Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: VAT RATES :: due date for vat payment :: list of goods taxed at 4% :: articles on VAT and GST in India :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit
 
 
« General »
 Top House tax writer suggests measures to mitigate the impact of the border tax
 Consumer goods distributors, wholesalers to bear the brunt of GST
 GST classification woes to continue
 There will be no tax on farm or agriculture income
 RBI, Income Tax Acts to be amended for electoral bonds, Jaitley says
  Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016
 I-T zeroes in on Mumbai trader in first crackdown after demonetisation
  Tax queries answered by Dilip Lakhani, Senior Chartered Accountant
 Income Tax Department Failed To Unearth Black Money Despite Information
 Govt filing twice as many cases as private cos in Supreme Court
 Taxes under GST 'to increase a bit', says CBEC Chairman

RBI ISSUES NEW VALUATION NORMS FOR INSURERS TOO
June, 25th 2010

Insurance companies will be required to adhere to the Reserve Bank of Indias latest guidelines on pricing of shares of unlisted companies, increasing the amount investors would have to pay for buying into them.

The central bank has taken up the issue with the insurance regulator, IRDA, after the latter had said the new rules will not apply to insurance companies.

Irda is expected to clarify on the issue soon, said a government official privy to the development.

A number of Indian promoters are believed to have entered into agreements with their foreign partners to allow them to increase their stake to 49%, as and when regulations allow.

Foreign investment in insurance is capped at 26% but a bill proposing to increase the limit to 49% is with Parliament.

According to the new RBI norms, shares of unlisted companies can be transferred at a price not less than the fair value, which is to be determined by a Sebi-registered merchant banker or

chartered accountant as per the discounted free cash flow method.

Under the earlier rule prescribed by the controller of capital issues, or CCI, fair value of an unlisted company was taken as average of the net asset value method and the profit earnings capacity value method.

The new method is expected to yield a higher valuation as it would take into account the potential of the business as opposed to the accounting approach of the earlier methods.

The change was particularly relevant for valuation of insurance companies, which have long gestation with initial years of substantial losses.

However, in a clarification released last Thursday, Insurance Regulatory and Development Authority said RBIs guidelines dated May 4, 2010, are applicable to Indian companies in sectors other than the financial sector.

In view of the same, it is clarified that provisions of the said circular continue to be not applicable to the insurance sector, it had said.

But with the RBI insisting that rules will apply to insurance as well, foreign investors will now be required to shell out more to their Indian partners under the cash flow method as valuations will go up. The move, however, will beget domestic insurance investors a higher value than what they had envisaged.

The earlier method allowed investors to price their assets conservatively as it was based, particularly in the profit earnings capacity method, on the current performance.

The new guidelines are aimed at removing any discretion in price-fixing and also reduce the chances of lower valuation under the earlier guidelines.

The idea behind central banks move was ascertain that Indian business getting transferred outside of the country receives proper consideration.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Application Management Solutions Application Management System Application Management Software System Application Management Development Application Management Software Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions