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Govt permits Indian companies to list directly in IFSC. How it impacts investors

February 17, 2024 - 11:39am
In a strategic move to enhance foreign investment in Indian companies, the Government of India has unveiled a groundbreaking set of regulations that allow public companies to list on International Financial Services Centre (IFSC) stock exchanges. This move follows the announcement made in July 2023 and incorporates the recommendations of the Working Group's report on direct listings in IFSC released in December 2023.ImpactUnder the new regulations, public companies are permitted to list on IFSC stock exchanges, unlocking the potential to attract funds from qualified foreign investors. However, this opportunity remains exclusive to public companies, with private companies still excluded from direct listings. Eligible investors, excluding Indian residents, are granted permission to purchase equity shares listed on international exchanges, bringing a new dimension to cross-border investments, whereas the government has emphasised on regulatory approval for eligible investors from countries sharing a border with India. Furthermore, the notification has outlined specific pricing formulae for both listed and unlisted entities, ensuring transparency and fairness in the listing process.Potential benefits and concernsThe move is anticipated to bring several benefits for both investors and companies. Raising capital in IFSC is expected to streamline compliance-related aspects, reducing the burden associated with various laws and regulations. The International Financial Services Centre Authority will act as a centralised authority, facilitating a more efficient and cost-effective listing process. Certain issues require clarification for the success of this initiative. There are resident holding restrictions for accessing IFSC, and this move is expected to shift the potential investments from the domestic tariff area to the GIFT IFSC zone to avail various taxation benefits including exemptions on capital gain from the transfer of listed shares. Furthermore, this move challenges the existing tax treatment disparity between Indian retail investors and foreign investors using the Foreign Portfolio Investment route and also increases compliance risks for the ultimate beneficial holder.Additionally, the extension of the direct listing framework to other global exchanges beyond GIFT IFSC would broaden its scope and depth, making it a more comprehensive platform for international investments.The road aheadWhile the Securities and Exchange Board of India is set to issue operational guidelines for listed public Indian companies, clarity on Ultimate Beneficial Ownership remains a focus area. This significant step aims to integrate Indian capital markets with global counterparts, attracting foreign investors and infusing global best practices, advanced technologies, and access to international markets.The Indian government's commitment to creating a conducive environment for foreign investments is further underscored by this notification, positioning IFSC as a promising hub for global investments and acting as a catalyst for its promotion. As the regulatory landscape evolves, India inches closer to its goal of becoming a preferred destination for both domestic and offshore investors.(The author Manoj Purohit is Partner & Leader, Financial Services, Tax & Regulatory Services, BDO India. Views are own)
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Priyanka Gandhi misses Rahul's Bharat Jodo Yatra

February 17, 2024 - 11:11am
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BJP's two-day national council meeting begins

February 17, 2024 - 11:07am
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US tech in a bubble waiting to pop: BofA strategist

February 17, 2024 - 11:03am
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Pay for train ticket only when it's confirmed: How

February 17, 2024 - 11:01am
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Congress veteran Kamal Nath and son to join BJP?

February 17, 2024 - 10:52am
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Small exporters hit hard by Red Sea crisis

February 17, 2024 - 10:42am
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ED Plea: Court asks Kejriwal to appear on Mar 16

February 17, 2024 - 10:20am
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Farmers' 'Delhi Chalo' march enters day 5

February 17, 2024 - 10:17am
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How selling equities before Mar 31 can save tax

February 17, 2024 - 10:02am
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Pakistan downgraded to 'authoritarian regime'

February 17, 2024 - 8:35am
Pakistan becomes the only Asian country to be downgraded to an "authoritarian regime", registering the greatest deterioration of any country in the region classified as "Australia and Asia", according to the Economist Intelligence Unit's (EIU) Democracy Index 2023 report. It has been reclassified from a "hybrid regime" to an "authoritarian regime", Geo News reported, citing the report. The EIU Democracy Index provides a snapshot of the state of democracy in 165 independent states and two territories.Out of the 28 countries in the region that are included in the index, 15 recorded a decline in their score, and only eight registered an improvement. Notably, Pakistan's score on the EIU Democracy Index fell by 0.88 to 3.25, resulting in a fall of 11 places in the global ranking table, to 118th, according to Geo News. Additionally, the report highlighted that along with the intervention in the electoral process and government dysfunction, the independence of the judiciary has been severely curtailed in Pakistan. Since 2008, the country's score on the democracy index remained a little over 4, however, for the first time in 2023, its score fell to 3.25 during the coalition government primarily comprising of Pakistan Muslim League-Nawaz (PML-N), Pakistan Peoples Party (PPP) and Jamait Ulema-e-Islam Fazl (JUI-F). Moreover, Pakistan's 2-23 score on the democracy index is even worse than in 2006 (3.92) when military ruler Gen (retd) Pervez Musharraf was in a ruling position, Geo News reported. Calling it "disappointing", Pakistan Institue of Legislative Development and Transparency (Pildat) Ahmed Bilal Mehboob, said, "This is a very disappointing development as Pakistan has scored the lowest since 2017 and our category has also been downgraded from a hybrid regime' to an authoritarian regime."He further urged all stakeholders to "undertake serious soul searching at this state of affairs".Michael Kugelman, a South Asia expert at the Washington-based Woodrow Wilson International Center for Scholars, said that it is unfortunate that after 15 consecutive years of formal civilian rule and some decentralisation reforms that strengthened Pakistan's democracy, the country has regressed to the point where it's being characterised as less democratic than it was during periods of formal military rule."And sadly, the trend lines don't suggest this pattern will change anytime soon," he added.Madiha Afzal, a scholar at the Brookings Institution, noted that it's no surprise that Pakistan has been downgraded from a hybrid regime to an authoritarian one by EIU, given the space ceded to the establishment by the PDM and their growing influence during the caretaker setup that followed, Geo News reported. "It should also be a signal that the world is watching Pakistan's democratic backsliding and its authoritarian turn," she added.
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Trump hit with $354.9 mn penalty, 3-year ban

February 17, 2024 - 6:40am
Donald Trump must pay $354.9 million in penalties for fraudulently overstating his net worth to dupe lenders, a New York judge ruled on Friday, handing the former U.S. president another legal setback in a civil case that imperils his real estate empire. Justice Arthur Engoron, in a sharply worded decision issued after a contentious three-month trial in Manhattan, also banned Trump, who is running to regain the presidency this year, from serving as an officer or director of any New York corporation for three years. Trump's lawyer Alina Habba vowed to appeal.Also Read: Judge in Trump fraud case would not back down Engoron canceled his prior ruling from September ordering the "dissolution" of companies that control pillars of Trump's real estate empire, saying on Friday that this was no longer necessary because he is appointing an independent monitor and compliance director to oversee Trump's businesses. Trump and the other defendants in the case, Engoron wrote in the ruling, "are incapable of admitting the error of their ways." "Their complete lack of contrition and remorse borders on pathological," Engoron wrote. "Instead, they adopt a 'See no evil, hear no evil, speak no evil' posture that the evidence belies." The lawsuit brought by New York Attorney General Letitia James accused Trump and his family businesses of overstating his net worth by as much $3.6 billion a year over a decade to fool bankers into giving him better loan terms. Trump, who faces criminal charges in four other cases, has called the lawsuit a political vendetta by James, a Democrat. In posts on his social media platform, Trump called Engoron "crooked," James "corrupt," and the case against him "ELECTION INTERFERENCE" and a "WITCH HUNT." "This 'decision' is a Complete and Total SHAM," Trump wrote. "We cannot let injustice stand." Engoron, who decided the case without a jury, also barred Trump and his companies named in the suit from applying for loans from any financial institution chartered in New York for three years, which could curtail his ability to obtain credit from major U.S. banks. The judge said Trump and his companies' past run-ins with the law were part of the reason for the stiff penalties. The Trump Organization was found guilty of criminal tax fraud in 2022. Two other entities Trump ran previously settled allegations of wrongdoing brought by New York state. Trump's adult sons, Don Jr. and Eric, also were defendants in the case. The judge ordered them to pay $4 million apiece. Their lawyer Clifford Robert called the decision a "gross injustice" and said he believes it will be overturned on appeal. Former Trump Organization CFO Allen Weisselberg, who pleaded guilty to tax fraud in a separate criminal case, was ordered to pay $1 million and barred for life from managing any New York company's finances. James said the penalties paid by all defendants totaled more than $450 million, including interest. "Donald Trump is finally facing accountability for his lying, cheating and staggering fraud," James said in a statement. "Because no matter how big, rich or powerful you think you are, no one is above the law." PRESIDENTIAL RACE The judge's decision could deal a major blow to Trump's real estate empire even as the businessman-turned-politician leads by a wide margin in the race for the Republican nomination to challenge Democratic President Joe Biden in the Nov. 5 U.S. election. During defiant and meandering trial testimony in November, Trump conceded that some of his property values were inaccurate but insisted banks were obligated to do their own due diligence. Engoron criticized Trump for his behavior during his testimony - and wrote that the testimony hurt his cause. "Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial," the judge wrote. "His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility." Trump could be required to deposit his portion of the full judgment plus interest during an appeal. Trump could also post a smaller amount with collateral and interest by securing a type of loan called an appeal bond. But he may have trouble finding a willing lender after Engoron found he lied to banks about his wealth. It is unclear how much access to cash Trump has, and estimates of his fortune vary, with Forbes pegging his net worth at $2.6 billion. Trump testified in a deposition last year that he had roughly $400 million in cash. Trump's stake in the parent of his social media app Truth Social is worth about $4 billion, based on how the shares of a black-check acquisition vehicle with which it has agreed to merge trade. Trump will be allowed to sell shares in the combined company six months after the merger is completed, according to a regulatory filing. U.S. financial regulators greenlighted the deal this week. While Trump could also sell of parts of his real estate portfolio to satisfy the judgment, it is unclear how much his holdings are worth, and selling them could take time. Trump will not be able to use campaign funds to pay the judgment because the case was not related to his campaign or his conduct as a president or political candidate, according to some legal experts. In another civil case, a jury last month found that Trump must pay writer E. Jean Carroll $83.3 million for defaming her by denying her claim that he raped her decades earlier. Trump has vowed to appeal. Another jury last year ordered Trump to pay Carroll $5 million in a separate case. CRIMINAL CASES Trump is under indictment in four criminal cases, including one in New York related to hush money paid to a porn star. The judge overseeing that case on Thursday set a March 25 trial date. Trump has also been charged in Florida for his handling of classified documents after leaving office and in Washington and in Georgia for his efforts to overturn his 2020 election loss. Trump has pleaded not guilty in those cases. During the civil fraud case, Trump lashed out in the courtroom on Jan. 11 - the day of closing arguments - against the judge and James while proclaiming his innocence. "You have your own agenda," Trump scolded Engoron, who told Trump's lawyer "control your client." The judge during the trial fined Trump $15,000 for twice violating a gag order against disparaging court staff. Engoron ruled in September that Trump's financial statements were fraudulent, leaving the focus of the trial on how much Trump should pay in penalties.
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Corporate India produces a flop succession show

February 17, 2024 - 5:30am
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ET Graphics: Electoral Bonds beyond Mumbai, Delhi

February 17, 2024 - 5:11am
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