There seem to be two issues here that arose to give Vodafone its problems.
One is that their local partner is holding some of its shares through an offshore company, thereby making part of its stake as non-Indian. This stake is owned by Indian nationals through an offshore company, apparently, set up to avoid Indian taxes. What is surprising is that this has been allowed by the Indian authorities and, once allowed, that they are not accepting this stake as fully Indian owned.
Secondly, the arrangement that Hutchison had with their local management to enable shares to be designated as a local holding was in place beforehand and nothing was said. Now that Vodafone makes its acquisition, this arrangement is being questioned.
These problems are not of Vodafone´s making and the Indian authorities should be laying responsibilities where they truly belong!
Onésimo Alvarez-Moro
See article:
Indian regulators have approved Vodafone's $11.1bn (£5.7bn) purchase of a majority stake in Hutchison Essar.
Officials had held up approval of the deal to ensure it did not breach Indian investment rules and put too much of Hutchison into foreign hands.
The Indian finance minister will have the final say, but it is understood he will rubber-stamp Vodafone's plans.
UK-based Vodafone agreed to buy 67% of Hutchison in February to enter the world's fastest growing mobile market.
See full Article.
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