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: form 3cd :: TDS :: Central Excise rule to resale the machines to a new company :: cpt :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: ACCOUNTING STANDARD :: empanelment :: list of goods taxed at 4% :: VAT Audit :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India
« General »
 Number of companies paying tax over Rs 100 crore declines in 2013-14
 Tax and the dilemma of the self-employed
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA

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 2016 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