Source Business standard
| Foreign portfolio investors get Xmas gift from Sebi |
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Mumbai, 24 December Clearing the decks for a shift to a new and simpler regime for foreign portfolio investments into India, the Securities and Exchange Board of India ( Sebi) on Tuesday said the government had agreed to a similar tax treatment for all categories of foreign investors. The board of the capital markets regulator also cleared regulations on consent mechanism and procedure for search & seizure operations, but deferred a final decision on rules for real estate investment trusts ( REITs) and a new corporate governance code. Differences over tax treatment between Sebi and the income- tax department had delayed the implementation of the Foreign Portfolio Investors (FPI) Regulations, 2013, which the Sebi board had cleared in October. Under the earlier system, tax treatment for foreign institutional investors ( FIIs) was different from that for subaccounts and qualified foreign investors ( QFIs). Under the FPI norms, Sebi had recommended auniform tax treatment for all categories of foreign investors. The tax department, on the other hand, was apprehensive that a similar tax treatment would carry a high risk of defaults and the recovery process would be difficult. "As regards FPI regulations, acommunication from the Department of Economic Affairs to the Central Board of Direct Taxes and to Sebi has conveyed the decision that all categories of FPIs would be given similar tax treatment as currently available to FIIs," Sebi said in a press release. Market experts said, with all government departments finally coming on the same page on the issue, Sebi could now move to the new FPI regime. "This is a very good decision. Ipresume a similar tax treatment would mean the FII manner of taxation — that is, a time- tested and stable method —will apply on all the three categories of FPIs," said Gautam Mehra, executive director, PwC. The FPI regulations club the two existing investor classes — FIIs and QFIs — into a single class and also do way with the need for direct registration with the market regulator. These also introduce the concept of riskbased know- your- client, where an FPI, depending on its nature of business, falls under one of the three categories and has a different documentation level. "Clarity on tax treatment will boost foreign investments into the country. There used to be a lot of confusion over difference in taxation methods. The new FPI regime might end the confusion and make it a lot simpler for overseas investors," said Pavan Kumar Vijay, MD & founder, Corporate Professionals. On Tuesday, the Sebi board also approved the draft Sebi (Settlement of Administrative and Civil Proceedings) regulations, 2013, issued in October, and included the guidelines for determining settlement terms in the regulations. Under the consent mechanism, Sebi settles charges against violators without admission or denial of guilt, for a penalty or market ban or both. Turn to Page 9 > To get same tax treatment as FIIs; rules on search & seizure and consent settlement cleared SEBI PLAYS SANTA KEY TAKEAWAYS |All types of foreign portfolio investors to get uniform tax treatment |IPO grading made optional for companies |The list of companies eligible for shelf prospectus expanded |Regulations on consent settlement and procedure for search & seizure cleared |Regulations for collective investment schemes realigned with the Sebi ordinance |Investor Protection and Education Fund regulations tweaked to repay investors out of disgorgement amount |
Click here to read more...Turn to Page 9 >
| Click: Article continued from…Foreign portfolio investors |
| All foreign investors... |
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The Settlement of Administrative and Civil Proceedings Regulations formalise the existing consentsettlement process, conducted under Sebi's May 2012 circular. The consent process had attained legal sanctity when an ordinance was promulgated by the President of India in October to give Sebi more powers. The board also cleared the Procedure for Search & Seizure Regulations, 2013, which gives Sebi the powers to search premises for the purpose of investigation, much like the income- tax department. The Securities Laws (Amendment) Second Ordinance, 2013, had conferred direct powers on the Sebi chairman to authorise an investigating authority or any other officer to conduct search &seizure operations. Among other things, the Sebi board decided to amend the Issue of Capital and Disclosure Regulations ( ICDR) to make the initial public offering ( IPO) grading process voluntary and expanded the list of companies that can use shelf prospectus while raising capital through non- convertible debentures ( NCDs). A company filing a shelf prospectus with the Registrar of Companies is not required to file prospectus afresh while raising capital for a period of one year. |
| Haldia Petro board okays rights issue |
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Kolkata, 24 December Financially troubled Haldia Petrochemicals Ltd ( HPL)' s board approved a rights issue on Tuesday to infuse funds into the company. The company will issue 520 million shares at ₹ 25.10 each ( matching the quote offered by Indian Oil Corporation in October to buy the Bengal government's 40 per cent stake stake in the petrochemical company) aggregating ₹ 1,300 crore, said HPL Chairman and state Industries Minister Partha Chatterjee after the board meeting here. The issue would come in the next 30 days. "We needed immediate funds to run the plant. So, we have decided to come up with arights issue. This will save the company from going to BIFR ( Board for Industrial and Financial Reconstruction)," he said. The funds from the rights issue will be primarily used to buy naphtha, a key raw material for the plant. This is the first time HPL is coming up with a rights issue after starting commercial production in 2001. If subscribed completely, it would not alter the company's shareholding pattern, which is again under dispute. "We have asked our legal team to make sure all legal angles are meticulously invigilated," the HPL chairman added. The rights issue comes when a state government to divest its stake to Indian Oil has hit a roadblock after the Supreme Court allowed copromoter The Chatterjee Group ( TCG) to approach the International Court of Arbitration in Paris on a contentious block of 155 million shares. TCG founder and chairman Purnendu Chatterjee and lenders were present during the Tuesday meeting. For the first time, TCG offered to settle issues out of the court. TCG is the principal private promoter of HPL. The TCG chief told Business Standard: " I have been offering them ( the HPL management) an out- of- court settlement option for quite some time, as we need a comprehensive financial solution." However, TCG did not comment on whether the rights issue was the right way to improve HPL's financial health. Uncertainty remains over whether West Bengal Industrial Development Corporation ( WBIDC), through which the state government holds the 40 per cent stake in HPL, will be able to bring in funds for the rights issue. On being asked about the need to bring more than ₹ 400 crore for the planned rights issue, the HPL chairman said: "I will take the matter to WBIDC's board and we have to see what are the options that can be used." HPL has been seeking ₹ 1,000 crore from banks, which have been reluctant because of the legal battles the company is mired in. 520 mn shares to be issued at ₹ 25.10 each |
| Axis Bank moves tribunal to recover debt from Gopinath |
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Bangalore, 24 December Within months of the State Bank of India initiating an aggressive stance to sell a sprawling residential property of G R Gopinath for nonpayment of dues, another lender — Axis Bank — is escalating the process to recover close to ₹ 265 crore from him. The bank, which has been in various stages of discussions with the Air Deccan founder over his grounded air logistics foray under Deccan Cargo and Express Logistics, has now moved the Debt Recovery Tribunal ( DRT) in Bangalore. The DRT has issued summons to Deccan Emerging Business Ventures, agroup company of Deccan Cargo after Axis Bank instituted recovery applications under Section 19 of the Recovery of Debts due to Bank and Financial Institutions Act for recovery of close to ₹ 265 crore. Gopinath, whose venture was grounded during mid2011 had borrowed the bulk of the ₹ 500 crore from SBI, Axis Bank and Syndicate Bank. SBI, on its part during August, managed to recover close to ₹ 35 crore from sale of asprawling property in the hub of Central Business District of Bangalore to publiclyheld realtor Sobha Developers. SBI has an exposure of close to ₹ 260 crore in Deccan Cargo. Gopinath is understood to have raised close to ₹ 500 crore debt for Deccan Cargo and close to ₹ 135 crore from Reliance Industries through the equity route. " While the concept of connecting industrial towns to cities through the air cargo route had immense potential, the execution did not fall into place, as a result of which the venture went into a tailspin and had to be suspended," a senior industry analyst explained. Various financial institutions have been getting pretty aggressive in recovering outstandings from a clutch of business houses after the Reserve Bank of India as well as the finance ministry urged financial institutions to hasten the process of curtailing the ballooning non- performance assets. The State Bank of India- led consortium off late has been active in recovering as much as ₹ 7,000 crore of dues from another Bangalore- based company UB Groups grounded Kingfisher Airlines. |
| Regulatory action likely against NSEL audit firms |
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Mumbai, 24 December After passing the ' fit and proper' order against National Spot Exchange (NSEL)- promoter Financial Technologies India Limited, the Forward Markets Commission (FMC) plans to move against audit firms and consultants associated with NSEL. The market regulator would issue an advisory on these agencies. " These entities do not fall under our jurisdiction. We can't issue a show- cause notice to them. But, we will issue an advisory to the entities regulated by us against these firms," a senior official at the regulator told Business Standard. The advisory is likely to detail the role of these firms and could include a bar against hiring their services in the future. FMC is also separately writing to the Institute of Chartered Accountants of India, to take action for the lapses. In the order against FTIL and its directors Jignesh Shah, Joseph Massey and Shreekant Javelgekar, the commission noted how Shah had been named as one of the key management personnel in all the annual reports of NSEL until 2011- 12. "Curiously, in the balance sheet of NSEL for 2012- 13, Shah has not been shown to be one of the key management personnel. Such an exclusion of his name from the list of key management personnel coincides with the exit of former statutory auditor S V Ghatalia & Co and induction of Mukesh Shah, who happens to be the maternal uncle of Jignesh Shah, as the statutory auditor for FY 2012- 13. The appointment as statutory auditor of NSEL was inappropriate and questionable in the prevailing circumstances," the commission had said. Mukesh Shah had asked stakeholders not to rely on the NSEL accounts for FY 13 after the ₹ 5,600- crore payment crisis. Following this, Deloitte, the statutory auditor of FTIL, also told that the FY13 accounts cannot be relied upon, as a significant portion of the parents profits came from NSEL operations. The official, quoted earlier, said, "There was a report given to Geojit by a consultant which said the NSEL warehouses were accredited by WDRA, which was not the factual position. We will go into such cases." Investors have pointed to some incorrect assertions by EY's financial risk services, in a report titled 'Risk- based review of commodity financing business'. The September 2012 report, commissioned by Geojit Comtrade, a brokerage firm which traded on NSEL, pointed to various risks and suggested measures to Geojit. EY, Deloitte and Mukesh Shah have denied allegations of wrongdoing and have maintained that they had followed applicable rules and procedures on the NSEL. They have refused to discuss the matter in detail, citing client confidentiality. FMC likely to issue advisory on lapses by audit and consulting firms associated with NSEL The advisory is likely to detail the role of these firms and could even include a bar against hiring their services in the future |
Source Business line
SEBI moves apex court in Fresenius Kabi case
MANISHA JHA
MUMBAI, DEC. 24:
The market regulator SEBI has moved the Supreme Court to appeal against the order of the Securities Appellate Tribunal allowing Pune-based pharma company Fresenius Kabi Oncology to delist without conditions. The matter is expected to come up for hearing in January.
Decision on trading
Meanwhile, the company has decided to suspend trading in its shares with effect from January 3 on account of voluntary delisting under SEBI's delisting regulations, according to a filing with the NSE.
The latest SEBI move follows a series of twists in the case since the company launched its offer-for-sale (OFS) to divest 9 per cent promoter shareholding in October last year to meet SEBI's minimum public shareholding norm.
Thereafter, the company approached SEBI for permission to delist its shares from the bourses.
Pre-offer holding
However, the regulator had asked the company to take its pre-offer shareholding into consideration for delisting from the stock exchanges. This condition was imposed by SEBI to rule out any collusive transactions to manipulate the pricing in the delisting.
SEBI cited investor complaints alleging that entities who had purchased shares in the OFS might have participated in the OFS with an intent to subsequently tender their shares at an artificial price in the bids for the delisting offer.
Fresenius Kabi had then approached SAT, which in its September order, had set aside SEBI's order against the company and allowed it to delist its shares without any conditions on the grounds that there was no proof to establish any collusion.
Though the tribunal allowed SEBI to go ahead with its probe into investor complaints regarding the company's OFS, it allowed the company to delist without any conditions
"If delisting is in the ordinary course of business, then there is no reason for imposing conditions," SAT had said in its order.
The shares of Fresenius Kabi closed flat at Rs 132 on Tuesday on the BSE.
(This article was published on December 24, 2013)
Keywords: SEBI, Supreme Court, Securities Appellate Tribunal, Fresenius Kabi Oncology, delist without conditions
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