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Finance Forum India

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Top Questions Answered About the Rajiv Gandhi Equity Savings Scheme

There has been a lot of buzz lately surrounding the new Section 80 CCG introduced in last year’s Union Budget that allowed investors to claim deductions in lieu of investments made in the Rajiv Gandhi Equity Savings Scheme. Popularly known as the RGESS, the investment scheme was launched with the ultimate objective of providing investors an additional avenue to save tax as well as grow their investments.  There have been a lot of queries revolving around the nitty-gritty of how exactly one can go ahead and make investments in the scheme and whether it would be worthwhile to invest in the...
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CFA Institute's India Investment Conference

b2ap3_thumbnail_cfa-logo.pngBy Saneil Shah 11th January, 2013 Mumbai   The India Investment Conference 2013 was kicked off by John Rogers, President and Chief Executive Officer, CFA Institute. He spoke about the lost in trust in the markets to allocate capital and risk after the global financial crisis in 2008.   The CFA Institute has recently launched Claritas Investment Certificate (learn more), which is a comprehensive global education program designed to give employees in the investment industry a clear understanding of their industry and their responsibilities within it. (DG has started a new discussion thread on Claritas in the Forum)   The conference had an impressive line of speakers and...
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Tax Implications of Investments in Gold

Investment in Gold and Related Tax Issues When an Assessee makes an investment in gold, it does not have any tax implications. However, any income received from the sale of items made of gold does attract taxes. The Income Tax Act of 1961 clearly states that silver, gold, and platinum ornaments or ornaments made from any other precious metal, precious or semi-precious stones, whether standalone or part of any furniture, utensils and any other articles, or worked upon or sewn into clothes etc. are considered Capital Assets. The taxable income that one receives upon sale can therefore be treated as Short-term...
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The Impact of Interest Rates On Equity Markets

Every bank adheres to the interest rate set by the central bank, in its country. The central bank in India is the RBI that decides the interest rate, which other banks have to abide by. In case of shortage of funds, banks borrow funds from the RBI, and the money is lent at the repo rate that is then deemed as the benchmark rate. Hence, every increase and the decrease in the repo rate have its repercussions on the life of a common man. An increase in repo rate will make it difficult for banks to borrow from RBI, resulting in...
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Profession Tax or Tax on Employment

Aashish Ramchand is the Co-founder of MakeMy Returns, an e-filing and online tax advisory website (recognized by Govt. of India). A chartered accountant by profession, he has worked with KPMG and JRC advisory both in international and domestic taxation respectively with a cumulative experience in taxation of more than 5 years. He has also completed CFA (USA) level 1 exam. Professional Tax or Tax on employment [Sec. 16 (iii)] As per Article 276 of the Constitution, Professional tax or Tax on Employment is levied by the state and is allowed as a deduction. The below mentioned factors are important with regards...
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Proxy advisory firms give a boost to shareholder activism

Long restricted to lone rangers, shareholder activism is now more structured, analytical and sophisticated Mumbai: For the last 27 years, Tamal Kumar Mazumdar has been attending the annual general meetings (AGMs). In the last 10 years, he has begun travelling from his hometown Kolkata to Mumbai and Delhi to be in the shareholder meets of some of the 120-odd listed companies in which he holds shares. Prior to these meetings, Mazumdar, 47 and an independent financial analyst, spends weeks poring over annual reports. He often ends up as the lone dissenting voice in the large auditoriums that typically host these meetings...
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Shareholder's voice gets louder

The general feeling that shareholders in India prefer to keep mum rather than voice their protests and can normally be silenced with a generous dividend seems to be changing.   Stanza 481 of the Tamil Classic Thirukkural states that “at the right opportunity, the king could succeed easily in his campaigns”. It emphasises the choice of right time and opportunity, especially by an administrator, to attain success. Shareholders appear to be thinking that this is the right time to take on corporate India and ask the management questions that could embarrass them. A few months ago, The Children Investment Fund (TCI) took...
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MFs take activist stance at shareholder meetings

The voting records of top equity mutual funds in the country show that some of India’s top mutual funds have started taking an activist stance. While some other funds either voted in favour of company resolutions or abstained from voting, RelianceMutual Fund’s and SBI Mutual Fund’s voting pattern showed they spent time studying the resolutions and voted against some of the resolutions proposed by companies’ management. Voting by mutual funds in annual general meetings (AGMs) and extraordinary general meetings (EGMs) for portfolio companies are to be disclosed on their websites as per a Securities and Exchange Board of India (Sebi) directive....
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Investor advisory firm seeks change in Infosys’ auditors

Minority shareholders are in a fighting mood. A few months ago, The Children Investment Fund (TCI) took the Coal India management to task for kowtowing to government babus on matters like pricing and fuel supply agreements. But now activism is being ignited on many fronts, by many players. Institutional Investor Advisory Services India Ltd (IIAS), which advices institutions on corporate issues, has advised shareholders of Infosys, which held its annual general meeting on Saturday (9 June), to vote against a resolution seeking the reappointment of its statutory auditors BSR & Co. According to a Business Standard report, IIAS  has recommended that ...
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Shareholder rights

As a shareholder, Templeton Asset Management has raised some good questions about the Vedanta group’s consolidation plans. It is concerned that the amalgamation of Vedanta Aluminium into Sesa Goa as part of the merger plans within Vedanta Resources will create a sizeable debt overhang for Sesa Goa without bringing in any major benefit, as the two companies operate in different sectors. Since the deal was announced in February this year, there is a reasonable ground to question why it took the investor such a length of time to come up with the observations. But as Sesa Goa has called for a...
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Will UK's ‘Shareholder Spring' last?

Will Britain's so-called Shareholder Spring — the spate of investor rebellions against ultra-generous pay packages, which has already resulted in the ousting of a couple of chief executives — lead to tangible long-term change? Concern about out-of-step executive pay has rumbled under the surface for decades. Over the years, irate shareholders raising questions about huge pay settlements have been a fairly common sight at AGMs, though these were often protests by solitary agents, treated with embarrassed silence from other investors. British investors have gained a pretty passive reputation, as the Ownership Commission chaired by economist Mr Will Hutton, recently noted. “The...
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Reebok India accuses former top execs of $157 mln fraud

Reebok India, owned by Germany's Adidas (ADSGn.DE), lodged a police complaint against two former top executives accusing them of fraud that had led the company to lose 8.7 billion rupees. The alleged fraud would be the most high-profile corporate scandal in India since 2009 when Satyam Computer's former chairman and founder Ramalinga Raju revealed that the company had overstated profits and falsified assets for years. Reebok India is accusing former India Managing Director Subhinder Singh Prem and former Chief Operating Officer Vishnu Bhagat of financial wrongdoing, said police officials in Gurgaon, where the complaint was filed. "Our criminal complaint has been...
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Contact DaulatGuru.com - Forum for CFA, FRM, MBA Finance Students

To contact us, please email at: This email address is being protected from spambots. You need JavaScript enabled to view it.    
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Shareholder activism: Will Infosys shareholders take lead?

Shareholder activism is common in developed markets. It is a push for shareholder friendly actions like higher dividend pay or buybacks by institutional investors like pension funds, provident funds, mutual funds, hedge funds or private equity funds. These institutional investors often own minority stakes in companies. They can collectively take a stand on (for or against) decisions taken by the management or the board of directors of a company.   A section of Infosys shareholders have called for a leadership change at the top to stimulate revenue and profit growth in the company.   Here are pointers to help you comprehend the trend:...
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UBS shareholders set to rebel over pay

(CNN) -- A significant number of investors are preparing to confront the management of UBS on Thursday by voting against the Swiss bank's 2011 pay award and denying executives formal approval of their actions. The bank's share price dropped 28 per cent last year and it lost $2.25bn in a rogue trade in London that caused the largest unauthorised trading loss on record in Britain. For the same period, the bank chose to pay 12 members of its executive board SFr70.1m ($77.1m) compared to SFr91m in the year before. That has prompted advisory groups and institutional investors including ISS, Ethos, F&C...
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Rise of shareholder activism

Infosys, Coal India, Akzo Nobel and Vedanta have run up against shareholders who are not afraid to ask searching questions, even if they happen to be minority shareholders. India Inc can no longer expect shareholders to remain calm if their rights are trampled upon. Not just big institutional investors, but even minority shareholders are now turning increasingly assertive to influence corporate decision-making. Recent developments in the financial markets and in business practices suggest a growing trend in shareholder activism, wherein investors attempt to influence management and corporate practices by raising uncomfortable questions to the top guns of India Inc. INSTANCES OF...
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Does your fund manager really protect your interest?

Earlier this week, 55% of the shareholders of Citigroup created a major flutter on Wall Street when they blocked a proposal to raise CEO Vikram Pandit's remuneration to $15 million for 2011 from a token $1 in 2010. American shareholders have a say on the pay of corporate executives and across the West, institutional shareholders take an active interest in the way managements run companies. Still, the Citi revolt took every Wall Street watcher by surprise. What about India? Investor activism is yet to take root here, and in the few instances where minority investors have intervened, they have had little...
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Cognizant institutional investor Lacera wants directors to be elected annually, not three-year term

BANGALORE: A tug of war between minority shareholders and the board of directors is brewing at Cognizant Technology Solutions, India's third-largest software outsourcing company. In Cognizant's upcoming June 5 annual shareholder meeting, institutional investor Los Angeles County Employee Retirement Association, or Lacera, which manages $39 billion in assets, is putting to vote a proposal at the shareholder meeting on June 5 to make it mandatory for all board directors to be elected annually, as against a three-year term at present. Cognizant has recommended that all shareholders vote against the proposal. Another activist investor John Chevedden has forced Cognizant to introduce a...
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Investors push for better corporate governance

New Delhi: Minority shareholders and independent directors are starting to make themselves heard by management and force a reversal of key decisions in what analysts say are small, but significant steps towards improving corporate governance standards in India. A rebellion at Coal India Ltd (CIL) last week in which independent board members and a minority shareholder challenged a government attempt to dictate terms to the state-owned miner is a case in point. In February, the board of paint maker Akzo Nobel India Ltd was forced to cut the royalty payable to its Amsterdam-based parent in a victory for small shareholders, who...
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High Frequency Trading

This article has been written by Kabir Sharma. Financial markets over the course of time have changed significantly, both with the development of new financial instruments and advancement of technology being employed. In terms of technology the markets have moved from human outcry mechanism to the modern day’s electronic exchanges with ultra high frequency computers being deployed to execute trades, minimizing the human intervention for trade execution. One of the recent developments in financial markets is algorithmic trading which now forms a major chunk of the total trades being executed across the most developed financial markets of the world. Algorithmic trading...
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