The Enforcement Directorate (ED) is investigating e-commerce giant Amazon for alleged violation the Foreign Exchange Management Act, 1999, (FEMA) in its deal with Future Retail Ltd.
This came at a time when Delhi High Court last month made observations about the deal while hearing Amazon’s challenge to acquisition of Future Retail by the Reliance Group.
All about Case
The US-based firm had objected to Future Group selling its wholesale, retail, warehouse and logistics units to Mukesh Ambani’s Reliance Retail.
The Delhi High Court had ruled Amazon’s attempt to control Future Retail through a conflation of agreements it has with an unlisted unit of the Indian company appeared to be violative of the FEMA’s FDI rules
Last Month, The Delhi High Court had observed that Amazon appeared to have indirectly obtained control over the Big Bazaar owner without the approval of the government.
It was done with the help of three agreements by Amazon-
Future Retail’s shareholder’s agreement with FCPL (FRL SHA), FCPL’s shareholder’s agreement with Amazon (FCPL SHA) and FCPL’s share subscription agreement with Amazon (FCPL SSA).
Why Amazon opposing the deal?
Amazon had bought 49 per cent stake in Future Coupon, an unlisted firm of Future Group, with the right to buy a stake in the group’s listed entity, Future Retail Ltd.
Amazon, in its shareholders’ agreement, had barred Future Coupon from selling its assets to 15 firms, including Reliance Industries.
However, in August last year, Reliance Retail acquired a 30 per cent stake in Future Group businesses for Rs 24,000 crore, which started the row with Amazon.
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