The government has involved various regulators to broadbase the probe into the Indian Premier League (IPL) affairs.
The Registrar of Companies (RoC) is scrutinising the returns and balance sheets of companies related to IPL. The Competition Commission of India (CCI) is looking into the norms followed during allotment of bids to IPL franchisees and the transparency maintained in the bidding process. The Department of Economic Affairs, under the Ministry of Finance, is looking into the possible violations of foreign direct investment rules by foreign investors in IPL.
“The mandate from the Ministry of Corporate Affairs is not only to see the listings, filings, balance sheets of companies investing in IPL franchises, but also to check the same of related companies, group companies, cross-holdings of companies or individuals, or firms holding stake in IPL teams,” said ministry officials. In Mumbai, for instance, there are one-two companies with direct stake in IPL teams, but RoC has identified six-seven entities for scrutiny. “We will look into related party transactions in related or group companies of all owners, sponsors or franchise holders even if the equity has been acquired as sweat equity,” they added.
“In various instances, the stakes in IPL teams have been diluted. So one has to see whether these are in compliance with Companies Act.”
For CCI, the scope of scrutiny is to see if there has been any unfair trade practices adopted during the bidding process to allot teams. It may also look into the scope of unfair trade practices involved in the alleged payment of facilitation fee by broadcasting agency Multi Screen Media (MSM) (erstwhile, Sony Entertainment) to marketing company World Sports Group ( WSG).
In India, FDI is allowed up to 100 per cent in sports and entertainment under the automatic route. Therefore, sources say, “prima facie, there is no violation of any rule since no permission is required. However, it is observed that investment has come through one country, but the investors belong to various countries, primarily tax havens. So, the source of income and credibility of the investors are some of the important issues in FDI that needs to be seen," said an official source. The Reserve Bank of India has been asked to furnish details of inflows and outflows of foreign exchange and other proposals submitted by Indian companies, individuals and firms related to IPL events, along with their observations.
Rajasthan Royals’ FDI need
An FDI proposal for Rajasthan Royals has been resubmitted to the Foreign Investment Promotion Board (FIPB) for reconsideration.
Since the investment is routed through Mauritius and several other countries, it is likely to get deferred pending the views of the Department of Revenue, said sources. Rajasthan Royals sought FIPB approval to induct foreign equity of over $5.82 million (Rs 26.7 crore). It sought to issue shares to UK-based Emerging Medial against a deposit of $50,48,885.25 made by the British firm to BCCI.
