CA Online

The Securities and Exchange Board of India (Sebi) has told the government that recent budget proposals could undermine its role as regulator, particularly with respect to the recommendation that the minimum public shareholding be raised to 35 per cent from 25 per cent. Already, government-owned companies are laggards in raising this level to the current 25 per cent norm, said a senior Sebi official.   “Going forward, this has to go up from 25 per cent to 35 per cent and ensuring compliance would be greatly impacted particularly from PSUs as Sebi has to depend on government for funding,” the official said. FM Nirmala Sitharaman’s July 5 budget proposals require the regulator to transfer its surplus funds to the Consolidated Fund of India (CFI). It will also need prior government approval for its annual capital expenditure plans, she has proposed.   That could lead to a conflict of interest with respect to the regulator having to enforce the shareholding cap and PSUs...

An increase in the effective tax rate will affect only high net-worth individuals, and according to government policy they should contribute more to nation building, the finance minister said  The controversial super-rich tax on foreign portfolio investors (FPIs) that are organised as trusts will stay undiluted as Parliament passed the Finance Bill, 2019, on Thursday.  Replying to a debate on the Bill in the house, Finance Minister Nirmala Sitharaman dismissed the argument of the Opposition that the tax would lead to a flight of FPIs.  “It will have an impact on FPIs registered as trusts. There is an option for FPIs to register as companies. If they are registered as companies, they don't have a problem with this new tax,” Sitharaman said.  She said a trust was treated as an individual entity and came under the tax.  She recalled finance ministry officials had been saying that FPIs registered as trusts might consider the option of dressing up as companies. An ...