ArchiveFebruary 2013

VTB Capital v Nutritek: The Corporate Veil and the Consequences of Piercing it

It may be surprising that the highest court in the United Kingdom decides, in 2013, to reserve for future decision the question whether and when the corporate veil can be pierced. It has been taken for granted for many years that a court may pierce the corporate veil and—atleast in this jurisdiction—the courts have been ready to do so on a wide range of grounds. In this background, Mr...

UK Supreme Court on the Corporate Veil: VTB Capital v. Nutritek

We had previously discussed the judgment of the Court of Appeal in VTB v. Nutritek. The United Kingdom Supreme Court has dismissed the appeal against this decision. While we will discuss the case in more detail in the coming days, one specific point is noteworthy. In dismissing the appeal, the Court has left open (at least as far as the Supreme Court is concerned) an extremely important...

Stringent Procedures for Schemes of Arrangement Involving Listed Companies

For the last few years, there has been a perceptible concern on the part of the Securities and Exchange Board of India (SEBI) that companies have been utilizing the facility of schemes of arrangement available under Sections 391-394 of the Companies Act, 1956 to effect various types of transactions, some of which may not be in the interest of minority shareholders. SEBI has sought to introduce...

Transfer Pricing on Issue of Equity Shares to Foreign Investors

The financial newspapers have covered this (here and here) and The Firm has an interesting discussion on this. The income tax authorities have sought to challenge the valuation on which certain Indian companies have issued shares to their foreign parents. While the shares were previously issued based on the erstwhile formulation adopted by the Controller of Capital Issues (CCI) that was...

Amount paid for buyback of shares allowed as business expenditure

The ITAT, Mumbai has held1 that the premium paid by the company on buyback of shares of a warring shareholder group is deductible as business expenditure in the hands of the company. Thus, it allowed the premium of Rs. 6.82 crores (over the face value of Rs. 8.40 lakhs) paid for buying back 34% of the shares held by such group. Though the decision is similar to a few earlier decisions on...

Draft Guidelines on Debt Restructuring

The Reserve Bank of India (RBI) has issued draft guidelines on “Review of Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions” that follows from the recommendations of the working group on the subject under the chairmanship of Mr. B. Mahapatra. The draft guidelines contain several technical details regarding prudential norms on income recognition, asset...

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