Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: due date for vat payment :: articles on VAT and GST in India :: list of goods taxed at 4% :: empanelment :: VAT Audit :: cpt :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: form 3cd :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
News Headlines »
 What to do if your TDS is not deposited with the government
 What if you forget to verify your Income Tax return?
 TDS on rent and other tax tasks to complete before March 31
 5 income tax changes which will come into effect from April 1, 2018
 Why you shouldn't be a last-minute tax filer
 How to calculate income tax for this assessment year on Moneycontrol
 6 Tax notices you may get and how to cope with them Income Tax Notice
 Deadline to pay advance tax ends tomorrow: Here is a step-by-step guide
  Central Goods and Services Tax (Second Amendment) Rules, 2018
 Income Tax Return Filing Deadline: Waiver On LTCG Tax To End On 31 March. Details Here
 Income tax returns (ITR) filing: Top mistakes that can be very costly

SEBI may tighten norms for pref warrant conversion
August, 20th 2009

Norms for preferential allotment of equity warrants are learnt to be back under the regulatory scanner, following complaints from institutional investors that this instrument is being misused by promoters.

Equity warrants are mostly issued by promoters to themselves, to increase their stake in the company in a cost-effective manner. An equity warrant gives the holder the option to buy an equivalent number of shares of the company at a predetermined price on the expiry of the warrants.

SEBI is said to be reviewing two aspects: the timeline for converting the warrant into shares and the upfront margin to be paid at the time of allotment of the warrants.

At present, the warrants are due for conversion into shares at the end of 18 months from the date of them having been allotted. Promoters have to pay a 25% upfront margin at the time of issuing the warrants, and stand to lose that amount if they decide not to convert the warrants into shares.

A person familiar with the development said SEBI may cut the time line to 12 months from 18 months, and may increase the upfront margin to be paid, anywhere between 30% and 50%, at the time of allotment of the warrants.

When the stock market was booming, many promoters issued warrants to themselves in the hope that they would be able to convert those into shares at a significant discount to the prevailing market price at that time. But the stock market crash that began in January 2008 upset their calculations.

Many promoters allowed the warrants to lapse as the conversion price was way above the market price when it was time to exercise their option. To rub salt into the wound of minority shareholders, a few companies which had let the warrants lapse, then issued fresh warrants to the promoters at lower prices.

In the last quarter of 2008, promoters of Hindalco and Tata Power were among the big names who forfeited their warrants. In the Q1 of 2009, the list included names like Punj Lloyd, Videocon, Patel Integrated Logistics and Regaliaa Realty.

Prima facie, this does appear to be skewed in favour of the promoter or the warrant holder. However, capital raising is essential for growth. A preferential allotment also assuages promoter worries about control. If the issue is about protecting minority shareholder interest rather than specified groups of people, than the only route to raise capital would be via rights, said a senior investment banker.

There is a perception that this route has taken a backseat after SEBI raised the upfront margin for equity warrants to 25% from 10% in end-February this year. Ravi Ramu, director of Purvankara Projects, believes that such a measure if implemented would be a positive move. It would be a equitable measure for non-promoter shareholders, he told ET.

Taking a contra view is Prime Database MD Prithvi Haldea, who is against the very idea of preferential issue to promoters as he feels all shareholders should have equal rights. If funds are required urgently than promoters should be required to bring all the money in the right away (and not 25% under the warrant route), and monitoring of such fund utilisation should be mandated, he told ET.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-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