ArchiveFebruary 2009

Is it time to sentence Share Warrants to Dishonorable Discharge?

(SEBI DIP Guidelines amendments – Part 2) Several amendments have been made to the SEBI DIP Guidelines as briefly highlighted here. I am sharing a few more thoughts on two areas, but in separate posts. This post focuses on the increase of minimum deposit on Share Warrants from 10% to 25% of issue price. This amendment was the least unexpected, even too late. Too late because it has already...

Precision Remains Elusive with Investment Law

I wrote the following column in the Business Standard on February 23, 2009:In a bold move, the government has opened up foreign investment in an unprecedented manner. The move legitimizes many a structure that would have hitherto been keeping even their authors shy.The Cabinet Committee on Economic Affairs has taken a policy decision that any Indian company in which foreign ownership is not more...

A Resurgence of Bank Nationalisations

An offshoot of the global financial crisis has been the significant changes in economic policies in the developed world. The recent phenomenon relates to increasing calls from leading economists to nationalise troubled banks, particularly in the U.S. The concept of nationalisation was previously associated with the so-called ‘socialist’ economies, but is now becoming closer to reality even with...

Indirect FDI: More Changes on the Anvil

In order to address the concern that Press Notes 2 and 3 of 2005 (discussed here) will allow foreign investors to take indirect stakes in sectors where foreign investment is otherwise prohibited (e.g. multi-brand retail trading), it is reported in the Economic Times that the Government is proposing to issue another Press Note that clarifies this issue. The concern arises because, under these...

The Policy Over ECBs

Satyajit Gupta has an interesting column in The Mint that reviews the changes in the external commercial borrowings (ECBs) policy over the last few years in the context of changing economic conditions both within India and around the world. As for recent efforts by the Reserve Bank of India (RBI), Satyajit notes:“ECBs have suffered in view of the adverse economic conditions coupled with the...

SEBI amends DIP Guidelines – quick highlights

SEBI has amended the DIP guidelines vide circular dated 24th February 2009. Several amendments have been made and while some are minor or consequential to other amendments made recently, some are far reaching. While I will post more detailed comments later, let me quickly highlight a few important changes. 1)      Listing of equity shares with differential...

Interim Budget: A Brief Overview

A few days ago, the Union Government announced the Interim Budget 2009-2010. This post seeks to briefly highlight some of the important issues it raises.The long title of what is usually the year’s-most-awaited legislation – the Finance Bill – set the tone of the budget. The Finance Bill, 2009, is stated to be a bill “to continue the existing rates of income-tax.” That may well sum up the interim...

Securitization: ‘True Sale’ of Receivables

In order to make a securitization transaction bankruptcy-proof with respect to the originator (seller) of receivables, it is necessary that there is a ‘true sale’ of the receivables to the assignee (purchaser). Failing this, the transaction could be recharacterized as a secured loan, thereby altering the rights and obligations of the parties under law (sometimes contrary to their original...

Have liaison offices escaped the tax net?

After the Department’s partial victory of sorts in the Vodafone tax battle, recent decisions of various Tribunals holding that liaison offices are generally not subject to taxation come as much needed relief for MNCs. This, however, is subject to a few qualifications. As the decision of the AAR in Ikea Trading v. Director of Income Tax, [2009] 308 ITR 422 illustrates, an MNC can avail of this...

Amendments to Takeover Regulations differently wide and narrow

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Regulations”) were amended last week to empower SEBI to grant exemptions from the strict operation of various operative provisions of the Takeover Regulations – initial comments on this blog were posted here.I wrote the following comment in the Economic Times, edition dated February 16, 2009:-The Securities...

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