In 2021, when General Atlantic and Kotak invested in KFin Technologies, the shareholders' agreement carried a full clause on bribery and money laundering. In 2022, when a UK fund bought shares in Kaynes Technology, the agreement defined who counts as a "government official" under Indian, American, and British law. This is now standard. Money entering India arrives with rules about how the company may deal with the government, enforced through the deal itself. Why do investors write these rules into the agreement, and what do they change about how government work is done in India?
Institutional capital entering India now carries a condition that has nothing to do with price. The shareholders' agreement that General Atlantic and Kotak Mahindra Bank signed with KFin Technologies in 2021 has an entire clause on bribery and money laundering. The agreement through which a London-listed fund, Ashoka India Equity Investment Trust, bought shares from the promoter of Kaynes Technology in 2022 defines "government official" so widely that it covers employees of state-owned companies, political parties, and candidates for office, and it names three laws at once: India's Prevention of Corruption Act, America's Foreign Corrupt Practices Act, and the UK Bribery Act. Clauses like these are now standard in Indian deal documents. The money does not arrive alone. It arrives with a rulebook about how the company may deal with the state.
The first question is why three countries' laws apply to one meeting with one Indian official.
The Indian law is the Prevention of Corruption Act. Since it was amended in 2018, giving a bribe is a crime, not just taking one. And the company itself is liable if anyone acting on its behalf pays one to win business. A company that maintains genuine internal controls has a defence; a company that looks away does not.
The American law is the Foreign Corrupt Practices Act. It can reach an Indian company through an American connection: an American owner, an American listing, or money moving through the United States. It has a second edge that surprises people: it requires honest accounts. A payment recorded as "consulting fees" that was really something else is an offence by itself, even if the bribe is never proven.
The British law is the UK Bribery Act, and it is the widest of the three. A company doing business in the UK is guilty if it fails to prevent bribery by anyone working on its behalf, anywhere in the world. It does not matter that the company never approved the payment. Failing to stop it is the offence.
When the three laws operate together, the strictest rule wins. One example shows how: the small "speed money" payment to move a file along. American law narrowly tolerates it. British law and Indian law do not. So for any company under these clauses, it is simply forbidden.
The width of this net matters more in India than in most countries. The clauses count employees of state-owned enterprises as government officials. In a country where the state owns banks, insurers, power utilities, railways, refineries, and the largest procurement marketplace, "government official" describes a large share of everyday commerce. The purchase officer of a public sector company evaluating a bid is an official. So is the branch manager of a state-owned bank, and the engineer of a state electricity board certifying a connection. A company that thinks "government relations" means its dealings with a ministry in Delhi has drawn the circle far too small. The clause draws it around every counter where the state, in any form, sits on the other side.
Inside the deal, the clause does three things. At signing, the company and the seller promise that no bribes have been paid; if that promise turns out to be false, the investor can claim its money back through an indemnity. During the years the investor holds the shares, the company promises to keep complying; a breach gives the investor remedies, sometimes including the right to exit. And before signing, the investor's due diligence examines the company's dealings with the government: who its agents are, how its tenders were won, how its approvals were obtained. The reason investors insist is not virtue alone. The fund answers to its own investors, pension funds and sovereign funds, and to regulators at home. A corruption scandal in a portfolio company travels all the way up that chain. The clause does not ask whether the company won the matter; it asks how.
This is the point where a legal subject becomes a government affairs subject, because the clause decides how government work can actually be done.
What it forbids is the oldest model in the market: the fixer. The consultant with "connections" paid a success fee. The unexplained retainer. Gifts circling a pending file. Cash that moves when a tender is close. And the biggest danger is not the company's own employee, who can be trained and watched. It is the outside agent. Under both the British and the Indian law, what the agent does is treated as what the company did. A middleman whose methods the company never examines is not a shortcut. Under the deal papers, he is the largest single liability the company carries.
What the clause permits, and in practice requires, is work that can survive being read. Written representations that argue the company's case on its merits. Meetings that are scheduled, recorded, and attended by people in known roles. Positions taken openly through industry associations. Advisers hired for a defined job at a fee that bears explanation. A register for gifts and hospitality. Accounts in which every payment is what it says it is. There is a practical reward hidden in this discipline, which companies usually discover late: documented, merits-based engagement is also what actually moves matters inside the Indian system. An official acting on a written record is protected by it. An official acting on a whisper is exposed by it.
Behind all of this sits a larger fact. India has no lobbying law; the discipline arrived through contract, carried in by capital. No Indian statute says who may represent a company before the government, or how. The standards that now govern how a serious Indian company deals with its own state were written largely in Washington and London, and they entered India clause by clause, through investment agreements, enforced not by any regulator but by warranties, indemnities, and the price of the next funding round.
The practical reading runs both ways. A company should build its government interface before the due diligence arrives: vetted advisers, a written record for every important matter, a gifts policy that is actually followed, training for everyone who meets the state in any of its forms. A fund should examine the target's government dealings as carefully as its revenue: its agents, its tender history, the path of its approvals. A clean government interface is now an asset that is priced when the investor enters and tested when the investor leaves, and a company that cannot show how it deals with the state will eventually have to answer that question at the worst possible moment, in someone else's data room.