Thursday, November 8, 2012

[aaykarbhavan] business standard news updates 9-11-2012



Sebi faces heat to name entities in Reliance insider trading case


NSUNDARESHASUBRAMANIAN

New Delhi, 8 November

The Right to Information (RTI) movement, which has shaken up the government, has begun to knock on the doors of corporate India. In a significant move, the Central Information Commission (CIC), the apex body under the RTI Act, 2005, has directed the Securities and Exchange Board of India (Sebi) to share the details of several entities that were involved in the Reliance Petroleum (RPL) insider trading case in 2007.

It also told the regulator to share details of the investigation reports and proceedings on the consent application filed by Reliance Industries (RIL) in this case.

The directions came on an appeal by Arun Kumar Agarwal, a Bangalore-based lawyer. Earlier, the Sebi's Chief Public Information Officer (CPIO) had refused to share these details with Agarwal under RTI on the grounds that investigations and quasijudicial proceedings were pending.

But the commission said, "After carefully considering the facts of the case and the submissions made before us, we are inclined to agree to the demand of the appellant that the disclosure of this information would serve a larger public interest," in an order dated November 6. It added, "We direct the CPIO to provide the first two items of information to the appellant within 10 working days of receiving this order." The commission also directed the market regulator to give details of the file notings and other proceedings that led to the notification of the consent order mechanism in 2007.

Agarwal has also filed a public interest litigation in the Supreme Court challenging the appointment of Sebi Chairman U K Sinha.

The regulator has the option to move an appeal in the high court against the CIC order. It is not clear if it plans to do so and on what grounds, as the CIC has said it is in public interest to reveal these details. An email questionnaire sent to a Sebi spokesperson did not elicit any response.

Several entities have been identified by the Sebi who were involved in insider trading/short sale of shares of Reliance Petroleum in 2007. The details of these entities are still not in public domain. INSIDE STORY

|RIL had sold 4.1% equity in RPL in the open market in Nov 2007

|To reduce price impact, RIL first short sold RPL in the F&O segment and then the spot market while covering the shorts

|RIL generated revenues (sale consideration) of ~4,023 crore and an estimated profit of ~500 crore from the F&O short sale

|Sebi probed trading pattern in RPL stock between Nov 1 and 29, 2007

|Sebi said since the company was aware of the sale of equity and sold futures prior to that, it amounted to insider trading

|The company has maintained all rules and regulations were complied with

|RIL had also said its action was driven by "protection" of market sentiment and the gain was recorded in the company's balance sheet

|RPL was merged with parent RIL in 2009 and delisted

|Sebi first issued a showcause notice to RIL in May 2009

Sebi has also been asked to give details of the file notings that led to the notification of the consent ordermechanism

Retail FDI game may not be over


GYAN VARMA& KAVITACHOUDHARY

New Delhi, 8 November

A spanner may have been thrown in the government works on foreign direct investment (FDI) in multibrand retail. The issue came up in a public interest suit that alleged the government had allowed 51 per cent FDI into the multi-brand retail sector without framing rules and regulations and without the assent of both houses of Parliament. The petition, moved by Supreme Court lawyer Manohar Lal Sharma, was taken up on October 1.

While replying to the Supreme Court, Attorney General G Vahanvati had said three amendments had been notified on October 30, enabling the government to allow FDI into the multi-brand retail sector. The changes were made to the Foreign Exchange Management Act (Transfer of Security by a Person Resident Outside India) Regulations, 2012. The Supreme Court adjourned the hearing of the PIL till January 22 next year.

While doing so, Justice Lodha said to Sharma, "Why do you presume that the government will not place the amendments before Parliament? If the provisions require them to do so, they will have to do it. Your apprehensions are premature and unfounded. If Parliament does not approve the amendments, it will be at their [the Centre's] own risk and peril." The bench said the matter was being adjourned to the new year in the expectation the changes in the Fema (Foreign Exchange Management Act) would be brought in the winter session of Parliament.

If Fema is not amended, FDI in retail cannot be operational. "The rules framed under Fema will have to be brought before both the Houses of Parliament. If no objections are raised by Parliament then it is deemed to be approved but if there are objections then there is a possibility of voting, too," said Piyush Goyal, MP and BJP treasurer.

Section 48 of Fema reads: "Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for atotal period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation, or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation".

A minister says the government is not liable to bring changes in Fema to Parliament. A senior Congress leader explained amendments, if any, needed to be examined closely. If the amendments are generic or particular, the commerce and law ministries will advise and Parliamentary strategy will depend on that. Minister of State for Information and Broadcasting Manish Tewari said, "FDI in retail is apolitical call, which has been taken by the UPA in the interests of farmers and consumers. So whatever is essential to implement that would be done."

 

Sub-panels to decide on CST compensation, GST design


BS REPORTER

New Delhi, 8 November

Finance Minister P Chidambaram today announced the setting up of two sub-committees to decide on the contentious issues of compensation to states for loss of revenue on account of central sales tax (CST) and to finalise the design of the goods and services tax (GST).

The two committees will work simultaneously and give their reports by December 31, after which the Empowered Committee of State Finance Ministers on GST will discuss the recommendations.

"We had a very free and frank discussion on GST, following which it was clear that the two issues still need to be resolved — compensation for loss of CST and the design of GST," finance minister P Chidambaram told reporters.

Chidambaram who met the empowered committee for the first time after taking over as finance minister in August, said that although there was a broad consensus on GST, some issues still had to be sorted out.

"The two committees will be initially headed by senior officials from state governments and nominees of the central government and, after the reports are prepared, ministers will join the panel," he said. Both the reports would be discussed threadbare by the empowered committee sometime in January. Thereafter, a final decision would be taken.

"We had serious concerns over the fiscal autonomy of states as and when GST is implemented. That will now be looked after by the two subcommittees," Madhya Pradesh Finance Minister Raghavji told reporters after the meeting.

He said that some states, including Madhya Pradesh, were of the view that the Centre should not claim its share in sales tax and that tax rates should be determined by states, who should also be allowed to administer those.

GST, which will empower the Centre and states to simultaneously tax supply of goods and services, was to be introduced from April 2010 and has since missed several deadlines. The Bill is currently being vetted by the Parliamentary Standing Committee on Finance. The committee had raised certain queries to which the revenue department has already responded. The report of the committee is awaited.

Chidambaram had earlier exuded confidence that the Centre would be able to resolve all issues concerning GST so that the new indirect tax regime could be rolled out from April 2013. CST is collected by the Centre and distributed among states.

As a precursor to GST, the Centre and states had agreed in April 2007 to phase out CST over a period of three years and in line the CST rate was reduced to three per cent and subsequently to two per cent.

The Centre had already compensated states for losses up to 2010-11. "The first compensation was paid for two years and part of it was paid in the third year," said Chidambaram.

As the Centre refused to go on compensating the states for delay in implementation of GST, states had argued that when it was decided to phase out CST, it was presumed GST would be implemented from April 2010. "Any decision on GST rollout will happen only when the two committees give their final report and the state finance ministers agree to it," said Raghavji.

Finance Minister P Chidambaram during his meeting with the Empowered Committee of State Finance Ministers, in New Delhi on Thursday. PHOTO PTI

GST was to be introduced from April 2010 but has missed several deadlines

 

 


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CS A  RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
email csarengarajan@gmail.com
mobile 093810 11200

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