PIL on CBI Judge Loya’s death. The drama and action sustained throughout the year with the Supreme Court handing down several important decisions. Let us briefly look at some of these important decisions that collectively are bound to change our legal perception of gender equality, gay sex, adultery and many more.

March 9th 2018 – Euthanasia: Living Will

In a unanimous judgment, the constitution bench of the Supreme Court headed by Chief Justice Dipak Misra gave legal sanction to passive euthanasia and execution of a living will of persons suffering from chronic terminal diseases and likely to go into a permanent vegetative state. Living will is a document prepared by a person in his/her healthy state of mind specifying in advance whether or not they would like to opt for artificial life support system if he/she goes into vegetative state due to an irreversible terminal illness at a later date.

“The right of an individual to refuse medical treatment is unconditional. Neither the law nor the constitution can compel an individual who is competent and able to take decisions to disclose reasons for refusing medical treatment nor is such a refusal subject to the supervisory control of an outside entity,” said Justice D.Y. Chandrachud.

“It is an extraordinary ruling by the apex court. People now will be allowed to grant a living power of attorney to another. Meanwhile, a law on passive euthanasia is on the ambit”, additional solicitor general, P.S. Narasimha, who had represented the Centre, said after the ruling.

July 4th 2018 – Delhi Government Vs Lt Governor Delhi

In a much needed relief to the besieged Delhi Government, the Constitution Bench of the Supreme Court held that, while Delhi was not a “State“ and occupied special status under the constitution, the Lt. Governor must act as per the aid and advise of the Council of Ministers of Delhi Government except in matters of land, police and public order. The LG could not interfere in each and every decision of the Delhi Government. Although it was mandatory for the Delhi government to communicate all its decisions to the LG, there was no need to obtain the concurrence of LG in all matters.

September 6th 2018 – Gay Sex Legal: Dilution of Sec 377 of IPC

In a much needed relief to the besieged Delhi Government, the Constitution Bench of the Supreme Court held that, while Delhi was not a “State“ and occupied special status under the constitution, the Lt. Governor must act as per the aid and advise of the Council of Ministers of Delhi Government except in matters of land, police and public order. The LG could not interfere in each and every decision of the Delhi Government. Although it was mandatory for the Delhi government to communicate all its decisions to the LG, there was no need to obtain the concurrence of LG in all matters.

"Section 377, IPC, to the extent that it criminalizes consensual sex between two adults is arbitrary, irrational and hence liable to be partially struck down." Stopping short of scrapping the Law, the bench spoke up for the LGBT community’s right to enjoy equal rights under the constitution., This judgement is intended to  help the LGBT community claim equal constitutional status as other citizens besides claiming the right to adopt, marry and have a family. Effectively, this judgment makes social ostracism enforced by the society on those belonging to LGBT community a thing of the past. This has been one of the most welcomed judgments in the history of the Indian judiciary.

September 26th 2018 – Constitutional Validity of Aadhaar Card

A 5-Judge Constitutional Bench of the Supreme Court upheld the constitutional validity of Aadhaar scheme. The court also held that Aadhaar card is mandatory for obtaining PAN card, filing IT return, availing welfare schemes and subsidies from Government. However it is not mandatory for school admission, obtaining SIM Card, opening of bank account, appearing for CBSE, NET & UGC examinations and private companies.

September 26th 2018 – Direct Telecast of Court Proceedings

Passing judgment on a batch of petitions including one by senior advocate Indira Jaising, the three-judge bench of the Supreme Court directed the Centre to frame rules for live streaming of court proceedings of cases of constitutional importance and national importance. “It will encourage the principle of open court, effectuate the public’s right to know and reduce dependence on second-hand views,” said Justice D.Y. Chandrachud. Such live broadcast would serve as an instrument of greater accountability forming part of Code of Criminal Procedure 1973.

September 27th 2018 - Adultery is no longer a Criminal Offence

Adultry is no longer a crime but will continue to be grounds for divorce said the supreme court while passing a landmark judgement striking down Section 497 of the IPC that dealt with adultery. In doing so, the apex court overturned its previous rulings that the adultery law was constitutional.

Chief Justice Dipak Misra who wrote the judgement for himself and Justice A.M.Khanwilkar said that unequal treatment of women invites the wrath of the constitution and that any provision treating women unequally is unconstitutional. He further said that adultery may not be the cause of an unhappy marriage, but the result of one.

September 28th 2018 – Sabarimala Temple thrown Open to Women of all Ages

The Supreme Court has struck down a rule that disallowed girls and women in the 10-50 age groups from entering the Sabarimala temple in Kerala. Chief Justice Dipak Misra-headed Constitution bench in a 4-1 verdict said the temple rule violated women’s right to equality and right to worship. Court said that women should not be subjected to gender discrimination. Womens groups across the country have hailed the judgment as”milestone in the race to achieve gender equality.” This Judgment has evoked mixed response as large scale protests and demonstrations across the country have erupted on the question of judiciary interfering with faith.

October 4th 2018 – Deportation of 7 Rohingya Muslims

The Supreme Court refused to stop deportation of 7 Rohingya refugees to Myanmar agreeing with the arguments made by Mr. Tushar Mehta appearing for the Government that Rohingya refugees were ‘illegal immigrants’ and had ‘consented’ to return to Myanmar. The dismissal of the application is a dangerous precedent, particularly for Rohingya refugees living in India.


Outer Space Arbitration



A punishment among the greeks answering the stocks.

Yeas and nays

The affirmative and negative votes on a bill or measure before legislative assembly.

Her bracket amount

A deduction available to individual taxpayers whether or not the individual itemizes his or her deductions.


Legal Prescription for Medical Ethics



Breaker Morant (1980) (Movie)

A 1980 Australian drama, the movie is based on the play of the same name. Three Australian lieutenants are court martialled for executing captured enemy prisoners and unarmed civilians. The court martial proceedings were one of the first war crime prosecutions in British military history. The film particularly dealt with Nurember defense – which meant that subordinates carrying out orders from their superiors could should not be prosecuted as they were merely carrying out orders. The movie also subtly deals with the human cost of war.  The movie won 10 Australian Film Institute awards and also nominated for Best writing / screenplay at the Academy awards in that year.

Sycamore Row – John Grisham (2013)
(Book / Novel)

A powerful sequel to an even more powerful prequel – “A time to kill”. Grisham followed up his first ever novel with a sequel almost a quarter century later. The story in the sequel begins three years after the first one in which the protagonist Jake Brigance, a white lawyer wins acquittal for a black man who killed his 10 year old daughter’s white rapists.

A wealthy reclusive lumber merchant dying of lung cancer hangs himself from a sycamore tree after handwriting a second will overriding his first one. In the second will, he writes most of his fortune in favour of Lettie Lang – black housekeeper woman and not his own children. Before hanging himself, he sends the will to lawyer Jake Brigance to enforce the same as he deeply admires Jake for his anti-racist views. This begins a dramatic courtroom trial and showdown in which Jake has to fight with all his might to prove that the will written by the dying tycoon was genuine and most of the wealth had to go to his black housekeeper in a racist prevalent Missisippi. Will the predominantly white jury agree to hand over all wealth to a black housekeeper and make her one of the richest in Mississippi? – Read the book. Find out.

MURDER ONE (1995-1997) (TV Series)

The series centers around a criminal defense attorney, Theodore “Teddy” Hoffman and his associates. When Teddy and his associates deal with a range of criminal cases from an alcohol-drug addicted famous actor to ordinary yet dangerous man, they don’t realize it spills into their personal lives.

Law without justice is a wound without a cure

– William Scott Downey

© Copyright 2019 - A K Mylsamy & Associates LLP


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