Recently, there has been a significant spurt in the number of Initial Public Offerings (IPOs) in India. Not only the investors, but the Central Government of India is also preparing for the big launch of the LIC’s IPO. Bearing in mind, the current situation of the India economy, the LIC IPO can ensure a rampant growth in coming years. The IPO not only benefits the company, but all its associations. It is a sentimental move that runs similar sectors. Overall, India being a developing nation has a lot of scope for improvement and privatisation opens up a new space for rampant growth.
“Legal counsel plays a fundamental role in initial public offerings ” informs the head of the Corporate Division at OP Khaitan& Co. law firm, Gautam Khaitan.” He adds that IPO investment documents, due diligence, structuring securities, dealing with multiple intermediaries, massive list of compliances involved, corporate governance issues ,necessary regulatory approvals and managing everything within a limited window of time are all taken care of by the counsel.
However, to manage such a wide array of tasks, legal advisers are needed in the business sector. Gautam Khaitan says that if you don’t have a legal advisor or decision-maker for your business/company, you are putting yourself at a high risk. There’s a lot that business lawyers do in order to safeguard everyone’s interests.
A legal counsellor is a general practitioner. This person handles 80 per cent of the needs of a business. From advising on legal and regulatory matters, drafting documents, negotiating contracts, strategising deal structures, listing and rating agencies, a legal advisor handles all of the intensive and demanding work. The Company needs to take care of an extensive list of regulatory formalities and legal advisors assist in maneuvering all the required actions.
There are several examples of renowned companies IPOs going under a massive flameout. Any company can make mistakes and suffer. A legal counsellor/ advisor can prevent such mistakes. Gautam Khaitan says, “While not many IPOs fail, the ones that do, happen in the shadow of high-level risk some companies take. All the companies have a dream of achieving an evaluation that multiplies their initial investment. Legal counsel takes charge of the legalities and helps achieve this goal.” He adds that legal advisers often spend a lot of time on drafting documents that need careful assessment. This is done to avoid unexpected problems of capital market regulations.
The legal framework is indispensable for the proper and sustained growth of any company. Since the global and national business environment is changing rapidly, the regulation of corporate entities must be in tune with the emerging economic trends. In a nutshell, legal counsel is the backbone of the capital market, which will continue to assist India in the coming years.