The Bombay High Court has delivered a significant ruling in favor of WeWork India Management Limited , dismissing two writ petitions that challenged the company's Initial Public Offering (IPO) approval. This decision marks a crucial development for the company's public listing plans.

Key Highlights of the Court's Decision

• Petitions Dismissed: The court rejected writ petitions filed by Vinay Bansal and Hemant Kulshrestha.
• Allegations Refuted: Claims of inadequate disclosures in WeWork India's offer documents were found to be unsubstantiated.
• SEBI Approval Upheld: The court affirmed the Securities and Exchange Board of India's (SEBI) approval of the IPO.

Court's Findings

The Bombay High Court made several important determinations:

1. Disclosure Adequacy: The court ruled that WeWork India's disclosures in its offer documents were true, fair, and adequate.
2. Regulatory Compliance: The IPO was found to be in compliance with Regulation 6(2) and other applicable provisions of SEBI's Issue of Capital and Disclosure Requirements Regulations, 2018.
3. Fit and Proper Person Requirement: The court clarified that this requirement was not applicable to the IPO.

Implications for Petitioners

The court's decision came with consequences for one of the petitioners:

• Costs Imposed: Vinay Bansal was ordered to pay costs of Rs 21.00 lakh to the Maharashtra State Legal Services Authority.
• Credibility Questioned: The court raised doubts about the bona fides of both petitioners.

Significance for WeWork India

This ruling represents a significant victory for WeWork India Management Limited, clearing a major legal hurdle in its path to going public. The court's decision validates the company's disclosure practices and reinforces the regulatory approval process.

The dismissal of these petitions may pave the way for WeWork India to proceed with its IPO plans, subject to market conditions and other regulatory requirements.

Conclusion

The Bombay High Court's ruling underscores the importance of regulatory compliance and transparent disclosures in the IPO process. It also highlights the judiciary's role in maintaining the integrity of the capital markets by scrutinizing challenges to regulatory decisions.

As WeWork India moves forward, this decision provides a solid legal foundation for its public offering, potentially boosting investor confidence in the company's governance and disclosure practices.

WeWork India Management has responded to governance concerns raised by proxy advisory firm InGovern regarding its Initial Public Offering (IPO). The company has provided clarifications on various aspects of its business structure, financial performance, and regulatory compliance.

IPO Structure and Financial Position

WeWork India defended its 100% Offer for Sale IPO structure, citing:

• Sufficient free cash flow and EBITDA generation
• Promoter investment of Rs 5,012.81 million made at a higher valuation than the IPO upper price band

The company filed its IPO under SEBI Regulation 6(2), which applies to companies not meeting profitability requirements.

Financial Performance

WeWork India addressed concerns about its financial position:

The company attributed the negative net worth to lease accounting norms and highlighted positive operating cash flows since FY2023.

Governance and Legal Matters

WeWork India disclosed:

• Criminal proceedings involving promoters Jitendra and Karan Virwani in offer documents
• Confirmation of a valid 99-year WeWork brand license under promoter control
• Resolution of material weaknesses in internal financial controls by March 2025

Use of IPO Proceeds

The company reported that IPO proceeds of approximately Rs 1,748 crore were used to retire debt, resulting in a reduction of pledged shares to 15%.

WeWork India's response aims to address the concerns raised by InGovern and provide transparency to potential investors. As the IPO process continues, market participants will closely monitor these clarifications and their impact on investor sentiment.