SEBI discussing issues of minimum shareholding Mumbai, Nov 19: The Securities and Exchange Board of India has started meeting about 70 listed companies in Mumbai to discuss issues related to compliance of minimum public shareholding of 25 per cent, said sources. The exercise which began on Monday will continue for two more days. This would be extended to other cities as well. The discussion will focus on the modalities of these companies achieving the minimum public shareholding of 25 per cent and whether the route proposed to be used by the company was acceptable to the regulator. Companies are expected to comply with the norms latest by June 2013 for private sector and August 2013 for PSUs. — Our Bureau In M&A deals, executives tend to neglect intangible capital: Survey Mumbai, Nov. 19: As merger and acquisition (M&A) deals became faster, executives fail to spend time managing the risks to intangible capital. The consequences can be severe, for if intangible capital is disregarded, integration languishes and the synergies fail to materialise. A new survey has pointed out that companies tend to underestimate intangible capital. Too much M&A activity also fails to deliver the value expected. In a large part, this is due to neglect of the importance of intangible capital, which could be construed as the organisational, relational and human capital of the enterprise. Though the collapse of debt-fuelled financing has put the brakes on M&A activity, the virtual disappearance of private equity investors, reduction of sovereign fund investment and a rush to divest non-core assets to shore up balance sheets has increased opportunities for strategic M&A investments. However, Hay Group, a global management consultancy firm, found that where it was considered at all, intangible capital was often an after-thought. Though three-quarters of the deal value lies in intangible capital, very few organisations pay it that much attention. Most of the executives polled typically valued intangible capital — including culture and customer relationships — at just 30 per cent of market capitalisation, and not the 75 per cent that analysts expect. Since it was not the main topic, buyers could risk damaging deal value. "By underestimating intangible value, they allocate insufficient resources to protecting it during integration. Just 38 per cent of companies conduct cultural due diligence," says the report. Hay Group global M&A director David Derain adds, "Many recent financial deals have been decided rapidly, often in a matter of days. Due diligence around intangible capital, never very thorough in the best of times, takes even more of a back seat. However, now we are seeing the fallout of poorly planned integration of intangibles as 'one organisation' still operates as two, with subsequent brand confusion and loss of key talent." Senior leaders tend to pay more attention to business fundamentals like the balance sheet, and the revenues of each business unit. A large part of due diligence is often left to finance departments, whilst intangible capital, and particularly organisational culture, is seen as soft, and therefore relatively unimportant, issue. For those that dare to pull the trigger, the survey has noted, the rewards of M&A remain as high as ever. But unless intangible capital gets the senior executive attention it deserves, value will remain untapped and could even be destroyed. amritanair.ghaswalla@thehindu.co.in Visa interview waived for four more categories, says US envoy Business Line Ms Nancy J Powell, the US Ambassador to India (file photo). New Delhi, Nov 19: More jobs for both Indians and Americans, energy security, women entrepreneurship and greater bilateral ties between the two countries were some of the issues before the US Ambassador to India, Nancy J Powell. Announcing visa interview waiver for four categories of work visa including H1-B and L1-B, she told the members of the Indian Women's Press Corp that ideal situation would be more jobs for both the US and India. A diplomat who is also a Libran she was true to her character, doing a balancing act while fielding questions. Gentle but firm she said that the second stint of Obama Government, while bringing in continuity, would also reflect some changes. Tactfully, pre-empting any questions on visa, she said taking forward the Interview Waiver Program (IWP) launched in March, it has been decided to expand it to four more categories now. The following Indian applicants may also be considered for streamlined processing: children applying before their 14th birthday travelling on any visa class, students returning to attend the same school and same program, temporary workers on H1-B visas, and temporary workers on Individual L1-A or Individual L1-B visas. The renewal application must be within the same classification as the previous visa. If the previous visa is annotated with the words "clearance received," that applicant is not eligible for a waiver of a personal interview, a US Embassy statement said. Not all applications will be accepted for streamlined processing, the statement further said adding that "As always, consular officers may interview any visa applicant in any category. Applicants who are renewing their visas may still need to make an appointment for biometrics (fingerprint and photograph) collection, and all applicants must submit all required fees and the DS-160 application form." N-deal On a question regarding the Indo-US Civil Nuclear Agreement, Powell said that there were some issues which need to be sorted out. Powell said that India is yet to join some international agreements on trade in nuclear technology. A high-level team from the US will be in India to discuss on the issue soon. Powell hoped for an early resolution of all the contentious issues on the subject. The private US companies were not comfortable with the way the current legislation imposed liability in the case of accidents. As regards to the free trade agreement (FTA) with India to allow export of shale gas from the US, she said that at present a study is being undertaken by the US Government on how much shale gas the country has, what is the gas demand, and the benefit and costs involved if exports were allowed. "By end of the year a clearer picture should emerge," she said adding that Indian companies will have to wait for the report before any deliberations on trade begins. At present only one project that of Indian company GAIL (India) for gas exports has been allowed. There are other two projects which are pending approvals, and their fate is dependent on the outcome of the study. Spirit of company law has been violated Former Chief Justice of India J.S. Verma speaks out against the Supreme Court's Vodafone verdict. November 19, 2012: On November 6, the Ministry of Corporate Affairs said that the Registrar of Companies (RoCs) cannot be expected to examine all the filing with a fine toothcomb. The 'clarification' was apparently a response to a spate of criticism regarding scrutiny of annual accounts filed with RoCs . The trigger for this criticism was l'affaire Robert Vadra-DLF in which DLF, a listed company, seems to have hobnobbed financially with a clutch of private companies owned directly or indirectly by Robert Vadra. The Ministry statement goes on to say that in any case, all these documents are available for public scrutiny, available as they are on the Ministry's Web site and that companies making false statements are punishable. Of course, the registrars, the clarification says at the end, routinely scrutinise balance-sheets of companies, against whom there are complaints; of companies which have raised money from the public through public issue of shares/ debentures etc; in cases where the auditors have qualified their reports; where there are defaults in payment of matured deposits and debentures; and in cases where references are received from other regulatory authorities pointing out irregularities, calling for action under the Companies Act, 1956. After the scrutiny, suitable steps are initiated, wherever necessary, to obtain explanation and clarification and to institute inspections, investigations and prosecutions wherever warranted, the clarification says smugly. One wonders how the registrar concerned kept quiet when DLF, a listed company, gave unsecured loans to Vadra's companies, unless he found the back-to-back deals, by way of these loans being used to acquire properties from DLF at throwaway prices, kosher. By the same token, how come the RoC kept quiet as men of straw donned the robes of big investors in a clutch of investment companies taking equity stakes in Purti, the company promoted by the BJP President Nitin Gadkari. The point is, the RoC is not merely supposed to file the documents filed with it and forget about the whole thing. Income-tax authorities can take up returns for scrutiny selectively, applying a sense of proportion, but the RoCs cannot possibly afford to be as selective, especially where public money is involved. Hard questions must be asked even of closely-held companies when they hobnob with listed companies, in which the public is vitally and substantially interested. The telecom cases The government functionaries seem to be saying 'we-said-so' in the aftermath of the tepid response to the auction of 2G licences. While many of them openly criticise the CAG for quoting what they call a brash figure of Rs 1,76,000 crore as the putative loss from allotment of licences on first-come-first-served basis, given the fact that the present auctions have not borne out these figures, there is a muted criticism of the apex court as well for cancelling the licences and ordering auction. In doing so, they are missing the wood for the trees. Can anyone justify the manner of dishing out licences on FCFS basis clandestinely with many of the allottees post-haste selling them off back-to-back at an astounding multiple of eight to ten times? That what was sold were shares and not licences cannot fool anyone, given that the underlying assets of these shares invariably were licences. It is unfortunate that the Government has chosen to conceal its disappointment with the auction by adopting a child-like manner — lampooning the CAG whose calculations are more than borne out by the valuations for shares, at the material point of time, of the telecom companies that were harbouring the licences, only to unload them to the unsuspecting foreign telecom companies. The Vodafone verdict of the Supreme Court in which the telecom companies were absolved of capital gains tax liability inasmuch as the shares that changed hands were those of foreign controlling companies, troubles many a conscience even today. Now Justice J.S. Verma, a retired Chief Justice of India, has boldly said, while releasing a book, that the Supreme Court erred in not honouring a legal precedent set by itself. Vodafone precedent Way back in 1985, in the famous McDowell and Companies Ltd case, the five-member Constitution bench of the Supreme Court had ruled that colourable devices cannot be adopted in the name of tax planning, that the substance is more important than the form of a transaction, and that in a welfare state the so-called smart acts of tax-planners exact a heavy price from the hapless citizens in the form of heightened taxes from them. Justice Verma has pointed out that in Vodafone case, the apex court could by all means have broken free of what the Supreme Court had said some three decades ago, but by constituting a Constitution bench of cognate jurisdiction, and not by a smaller bench comprising just three members. The former chief justice is not upset merely with this technicality which, of course, is important given the fact that a smaller bench cannot overrule a larger bench of the same court. Many have wondered how a complex web of carefully crafted investment can pass off as noble and normal. Hutch, the Hong Kong Company from which Vodafone bought the controlling interest of its telecom operations in India by acquiring controlling interest in a Camay Island company, knew from the beginning that investing directly in India was fraught with the danger of being slapped with capital gains tax liability, and hence chose this convoluted mode of investment away from India. And this precisely is what was decried by the Supreme Court in McDowell case, which is still the law of the land on tax planning. (The author is a New Delhi-based chartered accountant.) Refused extension by Sebi, Sahara moves SAT |
Sachin P Mampatta l Mumbai |
| Sahara group on Monday moved the Securities Appellate Tribunal (SAT), protesting the Securities and Exchange Board of India's (Sebi's) refusal to accept its documents after a deadline for submission set by the Supreme Court. The group wants Sebi to extend the deadline to January 31. The Supreme Court had in August asked two Sahara group companies (Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd) to refund around `24,000 crore they had collected from investors through optionally fully convertible debentures. The companies were to submit all documents with details of the investors within 10 days to Sebi, which was put in charge of the refund process. Sahara reportedly sent over 30 crore documents containing details of its three crore investors. The regulator refused to accept the consignment since it came after the submission deadline of September 10 set by the Supreme Court. Sebi has also filed a contempt petition in the Supreme Court for violation of the apex court orders by Sahara. Sahara counsel argued that Sebi is in the position of an entity entrusted to execute the Supreme Court order, which also means that it has the power to extend the time limit for doing so. Lawyers for Sebi refuted Sahara's contention and questioned whether the appeal could be admitted by the tribunal in the first place. sachin_m@dnaindia.net |
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