According to the SEBI Takeover Advisory Committee, the open offer only provides an opportunity to investors to exit the company and hence need not be treated as off-market transaction
A Securities and Exchange Board of India (SEBI) panel has suggested tax parity be introduced for shareholders who tender their shares in an open offer and those who sell through the stock market, reports PTI.
According to the SEBI Takeover Advisory Committee, the open offer only provides an opportunity to investors to exit the company and hence need not be treated as off-market transaction.
"The committee is of the view that there is a need to bring parity in the tax treatment given to the shareholders who tender their shares in an open offer and those who are selling the same in the open market," the report said.
According to the present regulation, open offers are classified as off market deals - entered into between private individuals and are largely unregulated and a non-transparent.
The committee noted that the present tax regime in India is more favourable towards open market transactions as against open offer transactions.
"For taxation purposes, an open offer transaction is considered akin to an off-market deal, which in the view of the committee is not desirable," the report said.
The panel recommended that the basic objective of an open offer is to benefit investors at large by granting them a just and fair exit opportunity.
"It would perhaps not be correct to club a regulated and investor friendly activity like open offers in the same bracket as an off-market deal," it said.
The oil ministry on 12th July had asked RIL to make a "pro-rata" cut in gas supplies to all existing customers if the production from its KG-D6 fields cannot support new customers like Essar Oil\'s Vadinar refinery
Upping its ante against the oil ministry, Reliance Industries (RIL) has refused to give natural gas to new customers by cutting supplies to power and fertiliser plants saying the ministry\'s order was in violation of the gas utilisation policy and wants panel of ministers to discuss it, reports PTI.
The oil ministry had on 12th July written to RIL asking it to make a "pro-rata" cut in gas supplies to all existing customers if the production from its eastern offshore KG-D6 fields cannot support new customers like Essar Oil\'s Vadinar refinery.
RIL on 15th July wrote to petroleum minister Murli Deora saying it had not signed contracts to supply KG-D6 gas with customers like Essar, as they were not ready to receive gas when available and so allocation made to them has lapsed.
The Gas Utilisation Policy, as framed by an Empowered Group of Ministers (EGoM), provides for no reservation of gas and users, who said will be able to take gas before end of 2009-10 fiscal, were allocated gas. However, not all those who were allocated gas were in a position to take gas by the appointed date.
"...all allocations that have not been signed on account of the customers not being ready to receive gas when available or lacking in the necessary pipeline connectivity cannot claim to have any quantity reserved for them," it wrote in the letter, a copy of which was also marked to finance minister Pranab Mukherjee.
RIL\'s KG-D6 fields can sustain a production of only 60 million standard cubic meters per day (mmscmd) and the company has already signed or committed to sign Gas Sales and Purchase Agreements (GSPAs) for 57.8 mmscmd.
Against the availability of 60 mmscmd gas, the oil ministry has allocated about 64 mmscmd and wants RIL to sign GSPAs with all those who have been allocated gas.
"On the day that KG-D6 production is not sufficient to cater to all the consumers with firm allocation, pro-rata cuts should be imposed on all firm consumers," the ministry wrote to RIL on 12th July.
Users awaiting signing of GSPAs include state-run NTPC (1.14 mmscmd), Essar Oil\'s Vadinar refinery in Gujarat (0.6 mmscmd), Oil and Natural Gas Corporation\'s LPG units (0.406 mmscmd), Rithala power plant in Delhi (0.4 mmscmd) and Bawana power plant (0.93 mmscmd).
The bill is expected to be tabled in the forthcoming session of Parliament beginning 26th July
Amid the Reserve Bank of India (RBI) expressing reservations over the Unit Linked Insurance Plan (ULIP) ordinance, the finance ministry today said a bill to replace the ordinance would be placed in the forthcoming session of Parliament beginning 26th July.
"Regulators have raised their points of view. The finance minister has taken note of those issues. The ordinance in whatever form has to be placed before Parliament. It is matter of a few days when this (bill) will be tabled and everybody would know what the future course of action on this particular piece of regulation is," finance secretary Ashok Chawla said.
After market watchdog Securities and Exchange Board of India (SEBI) and insurance regulator Insurance Regulatory and Development Authority (IRDA) locked horns over the jurisdiction of ULIPs, the government issued an ordinance giving IRDA the powers to regulate these schemes.
ULIPs are insurance schemes whose value is linked to the market value of shares they have been invested in.
However, a few days later RBI governor D Subbarao met finance minister Pranab Mukherjee and suggested the government to reconsider the ordinance.
"I have come to meet the finance minister in connection with the ordinance that they have issued regarding settlement of the dispute on regulatory jurisdiction. The RBI has certain reservations and concerns, which we have expressed in the letter," Mr Subbarao had said after the meeting.
Currently, inter-regulatory issues are looked into by a High Level Coordination Committee (HLCC), comprising financial sector watchdogs and finance ministry officials and is headed by the RBI.
Later, Mr Mukherjee said his ministry will not intervene in the autonomy of regulators, amid reservations expressed by the Reserve Bank over the ordinance on ULIPs.
"The intentions are quite clear. We are not going to intervene in the autonomy of regulators," Mr Mukherjee had said.
To a query on sovereign wealth fund, Mr Chawla said on the sidelines of a Confederation of Indian Industry (CII) conference that the government has taken no decision in this regard.
"Proposal has been mooted by some people. We will consider carefully as there are both points, in favour and against. At this point, no decision has been taken," he said.
On the status of the proposed Financial Stability and Development Council (FSDC) announced in budget 2010-11, Mr Chawla said, "FSDC...is supposed to be non-statutory forum of finance ministry and the regulators. So, its work is in progress. It will start meeting as and when necessary but it is not as if it has to go through any legislative process."
Some regulators are understood to have expressed reservations over any kind of role as an arbiter for the proposed body.