CA Online

In the iconic Bollywood movie, Sholay, a number of policemen have been featured. There is the bumbling jailor who relies on weak market intelligence and ends up burning his fingers. Then, there is the stereotypical Bollywood cop who arrives after all the action is over in the last scene.  In the recent furore over fancy structures used by mutual funds for promoter financing, market regulator Securities and Exchange Board of India (Sebi), unfortunately, displays similar weaknesses. To start with, its market intelligence comes across as extraordinarily poor, if not absent. Reports say the regulator is now concerned about undue risks taken by mutual funds, although there was no inkling of any concerns of the kind anytime in the past. Likewise, while market participants are now calling for better disclosures of such financing structures by listed companies, Sebi is yet to make a statement on this. J.N. Gupta, managing director, Stakeholders Empowerment Services (SES), says: “Sebi w...

The finance ministry has sought from the Reserve Bank of India (RBI) Rs 27,380 crore that was withheld by the central bank towards risks and reserves in the previous years, said sources. The RBI had retained  Rs  13,190 crore towards risks and reserves during 2016-17. It increased to  Rs  14,190 crore in 2017-18. Together, retained amount is  Rs  27,380 crore.  The ministry has requested the RBI to provide an interim surplus for the current fiscal on the analogy of the previous financial year and transfer the amount withheld from the surplus of 2016-17 and 2017-18, sources said. Earlier this month, Economic Affairs Secretary Subhash Chandra Garg had said the government expects  Rs  28,000 crore from the RBI as interim dividend during the current fiscal. The RBI, which follows July-June financial year, has already transferred  Rs  40,000 crore in the current fiscal.  If the central board of the RBI approves transfer of ...

Many well-heeled Indians who own stocks and properties abroad or are beneficiaries of offshore trusts may come under the glare of the income tax (I-T) department for failing to spell out their ‘indirect investments’.  Indirect investments are the nextlevel investments — or, holdings in other overseas companies — by the entity in which the resident Indian is a stakeholder. Consider an individual holding 15% equity interest in an unlisted offshore firm (A) in Dubai, which in turn is a shareholder in three US companies (B, C and D).  According to the department, indirect ownership in B, C and D has to be disclosed in the income tax return along with the investment in A. The tax office, sources said, has asked a few “high-profile individuals” to explain why they did not disclose their indirect investments because under the law the Indian resident is the ultimate beneficial owner (UBO) of all the companies. Non-disclosure of information could attract a penalty of at least ?10 l...