No regulatory vetting of M&As involving up to 25% control
BS REPORTER
New Delhi, 24 February
Relaxing the rule on mergers and acquisitions to be vetted by it, the Competition Commission of India (CCI) has exempted acquisitions resulting in a cumulative control of up to 25 per cent of shareholding or voting rights from such scrutiny. The current practice sets the limit at 15 per cent.
Analysts say the change is in sync with market watchdog Sebi’s new takeover code, which raised the open offer trigger from 15 to 25 per cent of the shares acquired.
Besides, intra-group mergers or amalgamations involving enterprises wholly owned by group companies will escape CCI vetting.
However, companies that need to undergo CCI scrutiny will now have to spend several times more as the fee for normal M&A (merger and acquisition) scrutiny has been raised from ~50,000 to ~10 lakh and from ~10 lakh to ~40 lakh in cases where intense scrutiny is required.
In a statement today, the CCI said amendments in the regulation were made keeping in view the fees charged by other regulatory authorities in India and abroad.
A CCI official said the effect of the changes on the number of M&As under scrutiny could not be gauged immediately. He said the amendment to the Competition Commission of India (Procedure in regard to the transaction of business relating to combination) Regulation, 2011 attempts to provide relief to corporate entities from making filings for combinations unlikely to raise competition concerns, reduce compliance requirements, make filings simpler and to move towards certainty in the application of the Competition Act.
The said regulation was notified in May last year.
“The merger and acquisition process is now almost eight months old and the amendment is rational and logical, in tune with the global practice,” said Dhanendra Kumar, former CCI Chairman during whose tenure the initial regulations were notified.
Since July 2011, the Competition Commission has cleared 28 merger and acquisition applications. In none of those did it find any possibility of an adverse impact on competition.
|Simpler application form for clarity and uniformity |Board-authorised company secretary permitted to sign M&A scrutiny applications along with managing director or director |Parties to provide details of value of assets and turnover, and copies of M&A agreement, board resolution, etc |A brief summary of the combination must be filed when filing notice RULE CHANGES
CBEC attaches Kingfisher’s a/c
BS REPORTER
New Delhi, 24 February
The Central Board of Excise & Customs (CBEC) today said it has again attached the bank accounts of Kingfisher Airlines after it failed to make regular payments of its arrears. The troubled airline’s discussions with the Central Board of Direct Taxes (CBDT) to de-freeze the accounts also failed.
CBEC Chairman S K Goel said Kingfisher was to pay ~1 crore everyday to clear its indirect tax dues with the department, but there were some interruptions in the last 2-3 days, following which the CBEC issued a letter to its banks instructing them to freeze Kingfisher’s accounts.
“They were paying ~1 crore per day. For past few days there has been an interruption. They have not been able to pay, so we have frozen their accounts,” Goel told reporters.
In December 2001, the service tax department had frozen the bank accounts of Kingfisher, but de-froze it later after the air carrier made partpayment of their service tax dues. Kingfisher owed ~70 crore to the service tax department, of which about ~35 crore is still due.
On the other hand, the Income Tax (I-T) department also refused to de-freeze the accounts of Kingfisher until the carrier agreed for a partial upfront payment of about 40 crore and pay the balance amount in installments over the next few months. Earlier this week, Kingfisher, promoted by liquor baron Vijay Mallya, had appealed to the department to allow it make payments over 18 months on a weekly basis.
Finance ministry officials said Kingfisher owed about ~300 crore to the I-T department since it had not deposited with the government the TDS (tax deducted at source) deducted from employees’ salary in the last two years. The amount included penalty and interest payment.
The amount of liabilities quantified on preliminary examination was ~53.82 crore for 2010-11 and ~100 crore for 2011-12. Of the total amount of ~153.82 crore, the tax department collected ~21.04 crore till December 2011. Kingfisher filed a commitment letter to pay balance ~130 crore TDS liabilities by the end of the current financial year.
Sebi may change market making rules in SME bourses
NSUNDARESHASUBRAMANIAN
MUMBAI, 24 February
Securities and Exchange Board of India (Sebi) is considering a proposal to tweak rules for market making in SME exchanges.
According to the framework, market making is compulsory for three years for companies listing on these exchanges to provide an exit to investors. But, the exchanges have put forward certain practical difficulties and requested certain changes in the rules. Though the regulator is not too keen to relax the timeline of three years, it is considering other proposals, officials in the know said.
"There is a practical possibility that the market maker ends up with the entire floating stock in the market. Also, at the other end he may exhaust the entire stock in his hand. In both situations, he may no longer be able to offer two-way quotes. So, we have asked the regulator to put a cap and floor on the floating stock that can be held by the exchange," a senior exchange official told Business Standard .Also, in situations where a venture capital investor takes a considerable stake in the Initial Public Offering (IPO), the floating stock will be reduced further, cramping the room for the market makers.
“These practical issues we have put up before Sebi,” the official said. Sebi has been very sensitive to the teething troubles of this platform, officials said. It has recently exempted the first SME IPO from the recent rule changes on market lots. The IPO of BCB Finance has opened on Thursday on the BSE SME platform.
Uttam Bagri,promoter of BCB Finance said, "The change of rule on market lots came just days before our issue was about to open. It would have made things difficult for us. But the exchange took up the matter with the regulator and they have clarified that the change would not be applicable to us."
Source Business line
I-T relief: House panel may push for higher deduction of Rs 3.20 lakh
Our Bureau
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Likely to include long-term savings, children's education; corporate tax may remain unchanged
New Delhi, Feb. 24:
The Standing Committee of Parliament on Finance is likely to recommend a deduction of Rs 3.20 lakh for income-tax relief. This limit may be made available for long-term savings, investment and expenditure on life insurance, health insurance and education for children.
The committee may also recommend exemption limit for income-tax at Rs 3 lakh per annum as mentioned in the draft report, although some members are reportedly still pushing to increase it to Rs 5 lakh.
The Direct Taxes Code (DTC) Bill tabled in Parliament had proposed a limit of Rs 2 lakh from the current limit of Rs 1.80 lakh.
The committee is scheduled to finalise its views on DTC Bill by March 2, for which a meeting was held on Friday. “The members appear to be in agreement over incentivising long-term savings and social security expenditure. So, a higher limit could be a part of the final report,” a person familiar with the development said.
At present, investments up to Rs 1 lakh in specified instruments are deducted while calculating tax liability. These specified instruments include life insurance policies, public provident fund, equity-linked saving schemes of mutual funds, National Saving Certificates.. This limit also includes school fees for two children. In addition, investments up to Rs 20,000 in infrastructure bonds are also exempted from tax.
However, the majority view in the committee is that the limit on long-term savings eligible for exemption from income-tax be increased to Rs 1.50 lakh as against Rs 1 lakh proposed in the DTC.
On the other hand, limit for tax deduction by incurring expenditure on life insurance and health insurance may be hiked to Rs 1 lakh from Rs 50,000 proposed in the DTC Bill.
There also appears to be consensus to provide an additional limit of Rs 50,000 for expenditure on children's education.
The Bill lays down a ceiling of Rs 50,000 on the amount of deduction available in respect of payments made for a life insurance policy, health insurance policy and education of children, all combined. In order to promote social security for senior citizens, the majority view is that an additional deduction on account of health insurance premium paid for dependent parents to the tune of Rs 20,000 may be separately allowed.
The Committee is unlikely to make any change in corporate tax. The DTC Bill proposed 30 per cent rate for corporates, without any cess and surcharges. On the other hand, the committee may suggest to the Government to review the General Anti-Avoidance Rules keeping in view the Supreme Court's judgment in the Vodafone tax matter.
Shishir.s@thehindu.co.in
(This article was published in the Business Line print edition dated February 25, 2012
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