Overseas Direct Investment, Liberalization/Rationalization

The RBI vide a recent circular, dated May 27, 2011 has made certain changes to the prevailing ODI Regulations. The objective is to provide operational flexibility to Indian Corporates having investment abroad. Some of the changes brought about are with respect to:

(i)  Performance Guarantees issued by the Indian Party.

(ii) Restructuring of the balance sheet of the overseas entity involving write-off of capital and    receivables.

(iii) Disinvestment by the Indian Parties of their stake in an overseas JV/WOS involving write-off.

(iv) Issue of guarantee by an  Indian Party to step down subsidiary of JV /WOS under general  permission.

The Business Standard dated May 28, 2011 reports the reaction of Corporate India to the above mentioned changes.    

Links of Interest

A recent article in livemint discusses the taxation of commodity derivatives.

The Karnataka High Court had an occasion to adjudicate on a Vodafone like case. The judgement is available here.

The Firm discusses the legal challenges and issues surrounding Slump Sales. There has been some debate in recent times over slump sales especially when the sale involves a core area of business. The recent divestment by Kanoria Chemicals of its Chloro Chemical Division (CCD) to Adiya Birla Chemicals (India) Limited (ABCIL) is an example of such a sale.