According to a stock exchange announcement, the promoter group, which held shares through 32 entities, would now transfer their shares, representing 34.17 per cent of voting rights, to a total of 61 entities, including 27 LLPs. The transaction was completed on August 11. transfer and acquisition is part of the transfer without consideration amongst the group,” the “The announcement stated. LLPs are an alternative corporate business vehicle that offers the benefits of not only limited liability, but also allows its members the flexibility to organise their internal structure as a partnership based on an agreement. According to tax experts, the restructuring would lead to a much lower tax outgo on dividend distribution. holding “A under the LLP structure will help them avoid the dividend distribution tax, which is applicable at 16.61 per cent in the case of companies,” said Sunil Jain, partner-taxation at J Sagar Associates. the Direct Code comes into effect from April 1, 2011, RIL could be restructuring before that to gain tax “As advantages. The company has treasury stock of '13,000 crore on its balance sheet,” explained Jagannadham Thunuguntla, equity head at SMC Capitals. Analysts believe that shifting treasury to LLPs might help the company save tax, even after Direct Taxes Code is introduced. It will make long-term capital gains taxable. Market experts, meanwhile, say the restructuring has been done at an appropriate time. "It not have been done post the new code as the changes proposed may result into higher tax outgo for the group," said Deven Choksey, managing director, KR Choksey Shares and Securities. "The new structure will be more revealing in terms of ultimate beneficiaries of stakes. Earlier, some trading and investment companies were among the promoters of RIL and it was not clear who the beneficiaries were," said S P Tulsian, independent equity advisor. PROMOTER PROFIT SHAREHOLDING IN RIL IN THE LAST THREE QUARTERS (in %) Jun Dec Mar ’10 ’09 ’10 Promoter 44.76 46.57 44.76 FII 17.20 16.82 17.59 DII 10.72 9.83 10.66 Others 27.32 26.78 26.99
According to a stock exchange announcement, the promoter group, which held shares through 32 entities, would now transfer their shares, representing 34.17 per cent of voting rights, to a total of 61 entities, including 27 LLPs. The transaction was completed on August 11. “The transfer and acquisition is part of the transfer without consideration amongst the group,” the announcement stated. LLPs are an alternative corporate business vehicle that offers the benefits of not only limited liability, but also allows its members the flexibility to organise their internal structure as a partnership based on an agreement. According to tax experts, the restructuring would lead to a much lower tax outgo on dividend distribution. “A holding under the LLP structure will help them avoid the dividend distribution tax, which is applicable at 16.61 per cent in the case of companies,” said Sunil Jain, partner-taxation at J Sagar Associates. “As the Direct Code comes into effect from April 1, 2011, RIL could be restructuring before that to gain tax advantages. The company has treasury stock of '13,000 crore on its balance sheet,” explained Jagannadham Thunuguntla, equity head at SMC Capitals. Analysts believe that shifting treasury to LLPs might help the company save tax, even after Direct Taxes Code is introduced. It will make long-term capital gains taxable. Market experts, meanwhile, say the restructuring has been done at an appropriate time. "It not have been done post the new code as the changes proposed may result into higher tax outgo for the group," said Deven Choksey, managing director, KR Choksey Shares and Securities. "The new structure will be more revealing in terms of ultimate beneficiaries of stakes. Earlier, some trading and investment companies were among the promoters of RIL and it was not clear who the beneficiaries were," said S P Tulsian, independent equity advisor. PROMOTER PROFIT SHAREHOLDING IN RIL IN THE LAST THREE QUARTERS (in %) Jun ’10 Dec ’09 Mar ’10 Promoter 44.76 46.57 44.76 FII 17.20 16.82 17.59 DII 10.72 9.83 10.66 Others 27.32 26.78 26.99
Business-Standard.docx