Call & Put Options: Dead or Alive?

Long live call & put options because now, thanks to Section 111a of the Companies Act, 18 A of the SCRA and the consolidated FDI policy, October 2011, call & put options are well & truly dead.

In this special mid-week edition of The Firm, we mourn the untimely demise of call & put options. Last Friday, the Department of Industrial Policy & Promotion dropped a bombshell on foreign investors such as private equity and corporate India hungry for investments.
In a seemingly innocuous and unflagged change, DIPP in its consolidated FDI policy, said only 'equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares, with no in-built options of any type, would qualify as eligible instruments for FDI.
Equity instruments issued/transferred to non-residents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant ECB guidelines.