A PEAK INTO ALTERNATIVE INVESTMENT FUNDS - SEBI AND FEMA PERSPECTIVE 

Background: 

Till 2012 Investment Management regulations of SEBI were limited only to Mutual Funds (MF), Collective Investment Schemes (CIS), Venture Capital Funds (VCF) and Portfolio Managers, and were well regulated.  In the absence of dedicated regulations, other private pools of capital and investment vehicles like PE Funds (Private Equity), Real Estate Funds, etc used VCF route for investments. This defeated the basic purpose of VCF which was promotion of early stage companies.  As the concessions and other benefits generally available to VCFs cannot be extended to other funds, the need was felt to recognize such other funds as “Alternative Investment Funds” as a distinct asset class apart from promoter holdings, creditors and public investors. 

Accordingly, SEBI has released a concept paper in August 2011 followed by issuing SEBI (Alternative Investment Funds) Regulations (herein after referred as ‘AIF Regulations’) in May 2012 and were amended time to time. SEBI (Venture Capital Funds) Regulations, 1996 were repealed and related provisions were subsumed in to AIF Regulations. However, SEBI (Foreign Venture Capital Investor) Regulations are not subsumed and are still governed separately.  

Read more: Alternative Investment Funds - FEMA

Key Topics:

AUDIT

• STANDARDS ON INTERNAL AUDIT - AN INTRODUCTION

DIRECT TAX

• ICDS V TANGIBLE ASSETS

GST

• GST RATE ON OLD AND USED MOTOR VEHICLES
• VALUATION IN CASE OF STOCK TRANSFER

UPDATES

FEMA

• FEMA UPDATES FOR THE MONTH OF NOVEMBER 2018

GST

• GST UPDATES FOR THE MONTH OF NOVEMBER 2018

COMPANIES ACT, 2013

• RULES, CIRCULARS, NOTIFICATIONS AND ORDERS ISSUED DURING THE MONTH OF NOVEMBER, 2018

In this edition, we bring to you certain important articles. The article on ‘Alternative Investment Funds – SEBI and FEMA Regulations’ will make you understand the other venues for raising funds to carry the business much efficiently. The article on ‘NFRA – Will they apply to Body Corporate’ is thought provoking and it is important that Ministry of Corporate Affairs release a clarification as to which body corporates the provisions of NFRA rules will apply.

The article on ‘Differential Treatment Inter- se Creditors’ deals with the recent judgment of Hon’ble NCLAT in the matters of Binani Industries Limited, wherein the Hon’ble NCLAT rejected the resolution plan which discriminated the creditors who are placed similarly. This is an important contribution to the jurisprudence on IBC and it will have significant effect in upcoming resolutions. The journal also deals with key recommendations by Insolvency Committee on Cross Border Insolvency which is to be adopted by India to tackle the issues in cross border insolvency matters.

Read more: SBS Wiki E Journal Dec 2018

Treatment of Income on Sale of Shares in ESOP Scheme – Perquisite or Capital Gain?

Legislative Background:

As per Section 15(1) of Income Tax Act, 1961 (Act) any salary due from employer or former employer to an assessee in the previous year, whether paid or not, is chargeable to tax under the head ‘Income from Salaries’. As per Section 17(1)(iv) of the Act, ‘salary’ includes ‘perquisites’ or ‘profit in lieu of salary or wages’.

Section 17(2)(vi) of the Act, the term ‘perquisite’ includes the value of specified securities which were granted under ESOP or sweat equity shares allotted or transferred, directly or indirectly, by employer or former employer, free of cost or at concessional rate to the assessee.

Read more: SBS i 15th Edition