Details are emerging of Amazon holding controlling rights in Future Retail Limited (FRL) as the two parties slug it out in the Delhi high court over the acquisition of the Kishore Biyani-company by Reliance Retail.

In the Delhi court, Future Retail is seeking to restrain Amazon which armed with the order of a Singapore arbitrator wants to stop the Reliance-Future deal.

Amazon holding controlling rights in Future Retail has led to questions on whether the US online giant is running foul of investment rules in multi-brand retail. Amazon on the other hand says it does not have any operational control over Future Retail and the agreement only tries to protect its investments.

On August 22, 2019, Future Retail had informed the stock exchanges that existing shareholders forming part of the promoter group and Future Coupons Limited (FCL) entered into a share subscription agreement and a shareholders’ agreement with Amazon.

Amazon has agreed to make an equity investment in Future Coupons for acquiring a 49 per cent stake comprising both voting and non-voting shares. A call option allowed Amazon to acquire all or part of the promoters’ shareholding in Future Retail and is exercisable between the third to tenth years, in certain circumstances.

However, 10 days ahead of this announcement, FRL had entered into a shareholders agreement with Future Coupons and other promoters to record certain rights and obligations of Future Coupons and the latter. Due to such an agreement, the interpretation is that Amazon has control rights in FRL, though the law does not provide that.

Amazon had reportedly contended that it could have invested up to 9.9 per cent in Future Retail under the FPI route and that under the current transaction if conflated, it merely held 4.81 per cent in FRL through FCL and that it along with the 4.81 per cent only held “protective rights”/“passive rights” in FRL, which do not amount to ''control''.