ArchiveMarch 2010

The Supreme Court on Penalty

Earlier posts had discussed the decision of the Supreme Court in Dharmendra Textiles, and its subsequent interpretation by the High Courts and Tax Tribunals. One of the most important reading downs was seen in the decision of Mumbai Bench of the ITAT, in ACIT v. VIP Industries. The Tribunal there considered a case where penalty was levied because of an increase in taxable income resulting from a...

IDR Offering Document

Here is the draft red herring prospectus for the first ever offering of Indian depository receipts (IDRs) proposed by Standard Chartered Bank. Particularly interesting is the section titled “Frequently Asked Questions on the IDR Facility” on pages 42-51 that provides details of operation of the IDR mechanism.

Governance Norms for Central PSUs

In 2007, the Central Government issued the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs). This was a measure introduced to bring corporate governance norms in CPSEs on par with the private sector. However, it was only a voluntary measure. On March 25, 2010, the Government announced that the Guidelines would now be continued on a mandatory basis. Hence, all CPSEs...

E*Trade Mauritius: Reaffirming legal form over economic substance

The Authority of Advance Rulings has issued its ruling in the matter of E*Trade Mauritius; and the Ruling essentially follows the decision of the Supreme Court in Azadi Bachao Andolan. The facts before the Authority were that the Applicant was a company incorporated in the Mauritius, and had been issued a Tax Residency Certificate by the Mauritius income tax authorities...

The Delhi High Court Departs from Samsung Electronics

One of the most pressing issues pending consideration of the Supreme Court is the appeal from the decision of the Karnataka High Court in Samsung Electronics. Earlier posts have considered whether the interpretation of section 195 proposed by the High Court is appropriate, and also the admission of the appeal by the Supreme Court. However, while the hearing before the Apex Court is due only in...

Air Travel, International Airlines and Liabilities

(The following post comes to us from Sumit Agrawal, who is an alumnus of the National Law University, Jodhpur and associated with the Securities and Exchange Board of India (SEBI) as Legal Officer in its Integrated Surveillance Department. Views expressed herein are his own. Email:

Mutual Funds as Activist Investors

On several occasions, discussions on this Blog have pointed to the inadequacy of shareholder activism (spearheaded by institutional investors) in India, and have therefore called for greater participation of institutional investors in governance processes. A circular issued by SEBI on March 15, 2010 addressed to mutual funds and asset management companies represents an important step towards...

Stamp Duty on Amalgamations

The Mint has a column by Heena Singhvi that discusses the often contentious issue of whether stamp duty is payable on an order the High Court sanctioning a scheme of amalgamation between two or more companies. Of greater relevance is the discussion of the Delhi High Court decision in Delhi Towers Ltd. v. G.N.C.T. of Delhi (MANU/DE/3152/2009), delivered on 4 December 2009, where the court held...

Lehman Bankruptcy Examiner’s Report

The Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings Inc. provides details about certain transactions that were carried out in the company and the manner in which they were accounted for in its books. The key transaction is question is referred to as “Repo 105”, and the New York Times Dealbook’s White Collar Watch has a nice summary: The examiner’s report gives us...

Regulating Credit Rating Agencies

The RBI recently put out two documents, (i) the Report of the Committee on Comprehensive Regulation of Credit Rating Agencies prepared “in response to the direction given by the High Level Coordination Committee on Financial Markets to reflect on the inter regulatory issues emanating from the activities of Credit Rating Agencies”, and (ii) the Assessment of Long Term Performance of Credit Rating...

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