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July 2016

Corporate Amicus: May 2016

Article

Amalgamation — Distinction between an ‘instrument’ and ‘instrument amounting to conveyance’ -

Larger Bench of the Bombay High Court has held that stamp duty is payable on a High Court Order sanctioning a scheme of merger/reconstruction, as an instrument of conveyance. It was also held that where a scheme of amalgamation requires sanction from multiple High Courts in India, (due to the registered offices of the merging companies being in different states), every order of the High Courts concerned sanctioning the same scheme would amount to a separate instrument for the purposes of levy of stamp duty. Considering difficulties in the said proposition and distinction between an ‘instrument’ and ‘an instrument of conveyance’, the author is of the view that there is obvious flaw in the said approach. The article concludes that where one High Court order is conditional to the order of another High Court where stamp duties on mergers is exempt or not at ad valorem basis, no ad valorem stamp duty will be payable anywhere.

 

Notifications & Circulars

  • Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 — Manner of payment in case of imports now includes payment in Indian Rupees using international credit card/ debit card through a credit/ debit card servicing bank in India.
  • Foreign Exchange Management (Deposit) Regulations, 2016 — Definitions of ‘NRI’ and ‘PIO’ modified.
  • Infrastructure Investment Trusts — SEBI issues guidelines for public issue of units of InvITs.
  • Insolvency and Bankruptcy Code passed by Indian Parliament — Law aims to consolidate the laws relating to insolvency of companies and limited liability entities (including limited liability partnerships and other entities with limited liability), unlimited liability partnerships and individuals.

 

Ratio Decidendi

  • ‘Due diligence’ means doing everything reasonable, not everything possible — Securities Appellate Tribunal (SAT) holds that banker cannot be expected to perform this duty in a vacuum when information is not made available.
  • Arbitration — Objection to arbitration award to be governed by foreign law, if arbitration governed by same — Supreme Court
  • Action under Negotiable Instruments Act not affected by winding up process — Bombay High Court holds that ‘suit or other proceedings’ in Section 446(1) of Companies Act, 1956, not includes criminal complaints filed under Section 138 of the Negotiable Instruments Act, 1881
  • Competition law — Dominant position must be ‘used’ in an anti-competitive manner to prove ‘abuse’

 

May, 2016/Issue-57 May, 2016/Issue-57

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