Insights
November 9, 2017

INDIA’S TAX REGULATOR “CLARIFIES” INDIRECT TRANSFER PROVISIONS IN CASE OF REDEMPTION OF SHARES OUTSIDE INDIA

Under the provisions of the Income-tax Act, 1961 (the “ IT Act”), the income of a non-resident will be deemed to accrue or arise in India if it arises, directly or indirectly, through or from any business connection, property, asset or source of income, or from a transfer of a capital asset (shares or other interest) situated in India. The indirect transfer provision was introduced in the Finance Act, 2012, by way of Explanation 5 to Section 9(1)(i) of the IT Act, clarifying that an offshore capital asset will be treated as situated in India if it substantially derives its value (directly or indirectly) from assets located in India.

Tags:
Tax
Private Equity and Venture Capital
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September 22, 2017

NTT DOCOMO FINDS ITSELF IN A TAX BIND

On March 25, 2009, NTT DoCoMo Inc., a company incorporated in Japan (“ NTT”), entered into a shareholders’ agreement with Tata Teleservices Ltd. (“TTL”). Under the terms of the agreement, it was agreed that if TTL failed to satisfy certain “key performance indicators” within a period of five (5) years, then TTL would be required to find a buyer to purchase NTT’s shares (26%) of TTL at the sale price that was higher of: (a) the fair value of those shares as of March 31, 2014; or (b) 50% of the price at which NTT purchased those shares. In July 2014, when TTL could not fulfill the performance indicators and, thereafter, could not find a buyer to purchase NTT’s shares, NTT requested TTL to buy the shares at the price of INR58.04 per share.

Tags:
Tax
Corporate/M&A
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September 11, 2017

BRIGHT-LINE TESTS TO DETERMINE CHANGE OF “CONTROL” FOR TAKEOVERS A NO GO

In India, under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “ Takeover Regulations”), there exists a mandatory tender offer regime for acquisition of listed companies. Under this regime, both, the acquisition of a substantial shareholding stake (25%) and the acquisition of “control” are treated equally, and require the acquirer to make an open offer to the public shareholders. Currently, under the Takeover Regulations, the test to determine what constitutes change of “control” is principle-based. Keeping in sync with global norms, in early 2016, the Securities and Exchange Board of India (the “SEBI”) released a discussion paper (the “ Paper”) to explore bright-line tests to determine what constitutes as change of “control.”

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Corporate/M&A
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August 18, 2017

INDIA - SECURITIES LAW UPDATE

Recently, the Securities and Exchange Board of India (the “ SEBI”) has approved and notified several important changes to Indian securities regulations, including, extending relaxations from open offer and preferential issue requirements to new investors acquiring shares of distressed companies, extending relaxations from open offer requirements to acquisitions made pursuant to resolution plans approved by the National Company Law Tribunal (the “NCLT”) and exemptions from lock-in requirements at the time of initial public offer (“IPO”) to Category II Alternative Investment Funds (“ AIFs”) such as private equity funds and debt funds.

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Corporate/M&A
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August 2, 2017

INDIA - INSOLVENCY LAW UPDATE - SUPREME COURT ORDER MAY PAVE THE WAY FOR OUT-OF-COURT SETTLEMENTS

The Indian government enacted the Insolvency and Bankruptcy Code, 2016 (the “ Code”) to consolidate the law on insolvency in India, and provide an effective and timebound mechanism for recovering debts due to both, financial as well as operational creditors. The provisions of the Code are being tested in Indian courts, and an important ruling has been passed by India’s Supreme Court (the “Court”) on out-of-court settlements between parties following the commencement of insolvency proceedings.

Tags:
Banking and Finance
Corporate/M&A
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July 26, 2017

INDIA - INSOLVENCY LAW UPDATE - ACTION AGAINST ESSAR STEEL UPHELD

With the aim of having a robust and efficient insolvency process and to remedy the appalling credit default situation in India, the Indian government enacted the Insolvency and Bankruptcy Code, 2016 (the “ Code”). The Code introduced sweeping reforms by consolidating the law on insolvency in India, and providing an effective and time bound mechanism for recovering debts due to both, financial as well as operational creditors.

Tags:
Banking and Finance
Corporate/M&A
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June 23, 2017

“DOMINANT” WHATSAPP NOT INDULGING IN PREDATORY PRICING IN INDIA

In 2009, the Indian government implemented the provisions for prohibition of anti-competitive agreements and abuse of dominant position in India under the Competition Act, 2002 (the “Act”). More recently, antitrust litigation has picked up in India as the general public is becoming aware of various issues such as price fixing, cartel formation, tying arrangements and predatory pricing.

Tags:
Competition
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June 13, 2017

FURTHER EXEMPTIONS ON LONG TERM CAPITAL GAINS IN INDIA

Under the existing provisions of section 10(38) of the Income-tax Act, 1961 (the “IT Act”), income arising from the transfer of a long term capital asset, being equity shares of a listed company or units of an equity oriented fund, is exempt from capital gains tax if the sale transaction is chargeable to Securities Transaction Tax (“ STT”) under Chapter VII of the Finance (No.2) Act, 2004 (the “Tax Exemption”).

Tags:
Tax
Corporate/M&A
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April 26, 2017

INDIA - CROSS-BORDER MERGER PROVISIONS NOTIFIED

The erstwhile Companies Act, 1956 (the “1956 Act”) contained provisions for the merger of a foreign company with an Indian company but not vice versa. The Companies Act, 2013 (the “ 2013 Act”) made a significant change and introduced enabling provisions for merging an Indian company into a foreign company. The provisions relating to both inbound and outbound mergers along with the corresponding amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, have been notified on April 13, 2017.

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Corporate/M&A
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April 03, 2017

THE TARGET TEST EXEMPTION UNDER INDIA’S MERGER CONTROL REGIME TWEAKED

The Competition Act, 2002 read with the Competition Commission of India (Procedure in Regard to the Transaction of Business relating to Combinations) Regulations, 2011, deal with the merger control regime in India. On March 27, 2017, the Indian government issued a notification (the “ Notification”) changing the target test exemption.

Tags:
Competition
Corporate/M&A
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March 23, 2017

DELHI TRIBUNAL AFFIRMS TAX ON INDIRECT SHARE TRANSFERS DERIVING VALUE FROM ASSETS IN INDIA

Under the provisions of the Income-tax Act, 1961 (the “IT Act”), the income of a non-resident is deemed to accrue or arise in India, inter alia, if it arises, directly or indirectly, through the transfer of a capital asset situated in India. The Finance Act, 2012, introduced an explanation to section 9(1)(i) of the IT Act, under which an indirect transfer of shares or an interest in a company or entity registered or incorporated outside India substantially deriving its value from assets located in India was subjected to capital gains tax in India on the theory that the offshore capital asset would be regarded as situated in India if it substantially derived its value (directly or indirectly) from assets located in India.

Tags:
Tax
Corporate/M&A
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March 15, 2017

IMPORTANT CHANGES USHERED IN BY INDIA’S NEW TRADE MARKS RULES

On March 6, 2017, the Government of India (the “Government ”) notified the Trade Marks Rules, 2017 (the “2017 Rules ”), which replace the Trade Marks Rules, 2002 (the “ 2002 Rules”) and revamp the regime for trade mark filings in India. The Trade Marks Rules (both, 2002 and 2017) are formulated by the Government under the Trade Marks Act, 1999 (the “Act”), and specify the procedure to be followed for various matters, including applying, renewing or assigning trademarks and rectification of the trade marks register. In this update, we present a snapshot of the key features of the 2017 Rules and their impact on stakeholders.

Tags:
Technology
Media and Telecommunications
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March 07, 2017

INDIA - THE DAWN OF A NEW ERA IN REMEDIES FOR THE CONSUMER

Consumers in the real estate sector, particularly the residential real estate sector, often find themselves locking horns with builders or developers from whom they have purchased apartments in residential buildings. Grievances of consumers have commonly been for delayed possession of the housing space purchased, poor quality of construction, failure to meet assured standards, etc. Remedying these grievances has required either approaching the ordinary civil courts or alternate forums established under the Consumer Protection Act, 1986 (the “ Act”).

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Disputes
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February 01, 2017

INDIA BUDGET 2017-18 - KEY HIGHLIGHTS

India’s Union Budget (the “Budget”) was announced on February 1, 2017, and the Finance Bill, 2017 (the “ Finance Bill”) was tabled in Parliament. Most of the income tax proposals in the Finance Bill will be effective from the financial year commencing on April 1, 2017, unless specified otherwise. The Finance Bill will be discussed in Parliament before its enactment, and therefore, it is likely that the Finance Bill may be amended as a result of these discussions.

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Tax
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January 20, 2017

PENALTIES IN COMPETITION LAW VIOLATIONS IN INDIA

In June 2011, the Indian government implemented the merger control regime under the Competition Act, 2002 (the "Act") and the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (the " Regulations"). While the Competition Commission of India (the "CCI") is a fairly young regulator, over the years, the jurisprudence on Indian competition law and the merger control regime has developed substantially.

Tags:
Competition
Corporate/M&A
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January 04, 2017

THE INDIA-SINGAPORE TAX TREATY HAS BEEN AMENDED

The bilateral double taxation avoidance agreement between India and Singapore (the “Singapore DTAA”) has been amended. On December 30, 2016, India’s Central Board of Direct Taxes announced the signing of the protocol (the “Protocol”) amending the Singapore DTAA. The Protocol will be effective from April 1, 2017. Although the text of the Protocol is awaited (as it has not as yet been ratified by the India’s Ministry of Finance), the key changes to the Singapore DTAA and their impact are listed below.

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Tax
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