Missive Volume III – June 2011 T R A N S A C T I O N A D V I S O R S

Dear Patron Here we are again with the Third successive issue of our monthly ‘Missive’. The month witnessed a slew of updates relevant from the transaction perspective and it seems that both the RBI and the Ministry of Corporate Affairs literally went into an overdrive in issuing circulars. The next few pages speak for themselves. Of all these updates, FDI in LLP, Rolling out of the combination regulations, Green initiatives in the corporate governance and enactment of Foreign Contribution Regulation Act are the ones who have stolen the show. Besides, courts in India have also been delivering certain key decisions. And with various discussion papers, concept notes and draft regulations already in the public domain for discussions, the next few months are going to witness some serious action. We trust you will enjoy reading this Missive. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents. Thanks and regards, Akhil Bansal Editor, Knowledge Management Team

Topics Page No FEMA 1 Corporate Law 4 Transfer Pricing 6 Competition Law 7 SEBI 8 Direct Taxes 9 Other Regulatory Updates 10 Recent News in Transactions that made headlines

12

“If you don’t like something, change it….. If you can’t change it, change

the way you think about it…..”

1

Foreign Exchange Management Act - RBI Liberalisation of Overseas Direct Investment – A.P. (DIR Series) Circular No. 69 Dated 27.05.2011 RBI has made certain changes to the prevailing ODI Regulations, in order to provide operational flexibility to Indian Corporates having investment abroad. Some of the changes brought about are with respect to: § Performance Guarantees issued by the Indian Party - Only 50% (as

against 100% at present) of the amount of performance guarantee provided by Indian companies to overseas ventures will be taken into account while computing the overall exposure limit. Indian companies are allowed financial commitments in overseas ventures up to 400% of their net worth.

§ Restructuring of the balance sheet of the overseas entity involving

write-off of capital and receivables - Existing regulations allow restructuring of balance sheets only for winding-up of JVs (atleast 51% holding) and wholly-owned subsidiaries abroad. Now, listed companies will be allowed to write off 25% capital, loans and other receivables such as royalty and management fee of their JVs and wholly-owned subsidiaries through the automatic route. Unlisted companies can do so after approval.

§ Disinvestment by the Indian Parties of their stake in an overseas

JV/WOS involving write-off – certain amendments have been made § Issue of guarantee by an Indian Party to step down subsidiary of JV

/WOS have now also been covered under general permission Impact: These are indeed welcome steps to provide additional headroom for overseas investments through the automatic route and ease procedural

complexities for companies which have global operations. Indian companies will get more flexibility in managing international joint ventures (JVs) and wholly-owned subsidiaries. The move regarding write-offs seems to be aimed at converging existing rules and regulations with IFRS. Under IFRS, all investments are subjected to the impairment test, i.e. whether the investments are fully realisable or whether there is erosion in value. Opening of Escrow Accounts for FDI transactions [A.P. (DIR Series) Circular No. 58 dated – May 02, 2011] RBI has permitted under automatic route, § ADs to open non-interest bearing Escrow accounts in India on behalf of

residents and / or non-residents, towards payment of share purchase consideration

§ SEBI authorized Depository Participants to open and maintain Escrow accounts for securities

Other key conditions with respect to above liberalization of escrow accounts are as follows § The terms of the Escrow account to be laid down in the Escrow

agreement, Share purchase agreement, conditions of issue of shares etc.

§ The underlying FDI transaction for which the Escrow account is opened should be compliant with extant FEMA provisions.

§ The Escrow account shall remain operational for a maximum period of 6 months only

§ No fund or non-fund based facilities would be permitted against the balances in the Escrow account.

2

§ Balance in the Escrow account, if any, may be repatriated at the then prevailing exchange rate (i.e., the exchange rate risk will be borne by the non-resident)

Impact: Prior to the issuance of the Circular, there was uncertainty as to whether RBI approval was required for opening of escrow accounts pertaining to FDI transactions; therefore, as a market practice, escrows were often maintained outside India to facilitate the commercials of the transaction (commercials includes the structuring of transactions, closing of transactions, etc.). But the above Circular, has now made it possible to set up and maintain such escrow accounts for FDI-related transactions in India without any delay. Also, the RBI has finally realised, that the time taken in the legal and due diligence process is prolonged and to facilitate the operation smoothly for new issues of transfer of shares to or from the NRIs, the authorization process needs to be amended. Permitting opening of Escrow accounts will ease out the M&A transactions in India and enable the investors to complete due diligence and other formalities before the completion of the transaction. Pledge of shares for business purposes [A.P. (DIR Series) Circular No. 57 dated May 2nd, 2011] RBI has decided to delegate powers to AD Category–I banks to allow pledge of shares of an Indian company held by non-resident investor/s in the following cases (subject to compliance of certain conditions): § Pledge in favor of an Indian bank in India to secure the credit facilities

being extended to the resident investee company for bonafide business purposes;

§ Pledge in favor of an overseas bank to secure the credit facilities being extended to the non-resident investor / non-resident promoter of the Indian company or its overseas group company.

Impact: Since there are a substantial amount of overseas funds being invested in Indian shares, non-residents require freedom to leverage their Indian investments for raising debt, both at an overseas level or India level. Due to dispensation of prior RBI approval, there would be a reduced time frame for mobilization of debt funds raised by pledge of shares of Indian company. The liberalisation concerning this pledge is a welcome initiative and enhances the business purpose borrowing ability of the Indian Investee Company as well as its Non-Resident Investors. Government approved FDI in LLP [Press Note 1 (2011 Series)] The Government has decided that FDI in LLPs will be permitted and implemented in the calibrated manner. The salient features of the policy are as below. § FDI in LLPs are permitted only in sectors where 100% FDI is permitted

under the automatic route and where no conditions are prescribed. § Indian companies having FDI will be permitted to make downstream

investment in LLPs only if both the Indian company and the LLP are operating in sectors where 100% FDI is permitted under the automatic route without any conditions. LLPs with FDI will not be eligible to make any downstream investments.

§ The Foreign investor will be permitted to participate in the capital structure of the LLP only by way of cash considerations.

§ FII /FVCI not permitted to invest in LLPs. § LLPs will not be permitted to avail External Commercial Borrowings. § Conversion of a company with FDI into an LLP will be permitted only

with prior approval of FIPB.

3

Impact: Permitting FDI in LLPs would give flexibility to foreign investors, depending upon their nature and size of investment. Even foreign investors with existing investments by means of joint ventures and wholly owned subsidiaries can now restructure and convert themselves to LLP, as long as they meet the pre-requisites provided for in the said release. However, issues such as valuation norms, determination of ownership and control, non-cash contributions still needs to be addressed by the Government. Other clippings

§ RBI is likely to make it mandatory for foreign banks in the country to

operate as wholly-owned subsidiaries, in line with the international practice, so that the central bank can have better control over their working. At present, the foreign banks operate through their branches.

§ RBI in its proposed norms for holding companies has said that financial groups can list both the holding company as well as the subsidiaries. RBI had placed the Report of the Working Group on Introduction of Financial Holding Company Structure in India on its website for inviting comments from the public. The proposed structure is similar to that prevailing in Western countries where holding companies like Citigroup are listed and serve as a vehicle for raising capital. The holding company in turn has subsidiaries in banking, asset management, insurance, investment banking and non-banking finance.

§ The Finance ministry has cleared the RBI’s draft guidelines on new bank licences with a rider that the existing 74% cap on foreign direct investment be retained. The central bank, which had proposed capping FDI in new banks at 49% in the first 10 years, is likely to make

the guidelines public and may seek comments from all stakeholders again.

§ RBI panel suggests tighter reporting norms for interest rates and forex derivatives. The report of the Working Group set up by RBI suggested that Clearing Corporation of India (CCIL) should be made the repository of all interest rate and forex derivative transactions.

§ The Government of India has decided to raise the overall limit for external commercial borrowings to $30 billion from $20 billion before; so the corporates can borrow more

§ For IPO related transient capital flows under the Application Supported by Blocked Amount (ASBA) mechanism, foreign currency-rupee swaps have been permitted to the FIIs subject to certain conditions

4

Corporate Law Green Initiatives in the Corporate Governance The Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Governance” by allowing paperless compliances by the companies under the provisions of the Companies Act, 1956. § Allowing service of Documents including Balance Sheets and Auditors

report, etc through e-mail addresses (General Circular No. 17/2011 dated 21.04.2011 & Circular No. 18/2011 dated 29.04.2011)

§ Participation by Directors and shareholders in meetings through video

conferencing (General Circular No. 27-28/2011 dated 20.05.2011)

§ Voting in General Meeting of Companies through electronic mode - In order to have a secured electronic platform for capturing accurate electronic processes, CDSL and NSDL are being given approval (General Circular No. 21/2011 dated 02.05.2011)

§ All certificates and standard letters issued by ROC to be issued electronically under the Digital Signatures of the ROC (General Circular No. 29/2011 dated 20.05.2011)

Impact: The above initiatives will allow the Companies to curb huge costs, particularly in the case of companies with overseas shareholding, and directors wherein meetings have now been allowed to be conducted electronically

Other improvements in process in MCA21 to help stakeholders / corporates § Introduction of Refund Process (refund of fees wrongly paid by the

stakeholder while availing various services at MCA 21)

§ Automatic approval for Form 2, Form 3 regarding return of allotment of shares, Form 18 for change of registered office and for 32 for change in directors details to be processed under STP mode (i.e. Straight through processing)

§ Delegation of power to issue section 25 license to a company from Regional Director to ROC

§ Companies which had defaulted in filing their annual returns and balance sheets for a continuous period of three years have been moved into a separate basket as "Dormant" companies. Form 8, 10 (for registration of charges) and Form 17 (for satisfaction of charges) are not allowed to be filed by a dormant company.

§ Companies who have not filed their statutory Annual Reports (i.e. Balance Sheets, Profit and Loss Accounts and Annual Reports) with ROC, are now not allowed to file their other Forms except certain Forms (viz. Form 32 for change in directors, Annual return, Form 23AC for filing financials, Form 21 i.e. notice of the court or company law board order, etc) till the companies has filed its updated Statutory Annual Accounts/ Annual Report in MCA-21 system. (Circular [F.No. 17/146/2011-CL-V], dated 12-5-2011)

5

Marking a company as having management dispute by Registrar of Companies under MCA-21 system in specific cases (General Circular 19/2011 dated May 2, 2011) This marking creates an alert and the documents are not approved and remain in the registry as work in process till it is demarked by the Registrar. In order to ensure uniformity among ROCs, it has been clarified that the ROC shall use the facility only in following specific cases § Where the court or CLB has directed to maintain the status-quo with

reference to any e-forms including the status of Directors in the company or, The Court or CLB has granted any injunction or stay in taking the document on record and ROC is a party in such court cases, etc

§ In other cases, where ROC in not a party, it is for the parties to comply to such orders and in case of non-compliances ,the law shall take its own course

Other Updates § LLPs have now been allowed to be appointed as auditor of companies

§ MCA has excluded banking, insurance, power, NBFCs and overseas

subsidiaries of these companies from Phase I of the implementation of XBRL.

§ The Director’s Relative (Office or Place of Profit) Rules, 2011 (which came earlier this year) provided that in case of a public company, the remuneration not exceeding Rs 250,000 per month can be made to a relative of director, provided the appointment is approved by a Selection Committee comprising of a majority of independent directors and an expert in the respective field from outside the company. The

said Rules have been amended wherein the clarifications have been made on composition of the committee. [vide Notification No. G.S.R. 357(E), dated 02-05-2011]

§ MCA, in the conference of Official Liquidators, stresses to expedite the Process of Liquidation Of Companies. This comes in view of the fact that the time taken for liquidation of companies is one of the major factors responsible for India’s low rank in the global “doing business survey” conducted by the World Bank. A series of measures have also been identified in the conference for expediting liquidation.

Significant decisions § The Supreme Court had set aside the judgment of the Gujarat high

court and directed the sale of a wound-up company at a higher price so that creditors will get their dues. The high court had confirmed the sale at the earlier price on the ground that a confirmed auction sale cannot be set aside merely because subsequently a higher price was offered by one of the bidders.

§ Increase in Authorised Capital is not liable to stamp duty under Indian Stamp Act, 1899 as applicable in Delhi, as there is no express provision for charging stamp duty on the increase in authorized share capital in Schedule IA of the Delhi Stamp Act. With the ruling in place, Delhi government will soon amend the schedule so as to bring it in line with other state stamp act schedules which expressly mention about the chargeability of stamp duty on increase in authorized share capital [Delhi High court in the case of S.E. Investment Limited]

6

News Snippet § The Ministry is considering substituting Unlisted Public Companies

(Preferential Allotment) Rules, 2003 by replacing it with new set of Rules. The new rules have proposed that the securities should be issued in Demat mode and imposed more disclosures on both the company and the buyer. It also requires the issuer to seek government permission if the cumulative value of the allotment is over 5 crore. A draft of such rules has been released for public comments.

§ As per MCA, the new company law will make it mandatory for companies to disclose details of social sector initiatives, called CSR, in addition to money spent, to shareholders in their annual reports.

Transfer Pricing

Significant Decisions § If loss making companies were excluded, a super profit earning

company should also be removed from the comparables [ITAT Delhi]

§ Arm’s length price under TNMM can be determined even with one comparable company

News Snippet

§ CAG may review transfer pricing case which has revenue implications for the exchequer – Director General of Income Tax

§ CBDT had now instructed AOs and TPOs to look into technical evidence involved in a tax or transfer pricing case by seeking assistance in the form of opinion from technical experts in the relevant subject matter for expeditious disposition of such cases especially where there are substantial amounts of taxes at stake [Instruction No. 5/2011 dated 30 March, 2011]. This instruction follows from the directions provided by Supreme Court in its ruling in the case of CIT v. Bharti Cellular Ltd. [2010-TI1-05-SC-INTL].

7

Competition Law The Competition Commission of India (Procedure in regard to the transaction of business relating to combination) Regulations, 2011 A draft set of regulations for regulating combinations had been released for public discussions (the brief provisions of which were covered in our April 2011 missive). After extensive discussions with various industry forums and professionals, a revised set of Combination Regulations has been finalized. The regulations would come into effect from June 1st, 2011, the same date when the provisions relating to combinations would come into force. Initially, the draft regulations, sought to expand filing and approval requirements to transactions, which would fall within the purview of a combination, but may not have had an Appreciable Adverse Effect (AAE) on competition (such as a pro-rata bonus share issuance to shareholders). This could have potentially resulted in unnecessary time delays in implementation of such “harmless” transactions. Keeping in line with the basic intention of Competition Law to regulate only those combinations, which could have an AAE in India, the Combination Regulations provide a schedule of transactions (otherwise qualifying as combinations), which may not have an AAE, and hence approval under Competition Law would not normally be required. Broadly, the following transactions are covered under the schedule subject to certain conditions. § Direct/ indirect acquisition of non-controlling stake (equal or less than

15%) or additional stake acquisition by an existing majority shareholder (already holding 50%)

§ Corporate action like bonus, stock split, rights issue, etc § Asset acquisitions § Intra-group combinations § Foreign combinations with “insignificant local nexus”

§ Other cases like acquisition by underwriters, stock brokers, etc

This revised set of Combination Regulations addresses various concerns raised by industry forums on the draft regulations released earlier, and provides some level of clarity on transactions, which would fall within the purview of Combination Regulations, or outside their purview. Recent Orders by CCI

§ CCI imposed a penalty of Rs 1 lakh each on 27 film producers on

charges of colluding through a cartel to exploit theatre owners. CCI imposed the fine on filmmakers after having found them guilty of entering into anti-competitive agreement.

§ CCI pronounced the National Stock Exchange (NSE) guilty of abusing its dominant market position by adopting unfair trade practices in connection with currency derivatives trading. The MCX-SX in its representation to CCI in November 2009 had alleged that NSE had substantially reduced admission and trade related fees to eliminate competition and discourage other entities from entering the market.

News Snippet

§ CCI ruled out any conflict with SEBI over the notified M&A norms,

saying the new regime would not clash with the market regulator’s takeover code.

8

SEBI Pre-agreed buyback of shares through put/call option in not valid under SCRA - SEBI

SEBI in its recent informal guidance to Vulcan Engineers Limited (VEL) (dated 23 May, 2011) has communicated to VEL that, the pre-agreed buyback of VEL shares from SIMEST through put/call option is not valid under SCRA. [LETTER NO. CFD/DCR/16403/11] SEBI, after the opinion in open offer by Vedanta wherein it had sought removal of clauses of “call / put options” from the agreement regarding sale of shares in Cairn India, is asserting the view that all kinds of put/call options are in the nature of forward contract and are therefore not valid under the securities laws in India. Even early this year, a 3-member arbitration panel in the BALCO case of Sterlite versus the Government of India held that any restriction on the free transferability of shares of a public company is violative of Section 111A of the Companies Act. Corporates are regularly inserting put/call option clauses in the SPA/SSA, the practice may need to be reviewed, especially for listed cos in India. News Snippets § SEBI wants IPO bankers to disclose their past record in handling the

public offers

§ SEBI stops Vaswani Industries listing, suspecting dummy IPO subscriptions on fears that a majority of the applicants could be dummy investors, acting on behalf of a few big operators as around

3,000 retail applicants withdrew their applications & several others were disqualified due to stop-payment of cheques.

§ SEBI has asked mutual funds to inform the investors on an urgent basis about their support or opposition to various business decisions of the companies. It is of the view that the fear of a possible opposition by institutional investors like mutual funds being made public would force the companies to follow best corporate governance practices in their businesses.

§ SEBI has proposed to put in place a business intelligence gathering mechanism with an aim to enhance its surveillance and protect investors’ interest.

§ Securities Appellate Tribunal (SAT) has ruled in a matter wherein there was a change in the term of plan (by increasing the term thereof), that the same affects the fundamental attributes of the scheme and modifies the interests of the unit-holders and thus the same should have been given effect to after notifying the unit-holders and providing an exit option to them as set out in Reg. 18(15A) of the SEBI (Mutual Funds) Regulations, 1996, in the absence of which, the investors are entitled to relief.

§ NSE & BSE has received an in-principle nod from SEBI for SME exchange

§ SEBI may soon frame a stringent set of rules for funds investing in art works, antiques, coins and stamps, with an aim to check black money flow into these products and safeguard the interest of genuine investors.

9

Direct Taxes Significant updates § India had Signed Double Taxation Avoidance Agreement (DTAA) with

Tanzania, Colombia and Ethopia

§ Agreement between India and Isle of Man and Commonwealth of The Bahamas for exchange of information with respect to taxes has been entered

§ A recent notification issued by the Ministry of Finance fixing the rate of interest as 9.5 per cent on the Employees' Provident Fund (“EPF”) balances for the purpose of income-tax exemption. In view of this notification, the anomaly between the interest earned on EPF balances and the income-tax exemption enjoyed by the RPFs member stands removed.

§ It is mandatory for Companies and Banks to issue Form 16A from TIN to their deductees for deductions made from April 1, 2011 (F.Y. 2011-12 onwards). [CBDT circular no. 03/2011 dated May 13, 2011]

Significant Decisions § High court upheld deduction claimed in respect of

remuneration/royalty paid to subsidiaries and holding companies on the contention that revenue authorities have not specified as to how much ordinary profit was supposed to be and the basis of its determination, before treating royalty payment as excessive and unreasonable. [Delhi HC]

§ Foreign corporates with subsidiaries in the country not subject to payment of withholding tax for financial services like discounting of bills provided to their Indian arms [AAR]

§ Consideration received under a composite contract for services which are ancillary to the main objective of providing a software user license (in the nature of field data collection/mathematical model studies) held to be Royalty [AAR]

§ Tax Refund Interest Not ‘Effectively Connected’ With PE [ITAT Delhi]

§ Transfer of shares of Indian company without consideration in the course of group reorganization, is not liable to tax in India [AAR]

§ Deduction U/s. 10A available on conversion of existing Domestic Tariff Area unit into Software Technology Park unit [Karnataka High Court]

§ Charges for data processing not ‘royalty’ [Mumbai ITAT] News Snippet § The Government has constituted a Committee under Chairman of

CBDT to examine ways to strengthen laws to curb the generation of black money in the country, its illegal transfer abroad and its recovery.

§ Desperate to curb the flow of blackmoney into the country’s economy, the Income Tax department has now begun to track all fliers and visitors who travel to tax havens like Switzerland, Virgin Islands and Bahamas for personal or business purposes secretly. India is also seeking pressure on tax havens to share information. Mauritius has for the first time provided banking information about a person being investigated by the Income Tax Department (ITD) for tax evasion and money laundering

10

Other Regulatory Updates Foreign Contribution (Regulation) Act, 2010 FCRA, 2010 has come into effect from May 1, 2011. While the provisions of the repealed FCRA, 1976 have generally been retained, the FCRA, 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent mis-utilisation of the foreign contribution received by the associations. Some new features of the legislation are § No person who receives foreign contribution as per provisions of this

Act shall transfer to another person, unless that person is also authorized to receive foreign contribution.

§ Foreign contribution shall be utilized for the purpose for which it has been received and such contribution can be used for administrative expenses up to 50% of such contribution received in a financial year.

§ New provisions have been made for suspension as well as cancellation of registration granted for violation of the provisions of the Act, management of foreign contribution and assets created out of such contribution of persons whose certificates have been cancelled, limiting the validity of registration certificate granted for a period of five years (with option for renewal thereof), imprisonment on violation of the provisions, etc

Other Updates

§ A Bank cannot Loan for subscription of Indian Depository Receipts (IDRs) or against security/collateral of IDRs - [RBI/2010-11/543 DBOD. Dir.BC. 96 /13.03.00/2010-11 dated May 25, 2011]

§ Splitting of Minimum Wages for the purpose of PF contribution not permissible - Ministry of Labour & Employment

§ Government of India has issued updates to the FAQ on Provident Fund

[PF] for international workers [IWs] on 6 May 2011 with a view to provide greater clarity on the applicability of PF regulations.

§ AS-11 provides for immediate recognition of exchange differences arising on long-term foreign currency monetary items. However, in order to prevent immediate burden on the companies, alternatives were proposed in earlier years wherein such differences (in case of depreciable capital assets) can either be added or reduced from the cost of assets and depreciation over the life of such assets, or be accumulated in the “Foreign Currency Monetary Item Translation Difference Account” and amortized over the life of the monetary item but not after March 31, 2011. The government had now again extended the sunset date in the transitional provisions thereto by one more year.

Significant Decisions

§ The Delhi HC has dismissed the appeal of Champagne, Moet & Chandon (manufacturer of wines) in a Trade Mark Case against a Delhi firm selling meat products under the same name by upholding that though the marks were identical, the products were different.

§ Indian court has no jurisdiction in an international arbitration petition as the agreement provided that law governing the arbitration will be English law [Supreme Court in the case of Videocon Industries Ltd vs Union of India]

§ No case made out under the Negotiable Instrument Act if cheque was issued for Security Deposit and not towards the discharge of any debt or loan [Bombay HC]

11

§ The HC can only interpret a notification, it cannot alter the same –

[Supreme Court in case involving Central Excise Act]

§ If an Act excludes a service from service tax then same cannot be imposed by virtue of any circular [Madras high court]

§ Mortgage suit cannot be referred for settlement through arbitration. According to Apex court, all disputes are not capable of settlement through arbitration; some by nature have to be adjudicated by courts [Supreme Court in the case of Booz Allen and Hamilton Inc. Vs. SBI Home Finance Ltd. & Ors]

§ A firm of architects or engineers is obliged to contribute to the Employees State Insurance Fund. The court held that it is not only a place where “goods” are sold which comes within the meaning of the word “shop”. A place where “services” are sold has also been legally interpreted to be a “shop” [Delhi high court in the case of Consulting Engineering Services (India) Ltd vs ESI Corporation].

§ The application praying for withdrawal of the withdrawal application in a court is maintainable [Supreme court]

§ Unless a different intention appears from the terms of contract, in case of the imposition or increase in the tax after the making of a contract, the party shall be entitled to be paid such tax or such increase. The decision was rendered in the context of service tax on rent [Delhi High court]

News Snippet

§ DEPB scheme may not get extension – Commerce Ministry

§ SKS Microfinance have challenged the special act passed by the Andhra

Pradesh government to regulate micro finance institutions in the state before the Supreme Court on the ground that micro finance sector falls under the central list and is not a state subject

§ The Centre plans to introduce bill on Land Acquisition in the next session of Parliament

§ International Accounting Standards Board (IASB) wants full IFRS adoption in India. Large companies may have to adopt IFRS from next financial year when new tax regime comes into effect.

§ The government plans an umbrella law to tighten financial scrutiny and regulation of religious trusts and non-profit organisations.

§ An inter-ministerial group on inflation has recommended allowing FDI in multi-product retail as one of the two steps to tame rising prices

§ DIPP has issued a Discussion Paper on Utility Models wherein it examines the viability of introducing the same in IPR regime. Utility models are a framework for providing limited protection to those innovations which may not meet the standards of the Patents Act and yet are commercially exploitable and socially relevant.

§ Housing ministry has prepared the Model Residential Tenancy Act, 2011 that is intended to replace archaic rent control legislations that capped rentals, resulting in landlords getting a pittance for properties in prime localities in metros.

12

Recent News in Transactions that made Headlines

§ Adani Buys Coal Port in Australia for $2 b

§ Bombay High Court had asked Jet Airways to pay 478 crore to Sahara India within two weeks as dues for the takeover of Air Sahara

§ Facebook and Google Inc are separately considering a tie-up with Skype after the web video conferencing service delayed its IPO

§ UK-based Serco Group is in talks with Blackstone to acquire a controlling stake in India’s largest unlisted BPO, Intelenet Global Services

§ Oracle Corp, the world’s second biggest software maker, is in early-stage discussions with potential bidders and investors about a possible sale of its software services unit

§ Morgan Stanley, Isolux Corsan to invest $400 mn in India JV

§ Global investment fund T. Rowe Price, which acquired a strategic 26% stake in UTI Asset Management Company (UTI AMC) last year, has threatened to exit the venture, complaining of government interference in the appointment of its chairman

§ Pension Fund Regulatory and Development Authority (PFRDA) had staked a claim to the pension schemes of insurance companies, setting the stage for a turf war with IRDA, the insurance regulator. The matter has been referred to the Financial Stability and Development Council, the regulatory dispute settlement body.

§ Aditya Birla Group bought Swedish pulp maker Domsjo Fabriker for $340 million signalling intent to grow the fibre business globally

§ The Finance Ministry and regulators will change the rules to give Sovereign wealth funds floated by governments of rich countries more headroom, when they buy shares in listed Indian companies. It is proposed that SWFs belonging to countries that have signed treaties or agreements with India should be allowed to buy up to 20% shares of a listed company, without making an open offer to existing shareholders.

Errata - Please ignore the impact of our first update in the ‘May’ missive wherein we have stated that even foreign directors would need to obtain PAN in view of General Circular 11/2011 dated April 7th, 2011. The correct interpretation is that only Indian nationals are supposed to mention the PAN and Foreign Directors have to register their passport number instead of PAN. We sincerely regret the error and inconvenience caused to you

This publication is intended as a service to clients and associates and to provide them with details of the important Transaction updates. It has been prepared for the general guidance on matters of interest only, and does not constitute professional advise. No person shall act upon the information contained in this publication without obtaining specific professional advise. Due care has been taken while compiling the information , however, no representation (express or implied) is given as to the accuracy or completeness of the information contained in this publication

This publication is intended as a service to clients and associates and to provide them with details of the important Transaction updates. It has been prepared for the general guidance on matters of interest only, and does not constitute professional advise. No person shall act upon the information contained in this publication without obtaining specific professional advise. Due care has been taken while compiling the information , however, no representation (express or implied) is given as to the accuracy or completeness of the information contained in this publication

AMinds Advisors Private Limited specializes in the fields of Mergers & Acquisition, Valuations, Due Diligence, Pre-fund raising Structuring, Financial Re-structuring, Regulatory, Private Equity and other funding opportunities Our guiding philosophy is “To carry out every professional assignment effectively and efficiently, while upholding the virtues of independence and integrity, without compromising on the creativity and quality of work, so as to provide utmost satisfaction to our clients ”

A-371, Defence Colony, New Delhi –110024

Tel: +91-11-4980-0000 Fax: 91-11-4980-0029

Email: akhil@spnagrath.com www.amindsadvisors.com

For any professional advice regarding alerts in this newsletter, we welcome your queries

T R A N S A C T I O N A D V I S O R S

©Copyright AMinds Advisors Private Limited , All rights reserved