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Rishabh Shroff

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Co-Head and Partner in the Private Client Practice at the Mumbai office of Cyril Amarchand Mangaldas. Rishabh specialises in family constitutions and settlements, trusts, wills and succession planning. He can be reached at rishabh.shroff@cyrilshroff.com

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Will and testament
The Indian Succession Act does not make it compulsory to appoint an executor of a Will, (iStock)

The Private Client team at Cyril Amarchand Mangaldas shares their comments and opinions shared in an article in the  following Q&A which was published by the Mint Newspaper on 28th Jan, 2020 and the online edition of the same can be found at: https://www.livemint.com/insurance/news/it-is-not-necessary-to-appoint-a-lawyer-as-executor-of-your-will-11580203086115.html

My life insurance policies have nominees. But I want the life insurance proceeds to go to a few other people, too. I wish to specify the same in the Will. Can it get challenged as the nominee names are different?

—Herman Patel…
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Will Making
Photo: iStock

The Private Client team at Cyril Amarchand Mangaldas is delighted to share, via our Private Client blog, our comments and opinions shared in various leading media publications globally. We hope these inputs help our clients and readers gain a practical perspective into key legal, financial, commercial and other aspects that need to be duly considered in Estate Planning.

The following Q&A was published by the Mint Newspaper on 14 Jan 2020 and the online edition of the same can be found at: https://www.livemint.com/money/personal-finance/trust-made-under-will-works-well-for-bequeathing-assets-to-a-minor-11578997625506.html.

For further information, please contact our Partner & Co-Head of our Private Client team, Mr. Rishabh Shroff, at Rishabh.shroff@cyrilshroff.com…
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Legal Heirs Preferred Over Nominees - Court Decision

The issue of legatees vs. nominees still seems to be causing confusion in the minds of the public. Even after a number of clear judicial decisions on this topic, confirming that legal heirs are the correct persons to inherit assets (over that of a nominee), a new decision re-confirms this issue.

The National Company Law Appellate Tribunal, New Delhi (“NCLAT”), on November 14th, 2019 had held that nomination does not amount to beneficial ownership to an asset and the nominee holds the asset for and on behalf of the legal heirs of the deceased. The Bench of Justice S.J. Mukhopadhyaya and Justice A.I.S. Cheema, in the case of Oswal Greentech v Mr Pankaj Oswal and Ors[1] (“Oswal”) whilst listening to the question of maintainability of the petition under Section 241-242 of the Companies Act, 2013 (“Act”), decided on the said matter.…
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Prosecution under Black Money Act for inherited foreign bank accounts

The scourge of ‘black money’ has been a persistent issue for India, becoming a major political issue in the recent past. The problem of black money leads to challenges on multiple fronts, greatest of them being denial of revenue to the Government. The parallel economy created by black money deprives the government of its due share of individual income tax, which in turn leads to reduced funds available for much needed government spending and stimulus. Socially, the problem of black money gives rise to further corruption and enhanced class inequality.

Since coming to power in 2014, the current Government has taken up the issue of black money as a major point of reform and has been gradually escalating its efforts to bring black money, both in India and abroad, to tax. Some of the major measures include establishing the multilateral mechanism for Automatic Exchange of Information, information exchange mechanisms with various countries under the respective tax treaties, the demonetisation drive, enactment of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BM Act) and the Fugitive Economic Offenders Act, 2018.…
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In recent years, the issue of corporate governance in India has been a hot topic of discussion. As India Inc. has grown by leaps and bounds, corporate India’s attention has evolved from simple ‘management’ to ‘governance’, and now ‘effective governance’. Given the unique challenges that India Inc. faces due to the predominance of family run businesses, there is a pressing need to move from the ‘Raja’ and ‘Praja’ model of governance (wherein the self-interests of the promoter family precedes the interests of other stakeholders) to the ‘Custodian’ model of governance (which is designed to serve the interests of all stakeholders). While some promoters have consciously worked hard to establish a “Ram Rajya” (a democratic-righteous rule), many are still reluctant to yield power and fear that it may lead to an abdication of their throne.

Kotak Committee

In June 2017, Securities and Exchange Board of India (SEBI), constituted a high powered committee under the chairmanship of Mr. Uday Kotak (Kotak Committee) with the aim of improving governance standards of Indian listed companies which came out with detailed recommendations (Kotak Report)[1]. The legal experts on the Kotak Committee included our Firm’s Managing Partner, Mr. Cyril Shroff.

On March 28th, 2018, SEBI’s Board decided on these recommendations whereby (i) 40 out of 80 were accepted without any modifications; (ii) 15 were accepted with modifications; and (iii) 18 were rejected.

Kotak Committee – Key recommendations accepted by SEBI

The Kotak Committee suggested numerous amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which will consequently impact all listed entities. In this article, we dissect some of the critical proposals and their impact on Indian Promoters. For a full list of recommendations accepted by SEBI, please refer to the press release[2].

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Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a lifetime.

–  Anonymous

Philanthropists the world over have been inspired by this simple but powerful statement, and have evolved from undertaking traditional notions of charity to philanthropy and now more recently, towards impact investing.

Impact investing bridges the gap between pure charity and donations for social, environmental and other causes, and pure investment aimed only at financial gain. As the world and, in particular, India, braces itself to battle increasing demand but diminishing resources, the deployment of monies in a manner that helps solve societal problems and conserve resources is not a luxury, but an urgent necessity.

Impact investing is an idea whose day has come. Mahatma Gandhi believed that the rich should be custodians of their wealth for the benefit of society, leading to a more egalitarian world. In this article, we explore why Indian family offices – being custodians of family wealth – should embrace impact investing that embodies this Gandhian philosophy. In doing so, they will not only contribute to society but also extend family legacies beyond the board room.

Impact Investing

The World Economic Forum describes impact investing as an approach that intentionally seeks to create both financial return as well as positive social and/or environmental impacts that are actively measured. The term is often used narrowly as an asset class, but, in fact, it represents an investment approach or philosophy by which investments are made across asset classes. Such asset classes include venture capital and private equity, social impact bonds, municipal bonds, real estate and contribution to social venture funds.

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Photo credit: Indian Express, August 23, 2017

Through its historic ruling delivered by a five-judge bench in the case of Shayara Bano and Ors v. Union of India on August 22nd 2017, the Supreme Court of India (SC) liberated Muslim women from the perpetual fear of arbitrary and whimsical divorce. The SC banned the regressive practice of instant ‘triple talaq’, which allowed Muslim men to unilaterally end their marriages simply by uttering the word “talaq” thrice without making any provision for maintenance or alimony. These often happened on the flimsiest of grounds, if any, which left the women at a serious and grave disadvantage.

The long-standing battle to get triple talaq abolished gained renewed momentum in October 2015, when the SC decided to look into the matter of Muslim women facing gender-based discrimination within the community. A Constitutional Bench of the SC was set up to examine if Muslim women face gender discrimination in divorce cases.

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Over the past few years, many Indian business families have established estate planning structures, many of which comprise one or more family trusts. The main driver for these structures would have been tax driven considerations. Under the recent Finance Bill, 2017 (Finance Bill), there was a key amendment proposed to the Income-tax Act, 1961 (IT Act), which if passed would have had a significant impact on existing and future estate planning structures – by way of a ‘gift tax’ in respect of assets received by taxpayers without consideration or for inadequate consideration (Proposed Amendment).

Subsequently, the Proposed Amendment has been further amended by the Finance Act, 2017, as passed by the Parliament on March 30th, 2017 (Finance Act). In this article, we discuss the said amendment to the gift tax regime.

Under the IT Act, gifts received by individuals and Hindu Undivided Families (HUFs), were taxed, subject to tax certain conditions and exceptions. However, other tax payers, such as unlisted companies, partnership firms and limited liability partnerships were not subject to gift tax, except if they receive shares of unlisted companies without consideration or for inadequate consideration. However, certain exceptions, namely receipts from relatives, gifts on occasion of marriage, etc had been retained.

In order to remove this disparity, the Finance Act provided that the ‘gift tax’ regime shall apply equally to all tax payers post April 1st, 2017.

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