INSIGHTS
IPOhhhhhh!
It was touted as the mother of all IPO’s. The most looked forward to since 2014.
In a year which saw (and will continue to see) see some of the biggest US tech companies get publicly listed, the Uber IPO was the most high profile “Unicorn” tech start up to go public in May, 2019. The Cab aggregator uses a mobile app to connect driver and riders.
Founded as UberCab by Garrett Camp and Travis Kalanick in 2009, Uber was a wild flower that quickly grew thanks to the advent of smartphones and apps. In just a decade, it has expanded from being a ride hailing service to carpooling, meal delivery and freight services. It is mulling over foray into electric scooters, automatic self driven cars and also aviation. The company aims to be a one-stop solution for customers who can use one platform and enjoy multiple services.
Bloom to Boom
The Uber boom (of coming out with an IPO) just about a decade after its bloom is nothing short of a fairy tale. Since inception, Uber managed to raise funds of almost $13.6 billion through private investment.
Uber’s initial funding came from First Round Capital in 2010 – a seed stage tech venture capitalist which invested $1.25 million. Thereafter almost every year at regular intervals, Uber got funded by some heavy weights – Benchmark Capital, Menlo Ventures, Jeff Bezos (co-founder of Amazon), Goldman Sachs and Japan’s Soft Bank group. Probably, one of its biggest cash infusion came in 2016 when Saudi Arabia’s Sovereign Wealth Fund invested $ 3.5 Billion in Uber. This additional fund infusion escalated Uber’s valuation at $ 62.5 billion. In August, 2018 Uber further raised money from Toyota.
IPO saga
The IPO bug bit Uber after its 2018 round of funding aided its increased valuation. By that time, its arch rival, Lyft went public in March, 2019 with average outcome.
To make its stock market debut, Uber hired a string of investment banks to act as its IPO underwriters. Almost 29 banks, spearheaded by Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch led the IPO. They were to arrive at valuation of 207 million shares. The valuation of Uber was pegged at a whopping $ 120 billion, nearly double its August 2018 valuation. This created substantial hype around the IPO. Amidst all the hulabaloo, Uber submitted its prospectus and financials to the NYSE. As the IPO date neared, the financials and performance began to be interpreted differently by the investment community. Finally, Uber shares were priced at $44 - $50 per share. At this price, the company was valued at about $ 75 million. Even then it was considered as one of the most valuable tech startups to go public.
Uber went public on 10th May, 2019. The shares were sold at $45 per share, the lower end of its estimated range. At this price the Uber raised around $ 9 billion from the stock markets.
Uber: Bull and bear rolled into one?
The real picture before and after the IPO was different. In the run up to the IPO, there was a general sense of extreme optimism. The $120 billion fancy valuation coupled with the projected plans of ambitiously venturing into never before areas like automated driverless transport and aviation gave them the edge when they decided to go public. Such was the euphoria that while the CEO openly stated though the personal transport business accounted only for “1% of all the miles driven globally”, they were confident making more than a dent in the $12 Trillion market of personal transport, food and freight delivery.
The scene though was not exactly as expected thereafter. Real time issues were being tackled at the ground level. Uber continuously reported losses. While its revenue in 2018 was $11.3 billion (up by 42%), there was simultaneous increase in expenditure of more than $ 14 billion which resulted in net loss of $ 3 billion. Its accumulated deficit at the end of FY 2019 was nearly $ 8 billion. Then there were regulatory issues to be sorted out. There was general driver discontent with the way they were being treated (as contractors and not employees). Uber was affected by the increasing crude prices and compliance of laws in all countries where they had presence. This was coupled with the allegations of sexual harassment and the indifference of the bosses in dealing with the same. This cost the company its reputation. The trade standoff between U.S and China also impacted. The company could probably also not draw from the IPO experience of its rival Lyft which saw a lukewarm response to its IPO just ahead of the Uber IPO.
Uber’s Indian connection
For Uber, India is very important as it is the second largest user after the U.S. Since Uber is facing substantial losses by running in the U.S with stiff competition from other domestic operators (like Lyft), it is looking to India to strengthen its presence and operations. However the way Uber operates in India is entirely different form the Western countries. For starters, in the west, most drivers are likely to own their cars. So it is a case of lesser investment and earning income. However, in a labour intensive country like India, not all skilled / semi-skilled people own cars. This means they will have to first incur capital expenditure. Even then, all money earned from rides is not theirs as they have to pay a certain amount as service / technology fee. “Cash” rides introduced by Uber seems to be exclusive to South Asian users. This was first introduced in Hyderabad, India and then tried in other Asian countries. In 2017, Uber launched its research and engineering unit in Bangalore, India. Thus Uber is seen as taking special interest in a large market.
The road ahead
For all the hullabaloo, the Uber IPO at best met with average success. Though initially valued at $120 billion, it eventually closed at $ 75 billion. Though not bad, it was almost 38% lesser than the projected estimates. Up until May, 2019, Uber was a private company / start up. Now after it has become public, it has a lot to brain storm and rejig. Right from its pricing to its corporate governance, Uber has to be up to the mark as the investors may not be too kind or patient for long after investing substantial funds. While the promoter-investors are laughing all their way to the Bank, it remains to be seen if the drivers, riders and Banks will benefit from the same. Fasten your seat belts. Your ride is just a click away!
WHAT'S BREWING
AMENDMENTS TO COPYRIGHT ACT, 1957 & COPYRIGHT RULES, 2013
Recently, the Department for Promotion of Industry and Internal Trade (DIPP), Ministry of Commerce and Industry published and circulated the Copyright (Amendment) Rules, 2019. The rules were last amended in 2016.
The draft of the amendment Rules are open for stake holders’ suggestions and views until 29th June, 2019.
A look at the important proposed amendments
1. The phrases “by way of radio broadcast or television broadcast” are proposed to be replaced by the phrase “for each mode of broadcast” in Provisions / Rules which deal with statutory licence for broadcasting musical work and sound recording. Currently the provisions / Rules of statutory licences are applicable only for radio and television broadcasting which means other forms of broadcast such as the internet and web have been excluded from the ambit of statutory licences.
The amendment seeks to remove such restricted applicability of statutory licenses only to radio and television broadcasting and include all forms of broadcasting - companies operating through digital web mode and music streaming companies for the purpose of statutory licences.
2. Several amendments have been introduced to the Act with a view to bring in increased transparency and efficient / effective functioning of Copyright societies / Board.
3. Several criteria have been introduced to fix tariffs / tariff schemes by copyright societies.
4. It is proposed to set up an Appellate Board to replace the existing Copyright Board.
5. The amendments proposed increased onus on the Copyright Societies – they will be responsible for:
- Compiling and publishing data on the names and works of all authors on a quarterly basis.
- Take necessary steps to compile all other information that is relevant to such authors and their works.
- A half yearly “Annual Transparency Report” has to be compiled and published by Copyright societies on their website. Such Report shall contain details on licences granted / refused; financial information relating to royalty(s) due to copyright owners, details of collaboration with foreign societies and related information.
Copyright Societies are to ensure easy access of all the above details to their users.
6. The amendments propose that refund of the royalty amount to the licensee if the same is not distributed within a period of 3 years from the end of the financial year in which such royalty occurred.
The proposed amendments make one thing clear – the government wants to broaden the scope of copyright registration to all forms of media and not restrict it only to radio / television. Bringing all types of broadcasters and broadcast content under the copyright framework will increase accountability and transparency. This becomes all the more relevant in an era of the rapid digital / technological advancement.
While the intention of introducing such amendments seem to be to make it easier and more affordable for all to purchase copyrighted work / music / sound recording / other relevant content, it could also be detrimental to the commercial interest of the original copyright owners of such works.
While DIPP has stated that such amendments are the need of the hour to bring the Copyright Act on par with other relevant legislations (such as the Patent Act also for which amendments have been proposed), the government has to undertake a delicate balancing act in order to ensure the profitability of the original owners of creative works alongside the end user while ensuring increased transparent compliance.
CIRCULARS & NOTIFICATIONS
SEBI
- Permitting Foreign Portfolio Investors (FPI) to invest in Municipal Bonds [May 08, 2019]
- Temporary Surrender and Revival of Professional Membership of an Insolvency Professional.[May 02, 2019]
- Insolvency Professionals to act as Interim Resolution Professionals and Liquidators (Recommendation) Guidelines, 2019; [May 14, 2019]
Provisions in the Insolvency and Bankruptcy Code, 2016
THE VERDICT
Forwarding SOCIAL MEDIA POSTS EQUALS TO ENDORSING IT
CR No. 148 of 2018 CRL. OP No.12229 of 2018
S.Ve Sekhar vs. The Inspector of Police, Cybercrime cell, Central crime branch,
Chennai city Police
In April, 2018, the inspector of police, Cybercrime cell registered a case against a playwright, actor and member of a political party for commission of offence under section 4 of the Tamil Nadu Prohibition of Women harassment (prevention) Act read with sections 504, 505(1) (c) and 509 of the Indian Penal Code. Offences under these sections contain imprisonment and fine.
Legalese
Section 504 of IPC deals with intentional insult with intent to provoke breach of peace.
Section 505(1)(c) of IPC provides that whoever makes, publishes or circulates any statement, rumour or report with intent to incite a class or community of persons to commit offence against any other class / community of persons
Section 509 of IPC prohibits any word, gesture or act intended to insult modesty of a woman
Section 4 of TN Prohibition of Women harassment Act – Defines “harassment” to mean means (to delete) any indecent conduct or act by a man which causes or is likely to cause intimidation, fear, shame or embarrassment, including abusing or causing hurt or nuisance or assault or use of force.
Facts
During April, 2018 when the said actor/politician posted a statement on his Facebook page in social media, the post contained explicit content which stated that women (especially) in the field of journalism could rise up the professional ladder only by immoral conduct - trading sexual favours with their superiors. The post was allegedly removed / blocked by the said person after sometime as it created a furore amongst the general public especially women.
Hence a complaint was filed by the police inspector cybercrime cell with the Madras High Court under sections 509 (word, gesture or act intended to insult modesty of a woman) read with section 4 (commits, participates or abets harassment of women) of the T.N Prohibition of women harassment Act. If found guilty under these sections the accused would face imprisonment of 3 years and fine.
Submissions
While applying for anticipatory bail apprehending arrest from the cybercrime branch, the actor/ politician (accused) submitted that he was well educated, a famous stage actor, producer- director, entertainer and a respected politician. Besides he was service oriented and a philanthropist. Being outspoken, he was in the habit of sharing his views through various platforms of social media – Facebook, Whatsapp, Twitter. However, they were strictly constructive and disciplined and not derogatory or defamatory. The intention was to create public awareness irrespective of whether he agreed with its content or not. He further submitted that he received the said message from a friend and shared it on his social media account without actually reading the entire content, confident that the message will contain something useful. However, after posting the said message when he learnt from his friend about the content, he immediately removed / blocked the said message. Hence there was no malafide intention (mens rea) on his part to insult the modesty of women. It was more an act of over confidence. He further alleged that this was an act of personal vendetta by some miscreants and tendered an apology even if he were not the creator of the message. He submitted that the said case would not come under the purview of Section 505(1) (c) Section. Except for section 505(1) (c), offences under all other sections are bailable.
9 intervening petitions were filed by women journalists, editors, social activists and NGO’s. All intervening petitions were allowed by the Madras High Court.
The submissions in all intervening petitions were similar – the face book post / message was outright derogatory and defamatory against women of the society. It insulted and outraged the modesty of women and in this case women journalists. Women journalists and women as such were generalised as immoral persons. It was submitted that the accused wilfully committed the offence. The removal / blocking of the message rendered it difficult to trace the whereabouts of the original co- offender. The intervening parties further stated that the said co-offender could be a shadow account of the accused and a detailed cyber investigation was required to ascertain the same. They further submitted that the accused should have been responsible all the more as he is a public figure and influential person. Being well educated, he cannot simply share any message on social media platforms (where he has large following) without ascertaining the quality of the same. When women are struggling to abolish gender bias, fight for equal rights, prevent exploitation and rise in their respective professions, such messages are highly condemnable and need to be dealt with an iron hand. Hence all the intervening parties strongly objected to the accused being granted an anticipatory bail.
The Judgement
After hearing both parties, the Hon’ble Madras High Court was of the view that the offence committed by the accused was against the constitutional rights of women, for the Indian Constitution granted equal rights to both men and women in terms of freedom and opportunity. The Court further observed that it was only after the condemnation and wide spread protests, was a case registered against the accused. It was only after the case was registered was the message / post on Face Book came to be blocked / removed by the accused. The Hon’ble Court was of the objective view that words are more powerful than acts. People using words during an argument or quarrel may later regret it, but putting things in writing or typing means they know the consequences and do it. Forwarded message is amounts to accepting and endorsing the same. Not just what is said, but who says it is also important. Especially when a person in public life who enjoys celebrity status says something, the common man will tend to believe that it is true. This is all the more true if the language is not indirect but direct, abusive, obscene and foul. The accused should have been a role model but instead set a wrong precedent as there could not have been harsher which portray working women as trading their chastity in order to grow professionally. The Court also observed that he has only regretted for forwarding the message but not denied the content of the message. The message indicates that all women enjoying high posts in public life would have come up only immorally?! Women should be encouraged to come up in life because a woman means a family. The Court took a view that talking and typing are two different acts. A typed message can be deleted and not erased. The society should not get a feeling that anything can be said on public platforms and then merely regretted or apologized thereafter. When public including women protesting such messages and action were detained and arrested by the police, the Court took a view that the person who was the root cause of such message and outrage should also be dealt with similarly.
Stating that the words from people in public life should bring peace and harmony and not incite hatred, the Hon’ble Madras High Court did not grant anticipatory bail to the accused. Dismissing the petition, the Court directed the police to proceed with the case in the same way as they are investigating with any other common man.
GO FIGURE
LEGAL-EASE
Quanti minoris
The name of an action in the civil law ,brought by the purchaser on article,for a reduction of the agreed price on account of defects in the thing which diminish its value.
Racket
Engaging in an operation to make money illegitimately, implying continuity of behaviour.
Saisie-foraine
A permission given by the proper judicial officer to authorize a creditor to seize the property of his debtor in the district which the former inhabits.
Taint
A conviction of felony, or the person so convicted.
INFOGRAPHIC
Fueling Our Future
(P)REVIEW
Legally blonde (2001) (Book / Novel)
An American legal comedy based on Amanda Brown’s novel of the same name. The story is based on Amanda’s experience attending Stanford law school as a natural blonde. This movie was a successful attempt to break the blonde stereotype – especially of women being more desirable and less intelligent / intellectual. Reese Witherspoon played the titular role of a natural blonde Elle Woods – a tropical girl obsessed with beauty and fashion. All she aspired to become was the wife of a blue blooded boy Warner Huntington III (Mathew Davis). Unexpectedly, he dumps her for “not being smart enough” for his aspirations for being a politican and enrols in Harvard Law school. There he reunites with his ex-flame from high school. Elle uses all she has to get into law school. It is an uphill battle to “fit in”. Slowly yet surely she proves (to herself and then) the world that there is much than just looks. The movie received commercial and critical acclaim due to the breezy and humorous performance of Reese Witherspoon. Beyond all the light hearted humour, the movie sends out a subtle yet strong message to not judge people based on their looks or their ability to “fit in”. A must watch ….. as most of us have been in such situation.
The Associate by John Grisham (2009) (Book / Novel)
The 21st novel from the stable of John Grisham, The Associate is a legal thriller which is based on a true story in which an alcoholic writes a letter of apology (while in rehab) to a woman he raped at a party. Almost two decades later, that admission of guilt establishes his offence and lands him in jail.
In the novel, Kyle McAvoy is a small town child whose father runs a law firm in Pennyslvia. Growing up, Kyle dreams of being an idealistic lawyer who seeks to do community / public service before getting into full-fledged law practice. His dream lands him in Yale law school where he becomes the editor of the prestigious Yale law journal. On the verge of living his dream, Kyle suddenly finds himself in the middle of potential embarrassment and professional jeopardy when an old video of himself and his friends at a party surface in the hands of mysterious and powerful man named Bennie. The video seemingly has evidence of two of his friends raping a woman. Bennie threatens to make public the video unless Kyle joins the largest law firm in the world in New York. Now this Law firm is dealing with the case of defense contractors who bid for developing a missile for US army. Eventually they fall apart and are waging bitter legal battles against each other. Bennie expects Kyle to infiltrate the law firm and retrieve key information. How Kyle manages to get into the law firm while tackling constant surveillance from Bennie and how he gets out of the rut forms the rest of the story. Like his other novels, this one also has strong and mysterious characters with all the twists and turns that make a Grisham novel best sellers.
Ally McBeal (1997-2002) (TV Series)
One of the most popular American legal dramedy (drama cum comedy), the TV series had a 5 year run from 1997 – 2002. The show is named after the central character Allison Marie “Ally” McBeal. She works in a fictional Boston law firm alongside her law school classmate Richard Fish. The series traces the professional and personal lives of Ally and other lawyers - eccentric, humorous, and dramatic to sya the least. There were many firsts to this series – often legal proceedings were used as backdrop to dwell into the personal lives of the main characters. Legal arguments was not one sided and delved into all sides of the case. Fantasy sequences were liberally used to establish a character’s inner thoughts, like for Ally’s tendency to fall down every time she met someone attractive. Her wishful thinking was portrayed by a dancing baby – one of internets’ earliest sensation! On the whole light watching with profound legal implications! Gen X can definitely identify and relate to!
Justice cannot be for one side alone, but must be for both.
– Eleanor Roosevelt
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