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Does Virat Kohli’s Investment In MPL Breach Conflict Of Interest Rules?

Does Virat Kohli’s Investment In MPL Breach Conflict Of Interest Rules?

Questions have been raised about BCCI president Sourav Ganguly endorsing edtech platform Classplus and fantasy sports platform My11Circle

Indian cricket captain Virat Kohli’s potential conflict of interest has come to light, since a company he had invested in (MPL), went on to become the official kit sponsor and merchandise partner for the Indian cricket team last year

Legal experts feel that while the small size of Kohli’s investment could work in his favour, the fact that a company with an investment from the team captain was considered for sponsorship, deserves scrutiny

The conflict of interest noose seems to have tightened around the top echelons of Indian cricket over the last month or so. In December, questions were raised about BCCI president and former India captain Sourav Ganguly endorsing edtech platform Classplus and fantasy sports platform My11Circle, both direct competitors of the Indian cricket board BCCI’s sponsors BYJU’S and Dream11 respectively. 

Now, Indian cricket captain Virat Kohli’s potential conflict of interest has come to light, after his portfolio company fantasy sports platform Mobile Premier League became the official kit sponsor and merchandise partner for the Indian cricket team in November 2020. 

Kohli invested in the company in February 2019 and has also been MPL’s brand ambassador since January 2020. 

Conflict of interest usually occurs when an entity or individual becomes unreliable because of a clash between personal (or self-serving) interests and professional duties or responsibilities.

In BCCI’s constitution, commercial conflict is defined as, “When an individual enters into endorsement contracts or other professional engagements with third parties, the discharge of which would compromise the individual’s primacy obligation to the game or allow for the perception that the purity of the game stands compromised.”

It is worth noting that BCCI has significantly revamped its constitution over the years to provide detailed guidance on conflict detection and resolution. Therefore factors like whether Kohli reported the transaction to the Ethics Officer, the stake involved in the transaction, and his decision-making powers (or lack thereof) about a vendor or sponsor are critical.

According to an Indian Express report, as per the terms of the agreement between Kohli and Galactus Funware Technology Private Limited, the Bengaluru-headquartered company which owns MPL, the Indian cricketer was allotted Compulsory Convertible Debentures (CCDs) for INR 33.32 lakhs in Galactus. After 10 years from the deal being signed, these CCDs would be converted into equity shares with a conversion ratio of 1:1. So Kohli would have a 0.051% stake in MPL’s parent company. 

A legal expert who did not wish to be named told Inc42 that the small size of the investment might work in Kohli’s favour. Plus, his inability to influence either the company or BCCI in contract negotiations, since he is the team captain and not in charge of commercial decisions at BCCI, could also be factored in his favour. 

The Lodha Committee, which was constituted by the Supreme Court in 2015 to suggest measures for improving the functioning of BCCI, recommended that players who are either in India’s playing 11 or among the regulars in the squad should not be allowed to own or have an interest or any stake in player agencies or companies involved with the game unless such interests are in the nature of sponsorship.”

“A minute stake may not have an influence on the overall company but it would be prudent to examine how a company which already had the investment from an existing player was considered for BCCI sponsorship,” said Neeraj Dubey, partner for Corporate Law at Singh & Associates. 

As part of the three-year agreement between BCCI and MPL, senior Indian men, women and under-19 teams will sport MPL jerseys. The Indian team has been sporting the MPL Sports — the sporting accessories and cricketing gear arm of MPL — logo during the ongoing tour of Australia. MPL Sports also has the rights to sell licensed jerseys and other official Indian cricket merchandise.

Last year, Kohli’s association with MPL also fetched him a notice from the Madras High Court, which was hearing a public interest litigation (PIL) filed against fantasy sports apps for promoting gambling among youth, which apparently drove many people to suicide.