| GST sop to be part of Constitution Amendment Bill |
|
New Delhi, 17 November The Centre has agreed to include compensation to be paid to states for Goods and Services Tax ( GST) roll- out as part of the Constitution Amendment Bill. " The compensation structure would form apart of the Bill. It will be paid in tranches to the states," an official said. A consensus on this crucial issue will make it easier of the Centre to introduce the GST Bill in the winter session of Parliament beginning November 24. The official further said that the finance ministry has floated a draft Cabinet note on the GST for inter- ministerial consultations. "The first tranche of compensation to states will be made available in the upcoming session," the official added. However, the official added that further discussions would be needed on revenue- neutral GST rate and threshold limit for imposing the levy. As regards taxation of petroleum products, the Centre has proposed to the states that it be made part of the GST Bill. The states, he said, would get six months to vet the GST Bill in the Assemblies after its passage by Parliament. While a sub- committee on GST has suggested that the revenueneutral rate of GST be pegged at about 27 per cent, the states are yet to decide on it. It had suggested states GST at 13.91 per cent and central GST at 12.77 per cent. Differences remain on threshold limit for levying GST with states demanding that annual turnover for imposing the levy be ₹ 10 lakh and Centre demanding it to be at ₹ 25 lakh. The GST will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies. The GST Constitution Amendment Bill, which was introduced in the Lok Sabha in 2011, had lapsed and the NDA government will be required to come up with a fresh Bill. |
| Sebi to outline framework for reclassification of promoters |
|
Mumbai, 17 November The Securities and Exchange Board of India (Sebi) is working on rules to govern how and when promoters will be allowed to reclassify themselves as public shareholders. The move follows instances of promoters reclassifying themselves to meet the minimum public shareholding (MPS) norms. A discussion paper for public comment is likely to be issued soon, multiple sources have said. The scenarios in which Sebi presently allows the reclassification include the signing of a separation agreement, duly disclosed, and promoter holding falling below five per cent. The regulator will also allow reclassification on a case- tocase basis if it feels the move is appropriate. "There was a need for this review. During the implementation of the mandatory requirement of 25 per cent public holding in private listed companies, it was observed that companies attempted to comply with the MPS norms by reclassifying a part of the promoter group entities as public," said a source. The issue was first highlighted when Sebi disallowed aproposal by Gillette India which involved termination of the existing shareholder agreement, so that the promoters could be termed public shareholders to meet the MPS norms. Similar instances took place involving Gokaldas Exports and Balmer Lawrie. In June 2013, the Securities Appellate Tribunal ( SAT), while hearing Gillette's appeal, directed Sebi to look into instances where companies removed certain entities from the promoter group to the public category. " The regulator should not contemplate action but a solution," Jog Singh, presiding officer of SAT had said. Pursuant to this, Sebi's Primary Market Advisory Committee discussed the issue and prepared a discussion paper. Market participants say this move will help bring clarity for investors in businesses that have been run or are run by families. "Sebi in earlier instances had allowed reclassification on acase- to- case basis if there was aseparation agreement or promoter holding had fallen below the prescribed five per cent. In cases where companies had approached Sebi for reclassification, it was based on precedence of similar scenarios. With Sebi defining a framework and having rules in place, it would help companies be more aware of the possibilities that fall in the realm of permissible," said R SLoona, managing partner, Alliance Corporate Lawyers. "Post reclassification, there should not be any other shareholding agreement in existence and the entity should only have rights that are vested with public shareholders," said a source. Another section of the markets believes the regulators should ensure reclassification of promoter holding should be viewed in a similar fashion by all of them. " Regulators could look at a one- time declaration on this matter, with any further amendment requiring a stock exchange notification. Additionally, provisions should be made that an entity which is apromoter for one regulator should be treated the same way by the other regulator," said Amit Tandon, founder and managing director of IiAS, a proxy advisory firm. Any entity that is later termed public would not be allowed to hold key management positions in the listed company or its associate and cannot exercise control over the affairs of the company. The companies would need to disclose the details and reason for reclassification to stock exchanges and the same would be permitted by Sebi only after 12- 18 months, the sources added on what is being contemplated. Discussion paper likely to cover 3 scenarios where a change in categorisation to public shareholders will be allowed FROM PROMOTER TO PUBLIC The issue was first highlighted when Sebi disallowed a proposal by Gillette India which involved termination of the existing shareholder agreement to meet shareholding norms Promoters will be allowed reclassification if promoter holding falls below 5% Reclassification allowed in case of separation agreement After reclassification, promoter should not have any shareholder agreement with the company and cannot exercise control |
Practising Company Secretary
Chennai
Mobile 93810 11200
__._,_.___
No comments:
Post a Comment