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2 clusters · 3 sources · 23 days · First seen · Last updated
Indian capital reduction and shareholder valuation debate
Overview
Legal debate has emerged in India regarding capital reduction regulations under Section 66 of the Companies Act, 2013. Following a Supreme Court ruling in Pannalal Bhansali v Bharti Telecom Ltd., the court upheld a selective reduction of capital that cancelled minority shareholders' shares, permitting a 25% discount for lack of marketability (DLOM) in the valuation.
Critics contend that the ruling conflates ‘fair value’ with ‘fair market value’ by applying a marketability discount to cases involving the absence of shareholder oppression. This approach may result in minority shareholders receiving discounted prices during forced exits, even when they did not seek to exit, as Section 66 does not mandate valuation by an independent valuer.
Entities
Directorate General of Foreign Trade · Reserve Bank of India · Registrar of Companies · Customs, Excise and Service Tax Appellate Tribunal · Supreme Court of India
Timeline
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[BUSINESS] 2 sourcesIndian regulatory and judicial updates impact tax and trade sectors
Recent regulatory and judicial updates in India cover tax credits for employees, CENVAT refund timelines, and new compliance measures from SEBI, RBI, and the DGFT.
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[BUSINESS] 2 sourcesIndia capital reduction regulations and Supreme Court valuation ruling
Legal discussions in India focus on capital reduction under the Companies Act 2013 and a Supreme Court ruling regarding marketability discounts for minority shareholders during forced exits.
Sources
blogs.law.ox.ac.uk · taxguru.in · taxscan.in