(The ULIP controversy has stirred an intense debate on the nature of instrument that it represents and consequently as to which regulator has purview over it. Jayant Thakur has previously analyzed the outcome of SEBI’s order in detail (here and here). Going by the developments following SEBI’s order, the legal issues surrounding ULIPs appear to constitute a classic case where reasonable minds may...
FDI Policy – Static or Dynamic?
Earlier this month, we had briefly discussed the Consolidated FDI Policy issued by the Government. The policy, which is meant to be exhaustive, would be subject to review every six months, with the first review due on September 30, 2010. The Business Standard has an incisive editorial about certain intervening events that already signal policy changes within the first month of its introduction:...
SEBI suspends its ULIPs order – BUT ONLY PARTLY!
See my immediately preceding post on SEBI’s order prohibiting specified insurance companies essentially from (i) starting new ULIP schemes and raising monies thereon and (ii) accepting further monies from existing ULIP schemes (and of course from doing incidental acts like issuing offer documents, etc.). Readers, I am sure, are too well aware of the heated debate thereafter. It was reported...
SEC’s Restrictions on Short Selling in Melting Scrip
(The following post has been contributed by Ravichandra S. Hegde of J. Sagar Associates) The Securities and Exchange Commission (“SEC”) in February 2010 has amended Rule 201 of the SHO Regulations[1] framed under the Securities Exchange Act of 1934 (“Act”) restricting abusive short sale in the falling scrip thereby retaining investor confidence. The amendment effected to Rule 201 is primarily...
SEBI bans ULIPs – but what about other similar “insurance” products?
SEBI has rightly banned ULIPs by its recent Order. It was also the next logical and even bold step to deal with this product that is aggressively and misleadingly sold by several unscrupulous agents under the head-buried-firmly-in-sand attitude of several insurance companies. But what about other products including endowment policies which share the traits of ULIPs? They are less worse only to a...
End to Accounting Jugglery in Mergers?! – SEBI amends listing agreement to end deviation through disclosure
SEBI has directed, vide circular dated 5th April 2010, the modification of the listing agreement focusing on certain deviations from Accounting Standards commonly carried out as part of Schemes of mergers, demergers, etc. SEBI has done this cleverly and indirectly but with apparently with more effect than it would have done it directly. It has also attempted to kill several birds with one stone...
NLSIR Corporate Law and Corporate Governance Symposium: April 10 and 11, 2010
The NLSIR Symposium, scheduled for 10 and 11 April at the NLS campus in Bangalore, will feature several important topics that we have discussed on the blog, including corporate governance, independent directors, tax planning, tax avoidance and adjudication of company disputes. The schedule for the symposium is indicated below. Readers interested in attending may contact us by email as soon as...
A Rather Elusive Form of the Statutory Corporation
Any discussion of the difference between a company and a statutory corporation seems, at first sight, unnecessary. It is, after all, settled law that a statutory corporation is an entity created by a statute, while a company is an entity that is governed by the provisions of a statute. This distinction, however, has become sharply controversial in recent times, and was considered by the Supreme...
Consolidated FDI Regime Operational
As we had discussed in December 2009, the Government had proposed a draft master press note to consolidate the regime relating to foreign direct investment (FDI). The consolidation exercise has now fructified with the issue of the Consolidated FDI Policy (Circular 1 of 2010), which takes effect from April 1, 2010. The policy document itself contains evidence of the complexity that has afflicted...
Taxation of Derivative Transactions by FIIs
(The following post has been contributed by Ravichandra S. Hegde of J. Sagar Associates) Profits earned from derivative transactions are business income, not liable to be taxed in India at the hands of the FII: AARThe Authority for Advance Rulings (“AAR”), Income Tax, in its recent decision dated March 22, 2010 has held that the special provision in the Income Tax Act, 1961 (“the Act”) cannot be...
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