A recent post on this blog examined changes to the SEBI DIP Guidelines made with a view to promoting qualified institutional placements [“QIPs”], as a measure to address domestic economic concerns, by enabling greater access to funds. While this shortage continues to be a cause for concern for domestic companies, given the interest rate hikes and the global financial crisis; the Finance Ministry...
DTAA income now included in total income
The CBDT has notified that if a DTAA provides that the income of a resident “may be taxed” in the other country, such income will be considered to be part of the total income of the assessee (CBDT Notification No. 91/2008). The notification is available here. The implication is that such income will be part of total income, although relief can be claimed under the applicable...
SEBI Board meeting of 6th October: Important Decisions
In a meeting earlier today, the SEBI Board took several decisions which may have an important impact. 1. The Board decided to encourage promotion of dedicated exchanges/platforms for trading of securities for small and medium enterprises. Enterprises with a post issue paid up capital of less that Rs. 25 crore would be listed on such exchanges/platforms. 2. In a move which may have important...
Legalizing Insider Trading – recent arguments
An earlier post on this blog had looked at some theoretical arguments about whether insider trading should be banned at all. Generally, as the post noted, allowing insider trading does seem “outlandish”. Nonetheless, newer arguments against the prohibition on insider trading do continue to appear in academic works. Of course, these works are not specific to the Indian context, but are rather...
The Effectiveness of IPO Grading
On April 30, 2007, the SEBI (Disclosure and Investor Protection) Guidelines were amended to introduce the novel concept of IPO grading. Following the insertion of clause 2.5A, companies going in for an IPO are required to obtain grading from at least one credit rating agency. Further, all grades obtained are required to be disclosed in the prospectus or red herring prospectus along with the...
Motive to Avoid and Transfer Pricing
Transfer pricing and arm’s length pricing have become increasingly important subjects over the past few years, with the growing importance of cross-border transactions between companies under the same umbrella organisation, or connected in other ways. Several questions have arisen – the definition of ‘associated enterprises’, the appropriate method of computing transfer pricing etc. One of these...
SEBI informal guidance – ESOP, Insider Trading and independent directors
The SEBI recently issued an informal guidance note on matters relevant to companies which are in the process of devising employee share option plans (ESOPs). A company contemplating an ESOP in accordance with the SEBI (ESOP and ESPS) Guidelines, 1999 wished to form an employee welfare trust to grant options to eligible employees and desired to appoint its Independent Directors as trustees of the...
Forced buybacks are back?!
Can a company buyback the shares of its public shareholders without their express consent? At a price fixed by the company? At a price that is far below the market price at the time of buyback? When the buyback is selective and applicable only to the public shareholders, mainly the small shareholders? Yes, Yes, Yes and Yes!!!! This is as also seen as a recent case (Elpro International Ltd., In re...
A Recent, Welcome Decision on Arbitration Agreements
(The following post is contributed by Venugopal Mahapatra and Gautam Bhatia) The case of Great Offshore Ltd. v. Iranian Offshore Engineering and Construction Company, decided by a single judge bench of the Supreme Court as recently as August 2008, is a very important shot in the arm for arbitration in India. The case involved a dispute between the two parties over the existence of an arbitration...
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