CA Online

Several landmark judgments have improved the woman’s position in a Hindu Undivided Family (HUF), such as one that ruled the eldest daughter, even if married, can replace her father as karta in an HUF after his death. However, a karta ’s wife or daughter-in-law cannot replace him. According to HUF laws, when a karta –or manager – of an HUF passes away, his eldest son automatically replaces him. But, cases where a karta only has daughter/s, or his children are minors, have been subjects of dispute. The position of a karta is a powerful one, for this person controls, and is also the custodian of, the finances of an HUF. “The karta borrows money on behalf of the family. He can spend money for the family without being accountable to the members, as all his actions are assumed to be carried out for the benefit of the family. The decisions of the karta are binding on other members,” says Hitesh Jain, senior partner at ALMT Legal. But, the karta cannot divide the estate disproportionatel...

The special investigation team(SIT)on black money has asked the Securities and Exchange Board of India (Sebi)to furnish the details of all those investing through participatory notes (P-Notes),according to sources in the know. This is the first time the government -constituted body has sought such massive amount of data,which includes the list of beneficial ownersand transfer trial sof investors taking the PNote route to invest in domestic equity and debt markets. The markets regulator,Sebi, which recently tightened the disclosure requirement for P-Notes, has already furnished the information to the SIT and the exercise would take a few more weeks to complete,sources added. The SIT wants to ensure that there gulatory changes made by Sebi are sufficient to curb misuse of tools,particularly with respect to end beneficiaries. The expert panel is concerned that the P-Note route coulds till be used by Indian companies to bring back unaccounted money, one of the officials who works...

Managements evading hard decisions, bank consolidation depends on resolving NPAs: Rai Banks Board Bureau chief Vinod Rai said little progress has been made on resolving bad loans as managements are reluctant to take hard decisions on recasting debt despite concerns that the rising burden of non-performing assets (NPAs) is holding back the economy. “We are not making much progress and I don't think we have anybody else to blame but the banks themselves,“ Rai told ET, adding that the government and RBI had created a conducive environment for lenders to clean up their books. The veteran bureaucrat, who was roped in by the government to oversee a planned transformation of state-owned banks, added that he doesn't see any prospects for consolidation until bad loans are sorted out. Rai, whose mandate is likely to get broader, said he now sees signs of recovery in the economy . But banks need to push sluggish credit expansion to spark private investment, which has been lagging ...

The Companies Act, 2013, has introduced important audit reforms. One of the important reforms is rotation of the auditor. All listed companies; unlisted public limited companies having paid-up share capital of Rs.10 crore or more; all private limited companies having paid-up share capital of ~20 crore or more, and all companies having public borrowings from financial institutions, banks or public deposit of Rs.50 crore or more are required to rotate their auditor. An individual cannot continue as an auditor for more than one term of five years and an audit firm cannot continue as an auditor for more than two terms of five years, that is a consecutive period of 10 years. The cooling off period is five years. The Companies Act allows three years for complying with the provision. Therefore, the provision must be complied by April 1, 2017. The objective is to enhance audit independence. This is expected to improve audit quality, resulting in improved financial reporting. Traditionally,...

Many stories appear in the media about those whose employee stock ownership plans (ESOPs) made them millionaires when their companies got listed. A recent one is that of RBL Bank. The bank had issued ESOPs at exercise prices ranging between Rs 52 and Rs 120. A large number of ESOPs were exercised at an average price of Rs 59.40 a share. When the stock listed at Rs 274 apiece, the employees enjoyed a windfall. In India, Infosys popularised ESOPs in the 1990s. The company’s various schemes have created hundreds of dollar millionaires and thousands of rupee millionaires. While these stories paint a rosy picture, and are even inspirational, all of them don’t end equally well. How ESOPs work ESOPs are a motivational tool, given to employees to impart a sense of ownership. There are four stages in an ESOP scheme. The first is its grant. At this point, the company communicates to its employees that they are being given options that can be converted into shares at a predetermined price...

The Centre has warned employees of disciplinary action if they indulge in criticism of the government or its policies. The move comes after officers of Indian Revenue Service (Customs and Central Excise) and All India Association of Central Excise Gazetted Executive Officers, among others, suggested changes in Goods and Services Tax Network (GSTN), a private company tasked with creating information technology infrastructure for the goods and services tax (GST), and composition of Revenue Secretary-led GST council secretariat. “Of late, it has been noticed that some associations or federations have commented adversely on the government and its policies. It may be brought to the notice of all associations or federations that if anyone indulges in criticism of the government and its policies, appropriate action (including disciplinary action) shall be taken,” an order issued recently by finance ministry said. It cited service rules that bar any government servant from making any a...

The Insolvency and Bankruptcy Code (IBC), 2016 proposes to set up new institutional pillars to support the insolvency resolution and liquidation processes. One such pillar is the industry of insolvency professionals. Insolvency professionals (IP) are expected to play a critical role in the timely and efficient insolvency resolution of firms and individuals. Two specific provisions pertaining to IPs in the new law have gone largely unnoticed: (i) not just individuals but firms can also get licensed as IPs (ii) those residing outside India can practise as IPs on Indian corporate and individual insolvencyrelated matters. Both these provisions can have important implications for the regulatory structure of the IP industry once the law is implemented. The regulation of professions in India has been a failure. Self-regulatory organisations in professions such as medicine (Medical Council of India), law (Bar Council of India) and accountancy (The Institute of Chartered Accountants of Indi...

The Commerce Ministry has suggested to its finance counterpart that the exemptions given to exporters should continue under the new indirect tax regime, GST. The proposed procedure of paying taxes and then claiming the refunds by exporters under the Goods and Services Tax (GST) would cause hardships for them, said an official. Hindustan Times New Delhi,10th October 2016

Raj Kumar Kohli, 61, a Delhibased government servant, has purchased multiple insurance policies over his lifetime. For some of his policies he still gets communications from the insurer, and he has managed to keep track of those. But, he suspects that he could have lost track of a few policies that he had purchased decades ago, and whose policy documents he has misplaced. Help is now at hand for policyholders like Kohli. From October 1, opening an e-insurance account has become compulsory for buyers of new policies. The insurer whom you are buying the policy from will facilitate the process of opening this account. Existing policyholders will have to initiate the process themselves. One advantage of opening this account will be convenience. After fulfilling KYC (know your customer) requirements, you will be able to store multiple insurance policies across segments at one place. Retrieving the policy at the time of lodging a claim will become easier. “Today, more than ~5,000 cro...

Foreign investors are facing compliance difficulties in moving from the foreign institutional investor (FII) to foreign portfolio investor (FPI) regime. The deadline to obtain an FPI licence ends in March 2017. Existing FIIs are required to submit documents and undertakings to obtain the licence. Also, there are issues regarding taxation under the new regime, say industry experts. These are forcing certain FPIs to rethink about remaining invested in India, experts add. “There are many inconsistencies yet and they (government) haven’t clarified issues that need to be addressed,” said Shardul Shroff, executive chairman, Shardul Amarchand Mangaldas. Foreign investors are finding it difficult to complete the paperwork, which includes submitting constitutional documents, identity proofs, among others. The lengthy process of certification of original papers and the frequency of accepting documents by the Indian authorities is said to be asource of discomfort for foreign investors. Legal ex...

The commerce ministry on Thursday said the website www.copyright.in does not represent the copyright registration office of India. It was inviting applications for protection of various worksliterary, artistic, dramatic, musical, sound recordings - the ministry said. Business Standard New Delhi,07th October 2016