private placement

Under Section 81 (1A) of the Companies Act, a public company may make a preferential allotment of shares only by passing a special resolution in a general meeting. On 24 May 2011 the Ministry of Corporate Affairs has issued a new set of draft rules [Unlisted Public Companies (Preferential Allotment) Rules, 2011] to replace the Unlisted Public Companies (Preferential Allotment) Rules, 2003. The draft rules which provide for greater compliance and disclosure requirements .. Full Article

In exercise of the powers conferred by sub Section (1-A) of Section 81 of the Companies Act 1956 read with Section 642 of the said Act, the Central Government hereby makes the following rules in supersession of unlisted Public companies (Preferential Allotment) Rules, 2003. 1. Short Title and Commencement -(i) These rules may be called Unlisted Public Companies (Preferential Allotment and Private Placement) Rules 2011 (ii) They shall come into force on the date o.. Full Article

The Taxpayer incurred interest expenditure on the funds borrowed for investing in shares of a company, with a view to acquire controlling interest. The ITAT held that the interest expenditure incurred is not allowable under Section 57(iii)(Section) of the Indian Tax Law (ITL), since it is not incurred 'wholly and exclusively' for the purpose of earning dividend income. Full Article

A bill enabling the State Bank of India (SBI) to split its shares and issue bonus shares may be placed in the current winter session of Parliament. Besides, the amendments to the State Bank of India Act, 1955, envisage the preferential or private placement of shares. The SBI (Amendment) Bill also proposes to allow India’s No. 1 bank to bring down the government holding to 51 per cent, which is on a par with other nationalised banks. Full Article

Interest paid on funds borrowed for acquiring controlling stake in a company will not be exempt from tax. The Income Tax Appellate Tribunal (ITAT) has ruled that such expenditure for investing in shares of a company cannot be exempted, since it has not been incurred ‘wholly and exclusively’ for the purpose of earning dividend income. Full Article