# 'Amazon seeking to exercise control over Future Retail without owning a stake' | Tech News (HT Tech) > Amazon had in August last year bought 49% in one of Kishore Biyani-led Future Group's unlisted firms, with the right to buy into the listed flagship Future Retail Ltd (FRL) after a few years and if the government were to undo its bar on foreign ownership of multibrand retailers. # 'Amazon seeking to exercise control over Future Retail without owning a stake' ## Amazon had in August last year bought 49% in one of Kishore Biyani-led Future Group's unlisted firms, with the right to buy into the listed flagship Future Retail Ltd (FRL) after a few years and if the government were to undo its bar on foreign ownership of multibrand retailers. Aug 20 2022, 23:59 IST ![Follow on Facebook](https://images.hindustantimes.com/tech/static/revamp/images/png/follow-us-facebook.png) ![Follow on Facebook](https://images.hindustantimes.com/tech/static/revamp/images/png/follow-us-facebook-hover.png) ![Share](https://images.hindustantimes.com/tech/static/revamp/images/png/Share.png) ![Share](https://images.hindustantimes.com/tech/static/revamp/images/png/Shareclicked.png) ![Share on WhatsApp](https://images.hindustantimes.com/tech/static/revamp/images/png/whatsapp.png) ![Share on WhatsApp](https://images.hindustantimes.com/tech/static/revamp/images/png/whatsapp-hover.png) ![Share on Twitter](https://images.hindustantimes.com/tech/static/revamp/images/png/twitter.png) ![Share on Twitter](https://images.hindustantimes.com/tech/static/revamp/images/png/twitter-hover.png) ![Share on Facebook](https://images.hindustantimes.com/tech/static/revamp/images/png/facebook.png) ![Share on Facebook](https://images.hindustantimes.com/tech/static/revamp/images/png/facebook-hover.png) ![Bookmark](https://images.hindustantimes.com/tech/static/revamp/images/png/Bookmark.png) ![Bookmarked](https://images.hindustantimes.com/tech/static/revamp/images/png/Bookmarked.png) ![Amazon on the other hand feels it didn't have any operational control over FRL and the agreement only tries to protect its investments.](https://images.hindustantimes.com/tech/img/2020/11/18/1600x900/2020-11-17T114222Z_1_LYNXMPEGAG0QV_RTROPTP_3_AMAZON-COM-NVIDIA_1605706668713_1605706690761.JPG) Amazon on the other hand feels it didn't have any operational control over FRL and the agreement only tries to protect its investments. (REUTERS) ![Author Photo](https://images.hindustantimes.com/tech/static/revamp/images/png/HTTech-new-circle-logo.png) ### By PTI World's largest e-commerce company Amazon is seeking to derail India's biggest retail acquisition using an agreement that gave it an indirect foothold in the owner of retail chain Big Bazaar, lawyers and analysts said. Amazon had in August last year bought 49 per cent in one of Kishore Biyani-led Future Group's unlisted firms, with the right to buy into the listed flagship Future Retail Ltd (FRL) after a few years and if the government were to undo its bar on foreign ownership of multibrand retailers. But FRL ran into a severe cash crunch soon after the nationwide lockdown imposed to curb the coronavirus outbreak. It cut a deal with Reliance Industries to sell assets for ₹24,713 crore, infuriating Amazon. Also read click here. The US firm claims that its contract with the unlisted Future Copouns Ltd (FCL) barred a transaction with a number of persons and companies, including Ambani and Reliance. The lawyers and analysts said Amazon invested not in FRL but in a company owned and controlled by Kishore Biyani namely Future Coupons Ltd (FCL), which was carrying on the business of wholesale trading of goods and merchandise and marketing and distribution of corporate gifts cards, loyalty cards, and reward cards to corporate customers. But that the August 22, 2019 shareholders' agreement gives FCL critical control rights over the management and affairs of FRL, including a bar on selling any retail asset without its approval and a bar on selling assets to any restricted persons. This, they said, tantamounts to Amazon getting 'control rights' in FRL even though the law does not provide for that. Amazon on the other hand feels it didn't have any operational control over FRL and the agreement only tries to protect its investments. The agreement was disclosed to Sebi as well as the Competition Commission of India (CCI). Sources, however, said the 'control' was in violation of the law as FDI is permitted in multi-brand retail with government approval and with a lot of restrictions such as 50 per cent of the funds being invested in backend infrastructure, mandatory local sourcing of goods and services, a bar on retail trading by means of e-commerce and multi-brand retail being allowed only in certain states. Amazon did not reply to a detailed email sent seeking comments. The charge of foreign control over the multi-brand retailer is being sought to be dismissed by pointing to 12.3 per cent foreign portfolio ownership in FRL. Amazon invested ₹1,430 crore to acquire 49 per cent equity in FCL. 51 per cent is held by Biyani. FCL, in turn, holds 9.82 per cent voting in FRL. FDI is permitted under automatic route in FCL. The FDI laws allow FCL to hold the shares of FRL only as long as FCL is owned and controlled by Indian residents namely Biyani, the sources said. They said Amazon chose to invest in FCL - a non-multibrand retail business venture, where FDI is allowed under the automatic route. If 'control' is read, as is sought by Amazon now, Amazon's investment would be treated as a violation of FDI policy, they added. Besides, it would have also triggered an obligation on both Amazon and promoters of FRL to make an open offer to all of the FRL public shareholders, they said, adding the approval of 3,00,000 plus FRL public shareholders was not sought for the Amazon deal. Amazon contends that it could have invested up to 9.9 per cent in FRL under the Foreign Portfolio Investment Route and that under the current transaction if conflated, Amazon merely held 4.81 per cent in FRL through FCL (49 per cent of FCL's shareholding in FRL i.e. 9.82 per cent). Amazon further contends that along with the 4.81 per cent it only held 'protective rights' / 'passive rights' in FRL, which do not amount to 'control'. The sources said this is contrary to submissions before the Emergency Arbitrator where Amazon contended that it has "protective, special and material rights" with respect to FRL's retail assets through FCL. Amazon says Future violated a contract with the sale to Reliance, while the indebted Mumbai-based firm says it would collapse if the transaction were to fail. Catch all the Latest Tech News, Mobile News, Laptop News, Gaming news, Wearables News , How To News, also keep up with us on Whatsapp channel,Twitter, Facebook, Google News, and Instagram. 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