|
Due to heavy losses, our company is closing down and has entered
into an agreement with a private limited company for transferring
its entire business, including its assets. Both companies are located
in Delhi. What is the stamp duty leviable on such a transfer?
The stamp duty leviable on the transfer of your company's business
to the other company will be calculated on the value of the consideration
stated in the transfer agreement, rather than on the real value
of your business. Under the Stamp Act, 1899, stamp duty has to be
assessed with reference to the recitals made in the conveyance instrument
as a whole. If the transfer agreement in your case conveys property
and goodwill of your company, it has to be stamped ad valorem under
Article 23 of the Stamp Act for the entire property, goodwill, etc.,
that is being conveyed. If there is an intentional undervaluation
of the consideration amount, your company may be liable to prosecution.
As your company is located in Delhi, you are liable to pay stamp
duty at a rate of 8 per cent of the consideration amount for the
business being transferred as stated in the transfer agreement.
What are the conditions for issue of shares
to non-resident shareholders of the transferor company after a merger
in which the transferor company is merged with another Indian company?
If a scheme of merger of two or more Indian
companies has been approved by a court in India, the surviving entity
may issue shares to its non-resident shareholders, provided the
percentage shareholding of these non-resident shareholders does
not exceed the percentage specified in the approval granted to the
surviving entity by the Secretariat for Industrial Assistance (SIA)
or the Reserve Bank of India (RBI), or specified in sectoral caps
for investment by persons resident outside India in the Foreign
Exchange Management Regulations, 2000. If the percentage shareholding
of the non-resident shareholders exceeds the percentage approved
or exceeds the prescribed sectoral limits, prior approval of the
SIA must be obtained before the issue of shares to non-resident
shareholders. The surviving company should not engage in agricultural,
plantation, or real estate business, or trading in transferable
development rights. The surviving company has to file a report within
30 days with the RBI, giving complete details and a confirmation
that all terms and conditions stipulated in the merger scheme approved
by the court have been complied with.
Can the surplus of a branch office or profits
from a project office be remitted outside India, and if yes, what
are the formalities?
A branch office or a project office can remit
surplus or profits of the office outside India after paying all
applicable Indian taxes. Certain documents have to be submitted
to the authorised dealer through whom the remittance is proposed,
including a certified copy of the audited balance sheet and profit
and loss account of the branch office or project office and a chartered
accountant's certificate certifying: (i) that the manner of arriving
at the remittable profit, (ii) that this amount has been earned
out of permitted activities, and (iii) that this amount does not
include profit on revaluation of assets. In the case of a project
office, the final income tax assessment order or documentary evidence
of payment of income tax and other applicable Indian taxes has to
be submitted. In case a copy of the income tax assessment order
or proof of payment of taxes is not available, a certificate from
a chartered accountant stating that sufficient funds have been set
aside by the project office for its tax liabilities in India should
be submitted. A project office also has to submit a certificate
from an auditor stating that no statutory liabilities are outstanding
in respect of the project.
The views expressed here should not be construed
as legal opinion and is for reference only. Business Today and/or
the author will not be responsible for any decision taken by readers
on the basis of these views. Please send in your queries to Legal.bt@intoday.com
or Going By the Book, c/o Business Today, F-26, Connaught Place,
New Delhi-110001.
|
