Mergers & Acquisitions Transactions perspective

Transcription

1 Mergers & Acquisitions Transactions perspective Tax Workshop November 2011 Amrish Shah Pinakin Desai Moderator - Sudhir Kapadia

2 01 Case study n restructuring

3 Background & Current Structure German is engaged in the business of telecom infrastructure German indirectly holds stake in an n listed company, List List is engaged in the following business Division A - Providing tower infrastructure to companies engaged in the telecommunication sector Division B - nstruction and development of housing projects German has partnered with an n who beneficially holds around 12.5% equity stake in List n partner Hold Holding mpany having only investment in List (Non promoter) 51% 49% Sub 25% German 100 Netherlands % 45% List 30% Beneficial stake of n Partner in List 12.75% Division A Division B Permitted FDI Permitted FDI upto 49% automatic, beyond 49% government automatic FDI - 45% Public Page 3 Tax Workshop 2011

4 Objectives Proposed Restructuring objectives Feasibility for German to divest from its n tower infrastructure business only Keeping this in perspective, it is envisaged to restructure the German s holding in the n company This is to be done in agreement with the n partner Page 4 Tax Workshop 2011

5 Desired n Resulting Structure German Netherlands n partner 45% Hold (Non promoter) 12.75% 12.25% New List 30% FDI 57.25% Public Has only tower infrastructure business Permitted FDI upto 49% automatic, beyond 49% government Page 5 Tax Workshop 2011

6 Structuring Step 1 Merger Sub to merge into List Pursuant to merger List to issue shares to Hold and German German to become a direct shareholder of List Step 1 - Merger Post Merger n partner Hold 51% German 49% n partner Hold German Netherlands Sub 25% Netherlands 45% List 12.75% 12.25% 45% List Page 6 Tax Workshop 2011

7 Structuring Step 2 Demerger List to incorporate a WOS, New List to demerge its Division A into New Pursuant to demerger, New to issue shares to all the shareholders of List New to get listed on stock exchange (hereinafter referred as New List co ) Step 2 Hold German 12.75% 12.25% Division A Netherlands 45% List Division B New Automatic listing of New Page 7 Tax Workshop 2011

8 Structuring Post Step 2 Resulting Structure German Hold Netherlands 12.75% % % New List Has only tower Infrastructure business Listed on stock exchanges 30% Public Page 8 Tax Workshop 2011

9 Key issues and discussion

10 02 Case study Transfer of shares including (primarily n) assets

11 Background and objective Facts UK is a company incorporated in the United Kingdom and is listed on the London Stock Exchange UK has operations across the globe including Investments in n company ( I ) held through chain of underlying companies i.e., Cyprus, BVI and M I is into manufacturing business It does not require any specific government license to operate FDI permitted in I upto under automatic route I does not own any brand used by the Group companies M holds a valid tax residency certificate ( TRC ) and is eligible to claim the benefits of the -Mauritius tax treaty Objective A proposes to divest its n business to a third party/unrelated party UK (listed ) Cyprus BVI (British Virgin Islands) M (Mauritius) I Overseas Page 11 Tax Workshop 2011

12 Options considered for sale of shares of I Option 1: BVI to sell shares of M to the non resident buyer i.e. B Indirect transfer of n company BVI B M Transfer of M shares Overseas I Page 12 Tax Workshop 2011

13 Options considered for sale of shares of I Option 2: M to sell shares of I to the non resident buyer i.e. B Direct transfer of n company BVI B M Transfer of I shares Overseas I Page 13 Tax Workshop 2011

14 Key issues and discussion

15 Thank you The discussions in this presentation are personal views of the speaker and are intended to provide only a general outline of the subjects covered. The presentation should not be regarded as comprehensive or sufficient for making decisions, nor should it be used in place of professional advice, which should always have regard for the particular commercial facts and circumstances. Accordingly, Ernst & Young Private Ltd accepts no responsibility for loss arising from any action taken or not taken by anyone by relying on this presentation.