CA Online

Sebi scraps ´ brightline´ control test proposal The Securities and Exchange Board of India (Sebi) on Friday said it has dropped the proposal of  adopting the “brightline test” to determine acquisition of “control”. In March 2016, the market regulator had floatedadiscussion paper on “brightline tests for acquisition  of ´control´ under Sebi Takeover Regulations”. The brightline test isadifferent approach to defining control, which prescribesalist of protective  rights which do not amount to acquisition of control. The current framework, is largely formulaebased, with one of the criterion being acquisition of 25 per  cent stake or voting rights. Determining change of control is critical as it triggers an open offer to the public shareholders. “The relevant issues have been examined intensively and in view of the aforesaid comments received and  considering the current regulatory environment, it has been decided to continue with the practice of  ascertaining acquisition of ´co

Packaged food without trademark may face 5% GST Packaged food items sold under a brand name without a registered trademark may face five per cent goods  and services tax (GST). This is among the issues likely to be taken up at the GST Council meeting on  Saturday. Other items on the agenda for the daylong meeting in Hyderabad include reopening of the composition  scheme window, hike in cess on cars and correction of anomaly in rates of certain goods. Finance Minister Arun Jaitley is learnt to have assured representatives of branded food companies with  registered trademarks that the government will rectify the anomaly in the Council meeting on Saturday. Widening the definition of ´brands´ by the Council will end the exemption foralot of packaged food  players who have a logo and a brand name but have not applied for a trademark. The registered trademark players, especially rice companies, which face a five per cent GST, have  protested against the misuse of provision by cer

Govt offers online tool to resolve foreign trade issues The government has set up an online service facility that can be used by importers and exporters to  resolve all foreign traderelated issues, an official statement said on Friday. The directorate general of foreign trade (DGFT), which comes under the commerce ministry, has asked  all exporters and importers to use the system —Contact@DGFT —for resolution of their matters. The Business Standard, New Delhi, 09th September 2017

MCA issues notices to errant NBFCs In yet another attempt to crack the whip on shell companies, the Ministry of Corporate Affairs has  issued notices to companies which were supposed to act as non-banking financial companies but have not  registered with the Reserve Bank of India (RBI). The ministry had taken this action to seek  explanation from these companies on their businesses within 10 days, a source said. If companies are  found to be in non-banking financial activities such as lending, investment or deposit acceptance as  their principal business, without RBI registration, the central bank can impose penalty or even  prosecute them in a court of law. The Business Standard, New delhi, 09th September 2017

PSBs choke on bad loan mess Public sector banks (PSBs) saw their loan book shrink for the first time in at least two decades as advances fell by Rs 1.35 lakh crore in FY17. In comparison, PSBs had made fresh loans (onanet basis) of Rs 1.34 lakh crore in FY16. Also, PSBs´ average capital adequacy is 40 per cent lower than that of private sector banks and half that of listed retail nonbanking finance companies (NBFCs). Every Rs 100 worth of advances by PSBs were backed by Rs 10.4 worth of core capital or net worth during FY17. The corresponding numbers for private sector banks and listed NBFCs were Rs 17 and Rs 21.4, respectively. The low capital adequacy constrained their ability to make fresh loans. At the peak, PSBs had made fresh loans of over Rs 6 lakh crore during the fiscal year ended March 2014 (see adjoining chart). The decline in advances of PSBs gathered speed during the current fiscal year, according to the Reserve Bank of India´s (RBI´s) 201617 annual report.

IT dept steps up drive against cash abroad The incometax (IT) department has established charges against five persons with unaccounted foreign  assets of Rs 5,000 crore in the British Virgin Islands (BVI),aCaribbean tax haven. Investigations are on in more cases. According to sources in the tax department, these persons are from the gold and diamond export  business, and have strong business operations in India as well. The total undisclosed foreign asset held by them was worth Rs 5,000 crore. These are among the 612 Indian residents named in the list exposed by The International Consortium of  Investigative Journalists (ICIJ) in 2013. The consortium released information about thousands of secret companies, trusts and funds in offshore  hideaways. According to tax officials, these are “established” cases where they had made offshore investments and  secret financial transactions, but it did not reflect in their tax statements. These people are accused of holding share

Physical shares to demat — the hurdles Signature mismatch to death of the owner are some of the problems. Here are ways to deal with them Did you find a bunch of yellow certificates while cleaning your parent’s or grandparent’s cupboard? It’s quite possible that those are share certificates, still in the physical form, purchased way back in the seventies or eighties. You need to brace yourself for problems while trying to convert these physical shares into electronic (demat) form. To start with, the beneficiary (owner of the physical share certificate) should have an active account with a depository institution. Otherwise, he has to open a new account in the name of the beneficiary. This can be done through banks or stock brokerages. Depository participants (DP) from banks and stock brokerages form the interface between beneficiary and depository institutions (National Securities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL)), hand-holding the benef