ICICI Ventures, one of India’s biggest domestic private equity outfits is contemplating a possible restructuring of the entire fund structure, which if successful, could emerge as a model for several tax-hit VCFs in the country In a move to overcome the adverse tax impact, ICICI Ventures has proposed that stocks it currently holds be transferred to investors.
What is now being mooted is that shares be transferred to investors, both foreign as well as domestic, (unlike in the traditional model, where the shares are held by a trust, which in turn issues units to the investors), while the asset management company of the VC fund will continue to manage the investment. The advantage here is that since the ownership of shares would shift from the trust to investors, the trust would be spared of tax.
The Finance Bill 2007 has proposed that only those VC funds which invest in specified sectors would enjoy tax exemption. So far, a VC fund was exempted from tax where only investors paid tax, and not the trust. The structure proposed by ICICI Ventures would help in restoring this.
Read The Economic Times article.
Related Posts:
UTI Bank to set up $500 mn offshore fund
Union Budget 2007-08 Presented: Proposals for Capital Markets and Private Equity
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment