Assignment of an asset from a trust
Isha
(Querist) 20 June 2014
This query is : Open
In a trust of 168 accounts (say Trust A), we have one account (say account X), in which a QIB has shown interest to invest. However, investment by the QIB in Trust A is not feasible since valuation of the account X as a part of the portfolio value is not feasible. In other words, while the valuation of the account X is possible based on the nature of underlying securities, the valuation of entire trust is not possible at this juncture due to the difficulty in determining the anticipated proceeds from the balance underlying assets, the expenses and the timelines. The transaction will be done in the following steps:
1.Assignment of Asset X from Trust A (managed by ARC) to Trust B (managed by ARC) at the agreed value say “M”.
2.Trust B will simultaneously receive amount M from ARC for payment to Trust A, and issue SRs (of face value of Rs 1000 each) to ARC (trust deed will be executed for the same) for the amount “M”.
3.ARC will transfer 95% SRs to the QIB at par value.
The following points may be clarified:
A.Legal validity of the proposed structure.
B.Compliance of RBI guidelines for the proposed structure.
