Private Equity and Venture Capital
August 20, 2020

THE POST-COVID PE AND VC INVESTMENT SCENARIO IN INDIA

COVID-19 is having an adverse effect on private equity and venture capital investments in India. As per industry reports and experts’ views, PE and VC investments in India may decline up to 60% in 2020 due to the pandemic. In 2019, PE and VC investment activities reached a record high at US$48 billion in India….

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Private Equity and Venture Capital
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December 19, 2017

PRIVATE EQUITY INVESTMENTS IN INDIAN INSURANCE COMPANIES NOW PERMITTED

Introduction On December 5, 2017, the Insurance Regulatory and Development Authority of India (the “IRDAI”) issued the IRDAI (Investment by Private Equity Fund or Alternate Investment Fund in Indian Insurance Companies) Guidelines, 2017 (the “PE Investment Guidelines”). The PE Investment Guidelines provide the framework for investments by private equity funds either as an investor or…

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Private Equity and Venture Capital
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November 9, 2017

INDIA’S TAX REGULATOR “CLARIFIES” INDIRECT TRANSFER PROVISIONS IN CASE OF REDEMPTION OF SHARES OUTSIDE INDIA

Under the provisions of the Income-tax Act, 1961 (the “ IT Act”), the income of a non-resident will be deemed to accrue or arise in India if it arises, directly or indirectly, through or from any business connection, property, asset or source of income, or from a transfer of a capital asset (shares or other interest) situated in India. The indirect transfer provision was introduced in the Finance Act, 2012, by way of Explanation 5 to Section 9(1)(i) of the IT Act, clarifying that an offshore capital asset will be treated as situated in India if it substantially derives its value (directly or indirectly) from assets located in India.

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Private Equity and Venture Capital, Tax
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August 18, 2017

INDIA’S SECURITIES REGULATOR ON SHELL COMPANIES, EXEMPTIONS FROM OPEN OFFER

Recently, the Securities and Exchange Board of India (the “ SEBI”) has approved and notified several important changes to Indian securities regulations, including, extending relaxations from open offer and preferential issue requirements to new investors acquiring shares of distressed companies, extending relaxations from open offer requirements to acquisitions made pursuant to resolution plans approved by the National Company Law Tribunal (the “NCLT”) and exemptions from lock-in requirements at the time of initial public offer (“IPO”) to Category II Alternative Investment Funds (“ AIFs”) such as private equity funds and debt funds.

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Private Equity and Venture Capital, Securities Law
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November 17, 2016

CHANGES TO THE FOREIGN INVESTMENT AND BORROWINGS REGULATIONS

Introduction This update discusses certain key changes to India’s foreign exchange regulations implemented recently. Foreign investment in financial services Recently, the Reserve Bank of India (the “RBI”) notified an amendment to the Foreign Exchange (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (the “Foreign Investment Regulations”) permitting 100% foreign investment…

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Corporate/M&A, Private Equity and Venture Capital
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September 7, 2015

POSITIVE SIGNAL TO FIIS AND FPIs – NO MAT PRIOR TO APRIL 1, 2015

Background Section 115JB of India’s Income-tax Act, 1961 (the “IT Act”), provides for taxation of those companies who, despite showing high profits in their books and paying substantial dividends, do not pay or pay only marginal taxes, by taking advantage of the various tax concessions and incentives available under the IT Act.  Minimum Alternate Tax…

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Foreign Investment, Private Equity and Venture Capital, Tax
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July 2, 2015

PRIVATE COMPANIES CAN NOW BREATHE EASIER IN INDIA

Introduction On June 5, 2015, the Ministry of Corporate Affairs, Government of India (the “MCA”) issued a notification (the “Notification”), which significantly reduces the compliance requirements for private companies under the Companies Act, 2013 (the “Act”). With these changes, corporate governance of private companies will become easier.  This update discusses the key changes. Key exemptions…

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Corporate/M&A, Private Equity and Venture Capital
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April 29, 2015

SHOULD FOREIGN PORTFOLIO INVESTORS BE WORRIED ABOUT MAT?

Background Minimum Alternate Tax (“MAT”) is a tax levied under the Income-tax Act, 1961 (“IT Act”) on the book profit of a company where the overall tax paid by the company is less than 18.5% of the book profit.  Generally speaking, in the case of non-resident entities who do not have a permanent establishment in…

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Foreign Investment, Private Equity and Venture Capital, Tax
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February 18, 2015

RECENT CHANGES TO INDIA’S FOREIGN EXCHANGE REGULATIONS

This update discusses certain key changes to India’s foreign exchange regulations implemented in the past few weeks Liberalization of the limit under the Liberalized Remittance Scheme (“LRS”) In the bi-monthly monetary policy statement released on February 3, 2015, the Reserve Bank of India (the “RBI”) has increased the limit on remittance of foreign exchange for…

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Corporate/M&A, Foreign Investment, Private Equity and Venture Capital
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