U.S. issues rule requiring banks to identify shell company owners

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies, India & International - Corporate updates | 0
A company list showing the Mossack Fonseca law firm is pictured on a sign at the Arango Orillac Building in Panama City in this April 3, 2016 file photo. REUTERS/Carlos Jasso/Files

The Obama administration is issuing a long-delayed rule requiring the financial industry to identify the real owners of companies and proposing a bill that would require companies to report the identities of their owners to the federal government, U.S. officials said on Thursday.

The Customer Due Diligence (CDD) rule, in the works since 2012, and the proposed legislation are meant to hinder criminals from using shell companies to hide ownership and launder money, finance terror, and commit other threats to the global financial system.

The use of shell companies to hide assets and avoid taxes is in the spotlight following a massive leak of data from the Panama-based law firm Mossack Fonseca, which embarrassed several world leaders and sparked government investigations around the globe into possible financial wrongdoing by the wealthy elite. The International Consortium of Investigative Journalists said it will release a searchable database of more than 200,000 offshore entities next week.

“Fundamentally our financial system should not provide the rich, the powerful, and the corrupt with the opportunity to shield their assets,” said Wally Adeyemo, the U.S. deputy national security advisor for international economics, in a call with reporters on Thursday. “Nobody should be able to hide in the shadows from their legal obligations.”

The final CDD rule will require banks, brokers, mutual funds and other financial institutions to collect and verify the identities of the real people, or “beneficial owners,” who own and control companies when those companies open accounts.

Financial institutions will have to verify the identity of any person or company who owns more than 25 percent of the company, and one live person who controls the company even if that person owns less than 25 percent.

Banks will have two years to get their systems into compliance, said Jennifer Fowler, the U.S. Treasury deputy assistant secretary for terrorist financing.

The U.S. Treasury said in 2012 it planned to propose a rule that would clarify and standardize financial institutions’ obligations to know the identities of their customers.

But the proposal generated opposition from the financial industry, which argued it would be costly, ineffective, and difficult to implement because the United States lacks a national database of corporate information.

To address one of those industry concerns, Treasury will propose legislation requiring companies to report to the Treasury the identity of beneficial owners when a company is incorporated. The legislation would create a central registry of beneficial ownership, something the U.S. currently does not have, Fowler said.

U.S. secretaries of state have lobbied against similar legislative action in the past, arguing that the Internal Revenue Service already has corporate ownership records that it could make available to law enforcement.

Adeyemo said the Obama administration had been “consulting actively” with secretaries of state. “This is a place where we need Congress to act,” he said.

Taken together, the measures would make the financial system more transparent and close loopholes that allow for abuse or illegal activity, officials said.

More than 1,000 prosecutions are brought each year in the United States for money laundering, Fowler said. “This is a record that no one in the world can match.”

But, she added, “there are vulnerabilities that we need to address in order to maintain an effective regime.”

The Treasury is also proposing a regulation that would increase requirements for some foreign-owned companies operating in the United States to report information to the government, which officials said would prevent the use of those companies for tax avoidance purposes.

In addition, the Justice Department is proposing amendments that would strengthen its ability to pursue foreign corruption cases, including issuing subpoenas for records in money laundering investigations, obtaining overseas records, and using classified information in civil cases.

Source: http://www.reuters.com/article/us-usa-regulations-finance-idUSKCN0XX02O

Financial inequality highest in India, China: International Monetary Fund

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
According to IMF, China and India have grown rapidly and reduced poverty sharply, however, this impressive economic performance has been accompanied by increasing levels of inequality.

Financial inequality is highest in India and China among Asia Pacific countries despite the two being among the fastest growing economies, IMF has said.

According to the International Monetary Fund, China and India have grown rapidly and reduced poverty sharply, however, this impressive economic performance has been accompanied by increasing levels of inequality.

“In the past, rapid growth in Asia came with equitable distribution of the gains. But more recently, while the fast-growing Asian economies have lifted millions out of poverty they have been unable to replicate the ‘growth with equity’ miracle,” the Fund said.

As per the report, China managed to increase middle class in urban areas, as did Thailand, while India and Indonesia struggled to lift sizeable portions of their populations toward higher income levels.

“In India, differences between rural and urban areas have increased, and have been accompanied by rising intra-urban inequality,” it said.

Many factors have been identified as key drivers of the inequality between rural and urban areas in China and India.

In China, rapid industrialisation in particular regions and the concentration of foreign direct investment in coastal areas have led to substantial inequalities between coastal and interior regions. Other factors also include low educational attainment and low returns to education in rural areas.

On India, the report said inter provincial inequality is lower in India than in China, and rising inequality in India has been found to be primarily an urban phenomenon.

Moreover, the rural-urban income gap has increased, and higher rural inflation has been found to be a key driver of this. Educational attainment has also been identified as an important factor explaining rising inequality in India over the past two decades, the Fund said.

The two countries have introduced a number of policies to tackle the rising inequality.

China introduced the Minimum Livelihood Guarantee Scheme (Dibao) for social protection in the 1990s. Moreover, various social programs are aiming to expand social safety nets and provide support for the development of rural areas and western regions.

In India, the government introduced the Mahatma Gandhi National Rural Employment Guarantee Act to support rural livelihoods by providing at least 100 days of employment. Programs to improve education include the National Education Scheme and Midday Meal Scheme.

The Fund lauded the JAM (Jan Dhan-Aadhaar-Mobile) initiative and said that “the JAM trinity initiative helped India in making substantial advances in financial inclusion. More recently, programs aiming for universal bank account coverage were launched”.

Source:
http://economictimes.indiatimes.com/articleshow/52106291.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Clean energy projects get Rs 86,000 crore investment

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs | 0

Renewable energy projects have received Rs 86,000 crore investment, most of it from private sector, in the last three years with Madhya Pradesh at top garnering Rs 14,313.80 crore.

“Most of the investment in renewable energy came from private sector. Total estimated investment in renewable energy power projects during the last three years is around Rs 86,000 crore,” New and Renewable Energy Minister Piyush Goyal said in a written reply to Lok Sabha today.

According to the statement, around 15,400 million units has been generated through solar power projects during the last three years.

Madhya Pradesh remained at the top, recording maximum investment in clean energy projects at Rs 14,313.80. It was followed by Maharashtra at Rs 13,743.01 crore, Rajasthan at Rs 11,632.96 crore, Karnataka at Rs 9,586.31 crore, Andhra Pradesh at Rs 9,539.12 crore, Tamil Nadu at Rs 8,961.28 crore and Gujarat at Rs 6,646.35 crore.

The minister also stated that Pondicherry, Laskhwadeep, Dadar & Nagar Haveli, Sikkim, Manipur, Meghalaya and Goa received no investment at all for renewable energy projects in last three years.

According to a separate reply to the House, as on March 31, 2016, a cumulative capacity of 42.76 GW has been installed from various renewable energy sources, which include 26.78 GW from Wind, 6.76 GW from solar, 4.27 from small hydro power and 4.95 GW from bio power.

In another reply to the House, the Maharashtra will require the maximum solar power generation capacity of 13,270 MW by 2021-22 as per tentative renewable purchase obligation (RPO) requirement estimated by the ministry.

The ministry has estimated 1,02,021 MW solar power generation capacity to be installed in the entire country by 2021-22.

After Maharashtra, Uttar Pradesh’s solar power generation capacity by 2021-22 as per RPO requirement would be the second highest at 12,124 MW followed by Gujarat at 9,796 MW, Tamil Nadu at 9,398 MW and Rajasthan 6,953 MW.

Under RPO, states are mandated by power regulators to have certain proportion of renewable energy capacity in their total power mix to promote clean and green sources like solar and wind.

The minister in another reply to the House stated that the new pithead thermal power plants have the lowest tariff of Rs 3.75 per unit in the first year of operation compared Rs 4.5 per unit for solar, Rs 4.6 for hydro, Rs 4.94 for atomic power and Rs 5.49 for non-pithed thermal plants.

However, the levellised tariff for hydro power plants is the lowest at Rs 4 per units compared Rs 4.5 for solar, Rs 5 for atomic power, Rs 4.57 for pithead based thermal power and Rs 7.57 per unit for non-pithead based thermal power plant.

Source:http://economictimes.indiatimes.com/articleshow/52125394.cms

IRDAI okays 16 FDI proposals worth Rs 14,592 crore

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0

Insurance regulator IRDAI has approved as many as 16 proposals amounting to Rs 14,591.9 crore as foreign investment, Parliament was informed today.

“Post notification of the Insurance Laws (Amendment) Act, 2015, Irdai has approved 16 proposals amounting to Rs 14,591.89 crore as foreign investment in the insurance sector,” Minister of State for Finance Jayant Sinha said in a written reply in the Rajya Sabha.

The Insurance Laws (Amendment) Act, 2015, provides for an increase of foreign investment cap in an Indian insurance company to 49 per cent from 26 per cent with the safeguard of Indian ownership and control, he said.

The government had notified the Indian Insurance Companies (Foreign Investment) Rules, 2015, to facilitate foreign investment in the insurance sector.

“Indian Insurance Companies (Foreign Investment) Rules, 2015, have been amended on March 16, 2016, to allow foreign investment up to 49 per cent through automatic  route in the insurance sector,” Sinha said.

To bring clarity on ‘Indian owned and controlled’, the Insurance Regulatory and Development Authority of India (Irdai) has issued guidelines on the same.

In December, Irdai chief T S Vijayan had said higher foreign participation in the insurance sector will attract more capital and increase sectoral penetration in India.

Source : http://economictimes.indiatimes.com/articleshow/52094191.cms

IMF Sees Rising Debt Challenge as Asia Stays Global Outperformer

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0

The International Monetary Fund said rising debt levels in major Asian economies have become a significant risk, even as the region remains on track to post solid economic growth.

Asia-Pacific economies as a group will decelerate only slightly, to 5.3 percent this year and next, from 5.4 percent in 2015, the Washington-based fund said in an annual regional report published Tuesday. The IMF last month trimmed its global forecasts, and said the world was more exposed to negative shocks thanks to a prolonged weaker pace of expansion.

In Asia, domestic demand, particularly consumption, should be a key driver, but worsening global conditions and high leverage in the region may curb growth, the fund said.

“Downside risks continue to dominate the economic landscape,” the IMF said. “In particular, the turning of the credit and financial cycles amid high debt poses a significant risk to growth in Asia, especially because debt levels have increased markedly over the past decade across most of the major economies in the region, including China and Japan.”

Downward Spiral

The IMF’s singling out of debt as a growing worry is in line with recent statements. The institution warned in a report last month against what it called a self-reinforcing “spiral” of weakening growth and rising debt that could require a coordinated response by the world’s major economies.

In Asia, the IMF said Tuesday, debt levels are high, while credit growth and corporate issuance have remained strong as companies try to take advantage of still-favorable global liquidity conditions.

The ratio of corporate debt to gross domestic product has risen faster in Asia than anywhere else in the world since 2009, the IMF added, and the measure is particularly elevated in China and South Korea. Household debt is a growing worry in Hong Kong, Malaysia, Singapore and Thailand, the IMF said.

“Although part of the credit growth reflects financial deepening, some growth has been above that implied by fundamentals,” the IMF said. Financial deepening refers to the spreading availability and use of banking.

Reform Refrain

As in previous reports, the IMF called on policy makers to push ahead with structural reforms to raise productivity, including measures to boost consumption in China. The fund also flagged the risk of an over-reliance on monetary or credit policies to hold up demand, particularly if job losses in manufacturing exceed the gains in services.

On Japan, the only developed economy where it anticipates economic contraction next year, the IMF recommended moves to reduce the difference between life-time and non-regular labor contracts to allow for higher wage increases. It also suggested deregulation and a drive to increase female labor market participation.

The IMF said that recent economic policies in Japan — so-called “Abenomics” — have been “supportive,” but added that “durable gains in growth” are yet to be seen.

The fund also warned against an excess reliance on monetary stimulus. The remark comes less than a week after a surprising Bank of Japan decision to hold off on stepping up its monetary expansion jolted markets and led to a surge of the yen against the U.S. dollar.

Source: http://www.bloomberg.com/news/articles/2016-05-03/imf-sees-rising-debt-challenge-as-asia-stays-global-outperformer

Renewable Energy Growth Will Remain Strong Through 2040

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0

 

“In its forward-looking report for the year, the U.S. Energy Information Administration forecasts renewable energy will be the fastest-growing power source through 2040,” writes Scientific American .

 

“New investments in renewable energy rose from $9 billion in the first quarter of 2004 to $50 billion for 2015’s first quarter…and the volume of installed photovoltaic systems in the United States has grown every year since 2000.”

 

“The story that renewable energy advocates often share of how their favorite power sources have grown so rapidly over recent years belies the reality that those industries have expanded from small market shares to start. Yet with increasing interest, investors are targeting renewables as strong assets, not dodgy options.”

 

Source: http://www.rollcall.com/news/renewable-energy-growth-will-remain-strong-through-2040#sthash.xUP8XuIh.dpuf

SME….! A New Opportunity for Private Company..!!!

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0

SME ExchangeIn the Present era, the market is booming up so every company wants to take the opportunity to capitalize the same more from market and want to get maximum benefits out of that.

Listing will help them enter capital markets (SME Exchange) and finally to graduate on to mainboard. The SME platform provides opportunity to entrepreneurs to raise equity capital for growth and expansion. It also provides immense opportunity for investors to identify and invest in good SMEs at an early stage.

Let’s see what are the ways available for companies to avail such benefits.

What is SME?

SME means Small and medium-sized enterprises or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits.

What is SME Exchange?

“SME exchange” means a trading platform of a recognized stock exchange having nationwide trading terminals permitted by the Board to list the specified securities issued in accordance with this Chapter and includes a stock exchange granted recognition for this purpose but does not include the Main Board”.

So now question that arises is how those benefits can be obtained…. the simplest answer is by listing in SME Platform.

What are the Criteria for Listing?

  • Incorporation

The Company shall be incorporated under the Companies Act, 1956 or 2013.

  • Financials

Post Issue Paid up Capital

The post-issue paid up capital of the company shall be at least Rs. 3 crores.

  • Net-worth

Net worth (excluding revaluation reserves) of at least Rs. 3 crores, as per the latest audited financial results.

  • Net Tangible Assets

At least Rs. 3 crores as per the latest audited financial results.

  • Track Record

Distributable profits in terms of Section 123 of the Companies Act 2013 for at least two years out of immediately preceding three financial years (each financial year has to be a period of at least 12 months). Extraordinary income will not be considered for the purpose of calculating distributable profits. Or

The net worth shall be at least Rs. 5 crores.

  • Other Requirements

It is mandatory for a company to have a website.

It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories.

There should not be any change in the promoters of the company in preceding one year from date of filing the application to Different Exchange for listing under SME segment.

  • Disclosures

A certificate from the applicant company / promoting companies stating the following

  1. a) ” The Company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).”

Note: Cases where company is out of BIFR is allowed.

  1. b) There is no winding up petition against the company, which has been admitted by the court or a liquidator has not been appointed.
  • Migration from Different Exchange SME Platform to the Main Board

The companies seeking migration to Main Board of Different Exchange should satisfy the eligibility criteria It is mandatory for the company to be listed and traded on the Different Exchange SME Platform for a minimum period of two years and then they can migrate to the Main Board as per the guidelines specified by SEBI vide their circular dated 18th May 2010 and as per the procedures laid down in the ICDR guidelines Chapter X B.

What are the Benefits of Listing in SME

1. Easy access to Capital

Different Exchange SME provides an avenue to raise capital through equity infusion for growth oriented SME’s.

2. Enhanced Visibility and Prestige

The SME’s benefit by greater credibility and enhanced financial status leading to demand in the company’s shares and higher valuation of the company.

3. Encourages Growth of SMEs

Equity financing provides growth opportunities like expansion, mergers and acquisitions thus being a cost effective and tax efficient mode.

4. Ensures Tax Benefits

In case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term Capital Gains Tax.

5. Enables Liquidity for Shareholders

Equity financing enables liquidity for shareholders, provides growth opportunities like expansion, mergers and acquisitions, thus being a cost effective and tax efficient mode.

6. Equity financing through Venture Capital

Provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing their lock in period.

7. Efficient Risk Distribution

Capital Markets ensure that the capital flows to its best uses and that riskier activities with higher payoffs are funded.

8. Employee Incentives

Employee Stock Options ensures stronger employee commitment, participation and recruitment incentive.

How are the Listing Procedures done?

This is as simple as we understand & execute the following steps!!!

Planning

The Issuer Company consults and appoints the Merchant Banker/s in an advisory capacity.

Preparation

The Merchant Banker prepares the documentation for filing after, conducting due diligence regarding the Company i.e checking the documentation including all the financial documents, material contracts, government approvals, Promoter details, planning the IPO structure, share issuances, and financial requirements

Process

Application procedure:

Submission of DRHP/Draft Prospectus – These documents are prepared by the Merchant Banker and filed with the Exchange as well as with SEBI as per requirements.

Verification & Site Visit – Different Exchange verifies the documents and processes the same. A visit to the company’s site shall be undertaken by the Exchange official .The Promoters are called for an interview with the Listing Advisory Committee.

Approval – Different Exchange issues an In-Principle approval on the recommendation of the Committee, provided all the requirements are compiled by the Issuer Company.

Filing of RHP/Prospectus – Merchant Banker files these documents with the ROC indicating the opening and closing date of the issue.

Once approval is received from the ROC/MCA, they intimate the Exchange regarding the opening dates of the issue along with the required documents.

Public Offering

The Initial Public Offer opens and closes as per schedule. After the closure of IPO, the Company submits the documents as per the checklist to the Exchange for finalization of the basis of allotment.

Post Listing

Different Exchange finalizes the basis of allotment and issues the notice regarding Listing and Trading.

Any Guidelines for Listing?

Yes the Company has to follow the below guidelines.

Capital
The post issue face value capital should not exceed Rs. Twenty-five crores.

Trading lot size

The minimum application and trading lot size shall not be less than Rs. 1,00,000/- .

The minimum depth shall be Rs. 1,00,000/- and at any point of time it shall not be less than Rs. 1,00,000/-.

The investors holding with less than Rs. 1,00,000/- shall be allowed to offer their holding to the Market Maker in one lot.

However in functionality, the market lot will be subject to revival after a stipulated time.

Participants
The existing Members of the Exchange shall be eligible to participate in SME Platform.

Underwriting
The issues shall be 100% underwritten and Merchant Bankers shall underwrite 15% in their own account.

So at last we can say that, if you want to increase the reputation of your company in the developing Countries like India, then you should have to register your Company in SME Platform because ultimately your company gets reputation as it is traded in Exchange Platform so Goodwill of the company  also increases and ultimately you achieve your profit.

This is best platform provided to the company for those companies who have not much of Paid Up Capital and also are less reputed but by registering in SME Platform, the company not only gets reputation all over India at large but also the company gets Profit by availing Tax benefits up to some extent. Thus,Small companies can now think big.

So considering the above fact, companies should have to opt for this option and after few years, the company would also be transferred from SME Platform to Main Board, hence your company is considered as the same as other reputed companies.

So by considering the Current Market Scenario every Private Company as well as Unlisted Public Company has to think on this matter and work accordingly. Though this facility has been available since long but few of them were able to grab this opportunity. Now it’s time to rethink about this opportunity.

SME Capital Markets so far

The SME Capital market in India has seen a flurry of activities in past 3 years. SME Platform has opened up immense opportunities not only for the small and medium enterprises to maximize wealth and gain visibility but also provides new investment opportunity to investors.Increasing number of companies are participating on SME Exchanges of BSE and NSE.
So far, 119 companies have got listed on BSE SME Exchange and 11on NSE Emerge. Further, several companies have filed their draft offer documents with these Exchanges. The total market capitalization of SME Exchanges has peaked over INR 10,000 Crores. These facts are remarkable, given the initial phase of SME capital markets that too in challenging times when even Main Board primary markets have witnessed little activity.

 

Growth Opportunities for SMEs

These recent initiatives of capital markets aim at bridging the gap between SMEs and capital markets by providing an opportunity to SME entrepreneurs to raise growth capital and reap benefits of listed space. SME entrepreneurs spot a ray of fresh light and hope for raising growth capital in economical and tax efficient manner and move up the ladder towards next-level growth. In the process, this opens up as a immense opportunity for capital markets, market intermediaries and professionals.