Category: Analysis
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Ambiguity with thin cap norms: Private credit players risk significant tax leakage
Accurate reading of thin capitalization norms is highly relevant to maximize IRRs, especially in asset heavy sectors Currently, norms interpreted such that sometimes the entire interest paid to foreign related parties is disallowed for the target (as expense)…
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Budget 2023: Impact on InvITs
Distributions out of repayment of debt principal could now be taxed as ‘other income’ – at odds with global standards Distributions out of debt repayments through redemption of units not treated as ‘income’, but reduce cost of acquisition – InvIT / REIT Regulations do not permit redemption of units…
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SEBI’s Proposed Disclosure Regime: Impact on Public M&A and Directors’ Liabilities
Most proposals are well thought through – unintended impact in a few cases Mandatory clarification of media rumours – M&A dealmaking compromised and potential creation of a false market?…
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Private Funds: SEBI introduces investor diligence requirements for AIFs
SEBI has cast new investor diligence obligations on AIF managers, which extends to underlying investors As per the new rule, the manager of an AIF is not permitted to on-board new investors or draw down capital from existing investors unless the diligence conditions have been complied with…
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How to Negotiate Key Person Provisions – A Lawyer’s Guide
The occurrence of a key person event should not trigger a domino effect across other funds managed by the sponsor The ‘time and attention’ requirement should be drafted so as to avoid inadvertent foot faults The question of whether or not a key person event has occurred should not be the subject of a long-drawn…
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EduInfra – Emergence of a new asset class
EduInfra offers a promising 10 – 11% entry cap rate for annuity investors with rental escalations in the region of 3 – 5% Infrastructure classification allows for tax optimal exit through InvITs Seller awareness needed – operators slowly moving towards asset light models; depth, but potential…
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Investor or developer? Real estate regulator (RERA) classifies real estate fund as a promoter
The term ‘causes to construct’ in the definition of ‘promoter’ under RERA has been interpreted to include private funds exercising rights typical to such investments Protective rights of investors have been interpreted as being secondary to the rights of the homebuyers – in a conflict, the latter should be protected, notwithstanding inter-se contractual relationship between…
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What’s Holding Back Indian Fund Managers From Raising Global Capital?
Indian fund managers, thus far restricted, may now be able to setup India-focussed offshore funds Is investment by resident individuals in offshore funds now restricted, even under LRS? Not quite – we address the ambiguity Will GIFT now emerge as the most favoured jurisdiction for setup of India-focussed funds?…
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Unexplored Strategies in the Fortis Saga: Public shareholders and IHH Healthcare exposed to significant collateral damage?
Latest SC judgement uncovers Daiichi’s new approach – Fortis, IHH and, public shareholders under the gun for liabilities of Fortis’ erstwhile promoters Public shareholders will need to brace for impact and be proactive – else risk getting the short end of the stick Legal sanctity of the ‘theory of attribution’ possibly misplaced in the Fortis…
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SEBI orders public disclosure at M&A negotiation stage: Compromises deal certainty and amplifies directors’ liabilities
Listed companies forced to publicly disclose deal details pending finalization of negotiations Investors bereft of price and deal certainty, may even face reputational damage Directors of listed companies may be liable for market manipulation and exposed to litigation if they publicly disclose a deal which then falls through…