Letters: Another hasty move

With reference to “Stressed unlisted firms may get tax incentives” (December 12), this is another instance of hasty and uncoordinated attempts at framing major legislation. Some of the problems like effective date, price benchmark for shares for debt conversion, eligibility of the existing promoters, other coercive proceedings like Debts Recovery Tribunal, and now tax issues pertaining to transfer of shares and for accumulated loss, could have been foreseen by an experienced group of tax and finance bureaucrats.
 
It stands to reason that imputing a fair market price different than that arrived through a bidding process is illogical. Once such a clarification is done in the statutes, there is no need to make a separate exemption of such transfer or conversion of shares from taxation, either as capital gains or imputed income. Allowing loss carry-forward is a mere recognition that a company is a legal entity, and at least for sick company acquisition, the benefit must continue. Of course, the government has to decide how much sacrifice it can absorb, and has to therefore balance the various claims and choose the optimal compromise.

 
On the eligibility of existing promoters not being willful defaulters, the better way would have been to give them the right of last refusal at 10-20 per cent better net present value than the best outsider bid. If indeed the promoters have emotional attachment or better insider knowledge, a premium is justified. After all, a company goes to the insolvency code-based sale only when all other debt restructure methods of the Reserve Bank of India have failed. P Datta   Kolkata
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