vodafone is an mba case study of messed up m&a

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Vodafone Is an MBA Case Study of Messed-Up M&A: Chris Hughes

By Chris Hughes

There’s hidden value in Vodafone Group Plc, the sprawling telecoms company whose market capitalization has shed more than $50 billion in nearly five years. It offers business students a lesson in the good, the bad and ugly of mergers and acquisitions. The only thing missing is the ultimate deal: a break-up bid.

Things aren’t going well. The shares recently slid beneath the psychological 100 pence level. The competition has been whipping Vodafone in Germany, its main market. Management is struggling to convince investors that high debt from dealmaking will come under control. Activist Cevian Capital AB gave up on the stock ...

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Vodafone is an MBA case study of messed-up M&A

There’s hidden value in Vodafone Group, the sprawling telecommunications company (and parent of South Africa’s Vodacom Group) whose market capitalisation has shed more than US$50-billion in nearly five years. It offers business students a lesson in the good, the bad and ugly of mergers and acquisitions. The only thing missing is the ultimate deal: a break-up bid.

Things aren’t going well. The shares recently slid beneath the psychological 100p level. The competition has been whipping Vodafone in Germany, its main market. Management is struggling to convince investors that high debt from dealmaking will come under control. Activist Cevian Capital gave up on the stock earlier this year, but telecoms billionaire Xavier Niel has taken its place as a potential agitator.

Rewind to 2013 and it’s hard to believe Vodafone could have got into such a pickle. Then-CEO Vittorio Colao agreed to an exit from its joint venture with Verizon Communications for $130-billion. Most of the payment received — mainly a mix of cash and Verizon shares — was funnelled to shareholders. That was a great deal making a hiatus in years of empire building. Sadly, the sequels in this M&A saga have been a letdown.

Vodafone added cable infrastructure to its portfolio pursuing a so-called convergence strategy to sell phone, Internet and pay-television services. Having offered $11-billion to take control of Kabel Deutschland in Germany, it then gobbled up Spain’s Grupo Corporativo ONO for $10-billion. The Spanish market later became viciously competitive.

In 2018 came the $22-billion acquisition of assets from rival Liberty Global. This filled gaps in Vodafone’s German coverage. Less than a week after the announcement, Nick Read, then chief financial officer, was announced as Colao’s successor and given the mammoth integration job. True, Colao had been boss nearly 10 years, but the succession was hardly ideal. Vodafone shares have badly trailed European peers ever since.

To be fair, the idea of becoming a bundled telecoms provider made sense, and it would have taken years to build this from scratch instead of doing acquisitions. The snag is that Vodafone has not run the assets well. Having initially reaped synergies, poor customer service has seen it lose German market share. If you do expensive M&A, you have to be a flawless manager of what you buy.

Vodafone also took on a lot of debt. It’s a fine judgment, but it would have been wiser to retain more of the roughly $80-billion returned to shareholders after the Verizon deal and keep more headroom.

Then there are the deals Vodafone didn’t do, or took its time over. Its assets span Europe and emerging markets. Yet what matters most in telecoms is scale within not across borders, while a multinational footprint adds complexity for investors. Vodafone could have done more to focus on select markets in Europe while finding better owners for everything else. That would have accelerated debt reduction and made the company a more manageable beast.

Earlier this year Vodafone passed on a deal with Masmovil Ibercom, letting Orange steal a march on Spanish consolidation. And while this month’s agreement on a partial sale of its mobile towers will cut leverage, it’s a governance fudge with a consortium of private equity and Saudi Arabian money. It would have been better to do a straight disposal years ago.

There is no rabbit that CEO Read can now pull from the hat. Regulators are likely to be more wary of permitting consolidation within Vodafone’s markets when consumers are stretched. A mooted combination with Three UK, owned by CK Hutchison Holdings, has yet to materialise.

Read’s best bet is to run the operations better, cut costs and grasp any M&A opportunities that fortune presents hereon. He could also be clearer that shareholders will benefit as debt comes down. Analysts at New Street Research see potential for a €4.9-billion cash return if things go well.

A smaller company with this record would be a takeover target itself. Vodafone’s enterprise value, exceeding $90-billion, offers protection from that threat. The fantasy deal would be a well organised consortium of buyers looking to carve up the firm between them. If that loomed, defending the status quo would be a huge challenge.

It’s up to chairman Jean-François van Boxmeer to decide whether Read is successfully leading Vodafone out of the mire. But any CEO here would have the same limited options for turning this monster around.  — (c) 2022 Bloomberg LP

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Vodafone is an MBA case study of messed-up M&A

charlie chaplin short biography

• Charlie Chaplin

(1889-1977)

Who Was Charlie Chaplin?

Charlie Chaplin worked with a children's dance troupe before making his mark on the big screen. His character "The Tramp" relied on pantomime and quirky movements to become an iconic figure of the silent-film era. Chaplin went on to become a director, making films such as City Lights and Modern Times , and co-founded the United Artists Corporation.

Famous for his character "The Tramp," the sweet little man with a bowler hat, mustache and cane, Charlie Chaplin was an iconic figure of the silent-film era and was one of film's first superstars, elevating the industry in a way few could have ever imagined.

Born Charles Spencer Chaplin in London, England, on April 16, 1889, Chaplin's rise to fame is a true rags-to-riches story. His father, a notorious drinker, abandoned Chaplin, his mother and his older half-brother, Sydney, not long after Chaplin's birth. That left Chaplin and his brother in the hands of their mother, a vaudevillian and music hall singer who went by the stage name Lily Harley.

Chaplin's mother, who would later suffer severe mental issues and have to be committed to an asylum, was able to support her family for a few years. But in a performance that would introduce her youngest boy to the spotlight, Hannah inexplicably lost her voice in the middle of a show, prompting the production manager to push the five-year-old Chaplin, whom he'd heard sing, onto the stage to replace her.

Chaplin lit up the audience, wowing them with his natural presence and comedic angle (at one point he imitated his mother's cracking voice). But the episode meant the end for Hannah. Her singing voice never returned, and she eventually ran out of money. For a time, Chaplin and Sydney had to make a new, temporary home for themselves in London's tough workhouses.

Early Career

Armed with his mother's love of the stage, Chaplin was determined to make it in show business himself, and in 1897, using his mother's contacts, he landed with a clog-dancing troupe named the Eight Lancashire Lads. It was a short stint, and not a terribly profitable one, forcing the go-getter Chaplin to make ends meet any way he could.

"I (was) newsvendor, printer, toymaker, doctor's boy, etc., but during these occupational digressions, I never lost sight of my ultimate aim to become an actor," Chaplin later recounted. "So, between jobs I would polish my shoes, brush my clothes, put on a clean collar and make periodic calls at a theatrical agency."

Eventually, other stage work did come his way. Chaplin made his acting debut as a pageboy in a production of Sherlock Holmes . From there, he toured with a vaudeville outfit named Casey's Court Circus and in 1908 teamed up with the Fred Karno pantomime troupe, where Chaplin became one of its stars as the Drunk in the comedic sketch A Night in an English Music Hall .

With the Karno troupe, Chaplin got his first taste of the United States, where he caught the eye of film producer Mack Sennett, who signed Chaplin to a contract for a $150 a week.

Film Career

In 1914, Chaplin made his film debut in a somewhat forgettable one-reeler called Make a Living . To differentiate himself from the clad of other actors in Sennett films, Chaplin decided to play a single identifiable character, and "The Little Tramp" was born, with audiences getting their first taste of him in Kid Auto Races at Venice (1914).

Over the next year, Chaplin appeared in 35 movies, a lineup that included Tillie's Punctured Romance , film's first full-length comedy. In 1915, Chaplin left Sennett to join the Essanay Company, which agreed to pay him $1,250 a week. It is with Essanay that Chaplin, who by this time had hired his brother Sydney to be his business manager, rose to stardom.

During his first year with the company, Chaplin made 14 films, including The Tramp (1915). Generally regarded as the actor's first classic, the story establishes Chaplin's character as the unexpected hero when he saves the farmer's daughter from a gang of robbers.

By the age of 26, Chaplin, just three years removed from his vaudeville days, was a superstar. He'd moved over to the Mutual Company, which paid him a whopping $670,000 a year. The money made Chaplin a wealthy man, but it didn't seem to derail his artistic drive. With Mutual, he made some of his best work, including One A.M. (1916), The Rink (1916), The Vagabond (1916) and Easy Street (1917).

Through his work, Chaplin came to be known as a grueling perfectionist. His love for experimentation often meant countless takes, and it was not uncommon for him to order the rebuilding of an entire set. Nor was it uncommon for him to begin filming with one leading actor, realize he'd made a mistake in his casting and start again with someone new.

But the results were hard to refute. During the 1920s Chaplin's career blossomed even more. During the decade he made some landmark films, including The Kid (1921), The Pilgrim (1923), A Woman in Paris (1923), The Gold Rush (1925), a movie Chaplin would later say he wanted to be remembered by, and The Circus (1928). The latter three were released by United Artists, a company Chaplin co-founded in 1919 with Douglas Fairbanks, Mary Pickford, and D.W. Griffith.

Later Films

Chaplin kept creating interesting and engaging films in the 1930s. In 1931, he released City Lights , a critical and commercial success that incorporated music Chaplin scored himself.

More acclaim came with Modern Times (1936), a biting commentary about the state of the world's economic and political infrastructures. The film, which did incorporate sound, was, in part, the result of an 18-month world tour Chaplin had taken between 1931 and 1932, a trip during which he'd witnessed severe economic angst and a sharp rise in nationalism in Europe and elsewhere.

But Chaplin was not universally embraced. His romantic liaisons led to his rebuke by some women's groups, which in turn led to him being barred from entering some U.S. states. As the Cold War age settled into existence, Chaplin didn't withhold his fire from injustices he saw taking place in the name of fighting Communism in his adopted country of the United States.

Chaplin soon became a target of the right-wing conservatives. Representative John E. Rankin of Mississippi pushed for his deportation. In 1952, the Attorney General of the United States obliged when he announced that Chaplin, who was sailing to Britain on vacation, would not permit him to return to the United States unless he could prove "moral worth." The incensed Chaplin said good-bye to the United States and took up residence on a small farm in Corsier-sur-Vevey, Switzerland.

Final Years and Death

Nearing the end of his life, Chaplin did make one last visit to the United States in 1972, when he was given an honorary Academy Award. The trip came just five years after Chaplin's final film, A Countess from Hong Kong (1967), the filmmaker's first and only color movie. Despite a cast that included Sophia Loren and Marlon Brando , the film did poorly at the box office. In 1975, Chaplin received further recognition when he was knighted by Queen Elizabeth II .

In the early morning hours of December 25, 1977, Chaplin died at his home in Corsier-sur-Vevey, Vaud, Switzerland. His wife, Oona, and seven of his children were at his bedside at the time of his passing. In a twist that might very well have come out of one of his films, Chaplin's body was stolen not long after he was buried from his grave near Lake Geneva in Switzerland by two men who demanded $400,000 for its return. The men were arrested and Chaplin's body was recovered 11 weeks later.

Wives and Children

Chaplin became equally famous for his life off-screen. His affairs with actresses who had roles in his movies were numerous. Some, however, ended better than others.

In 1918, he quickly married 16-year-old Mildred Harris. The marriage lasted just two years, and in 1924 he wed again, to another 16-year-old, actress Lita Grey, whom he'd cast in The Gold Rush . The marriage had been brought on by an unplanned pregnancy, and the resulting union, which produced two sons for Chaplin (Charles Jr. and Sydney) was an unhappy one for both partners. They divorced in 1927.

In 1936, Chaplin married again, this time to a chorus girl who went by the film name of Paulette Goddard. They lasted until 1942. That was followed by a nasty paternity suit with another actress, Joan Barry, in which tests proved Chaplin was not the father of her daughter, but a jury still ordered him to pay child support.

In 1943, Chaplin married 18-year-old Oona O'Neill, the daughter of playwright Eugene O'Neill. Unexpectedly the two would go on to have a happy marriage, one that would result in eight children.

QUICK FACTS

• Name: Charlie Chaplin
• Birth Year: 1889
• Birth date: April 16, 1889
• Birth City: London, England
• Birth Country: United Kingdom
• Gender: Male
• Best Known For: Charlie Chaplin was a comedic British actor who became one of the biggest stars of the 20th century's silent-film era.
• Astrological Sign: Aries
• Death Year: 1977
• Death date: December 25, 1977
• Death City: Corsier-sur-Vevey, Vaud
• Death Country: Switzerland

We strive for accuracy and fairness.If you see something that doesn't look right, contact us !

CITATION INFORMATION

• Article Title: Charlie Chaplin Biography
• Author: Biography.com Editors
• Website Name: The Biography.com website
• Url: https://www.biography.com/actors/charlie-chaplin
• Access Date:
• Publisher: A&E; Television Networks
• Last Updated: May 5, 2021
• Original Published Date: April 3, 2014
• I want to see the return of decency and kindness. I'm just a human being who wants to see this country a real democracy.
• I am for people. I can't help it.
• The Zulus know Chaplin better than Arkansas knows Garbo.
• The saddest thing I can imagine is to get used to luxury.
• All I need to make a comedy is a park, a policeman and a pretty girl.
• I remain just one thing, and one thing only—and that is a clown. It places me on a far higher plane than any politician.
• I am known in parts of the world by people who have never heard of Jesus Christ.
• I went into the business for the money, and the art grew out of it.
• The summation of my character is that I care about my work. I care about everything I do. If I could do something else better, I would do it, but I can't.
• I've always related to a sort of a comic spirit, something within me, that said, I must express this. This is funny.
• Cruelty is a basic element in comedy. What appears to be sane is really insane, and if you can make that poignant enough they love it.
• I don't think one can do humor without having great pity and a sense of sympathy for one's fellow man.
• I think life is a very wonderful thing, and must be lived under all circumstances, even in misery.
• All my pictures are built around the idea of getting in trouble and so giving me the chance to be desperately serious in my attempt to appear as a normal little gentleman.
• Failure is unimportant. It takes courage to make a fool of yourself.
• Life is a tragedy when seen in close-up, but a comedy in long-shot.
• A day without laughter is a wasted day.

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A Short Biography Of Charlie Chaplin

Reading Comprehension – A Short Biography of Charlie Chaplin

Develop your reading skills. Read the following Short Biography of Charlie Chaplin and do the comprehension task.

Charlie Chaplin: A Cinematic Legacy

Charlie Chaplin was an English comic actor, filmmaker, and composer who rose to fame in the silent era. He is mostly famous for his screen persona “the tramp”. Born on April 16, 1889, in London, Chaplin is considered one of the most important figures in the history of the film industry. He had been a productive and creative filmmaker for about 75 years before he died in 1977.

Chaplin suffered from poverty and hardship in his childhood. He was sent to a workhouse twice before the age of nine. His mother struggled financially when his father was absent. When he was 14, his mother was sent to a mental asylum.

Chaplin’s first performances were at music halls as a stage actor and comedian at the age of 19. He went to the USA where he was scouted for the film industry and began appearing in 1914 for Keystone Studios. He soon developed the Tramp persona and formed a large fan base. Chaplin directed his own films from an early stage and continued to hone his craft. By 1918, he was one of the best-known figures in the film industry.

Chaplin wrote, directed, produced, edited, starred in, and composed the music for most of his films. He was a perfectionist, and his financial independence enabled him to spend years on the development and production of a picture.

In 1919, Chaplin co-founded the distribution company United Artists, which gave him complete control over his films. His first feature-length films were:

• The Kid (1921),
• A Woman of Paris (1923),
• The Gold Rush (1925),
• and The Circus (1928).

In the 1930s, Chaplin refused to move to sound films. He produced instead:

• City Lights (1931)
• and Modern Times (1936)

Both without dialogue.

Later, his films became more political by producing The Great Dictator (1940), where he satirized Adolf Hitler.

Controversy

The 1940s were a decade marked with controversy for Chaplin, and his popularity declined rapidly. He was accused of communist sympathies, while his involvement in a paternity suit and marriages to much younger women caused scandal. An FBI investigation was opened, and Chaplin was forced to leave the United States and settle in Switzerland.

His latest films

Charlie Chaplin abandoned the Tramp in his later films, which include Monsieur Verdoux (1947), Limelight (1952), A King in New York (1957), and A Countess from Hong Kong (1967).

In 1972, as part of a renewed appreciation for his work, Chaplin received an Honorary Academy Award for:

“the incalculable effect he has had in making motion pictures the art form of this century”.

Source: Wikipedia

Comprehension:

• Charlie Chaplin had a happy childhood. a. True b. False
• Chaplin started his career in England. a. True b. False
• Chaplin left the USA to live in Switzerland because he was ill. a. True b. False
• Chaplin died at the age of 88. a. True b. False

Related Pages:

• Film making
• Academy Awards
• List of Academy Awards
• Entertainment Vocabulary

Biography Online

Charlie Chaplin Biography

 “Life is a tragedy when seen in close-up, but a comedy in long-shot”

– Charlie Chaplin

Short bio Charlie Chaplin

Chaplin was born in London, 16 April 1889, to parents who worked in the entertainment industry. At an early age, his alcoholic father passed away, and later his mother had a breakdown and was taken to an asylum. This left Charlie and his brother to fend for themselves. Following in their parent’s footsteps, they were drawn to the musical hall, and Charlie gained a prominent reputation as a performer.

Charlie Chaplin had tremendous intensity. He would finance, write and direct all his films himself. He was a great perfectionist and would make his actors perform scenes up to 100 times to get it just right. Yet he also liked to improvise much of his performances and would not stick rigidly to a script.

The film was made one year before the US entered the war against Germany, and was controversial at a time when anti-Semitism was rife in America. Despite his parody of Hitler in this film, Chaplin refused to publicly endorse the war effort in 1942 – causing the authorities to become suspicious of his political leanings.

“Wars, conflict, it’s all business. One murder makes a villain. Millions a hero. Numbers sanctify.”

Monsieur Verdoux (1947);

“Since the end of the last world war, I have been the object of lies and propaganda by powerful reactionary groups who, by their influence and by the aid of America’s yellow press, have created an unhealthy atmosphere in which liberal-minded individuals can be singled out and persecuted. Under these conditions I find it virtually impossible to continue my motion-picture work, and I have therefore given up my residence in the United States.”

Charlie Chaplin later said he was not a Communist but refused to condemn Communists because he disliked the nature of the McCarthy era.

“Friends have asked how I came to engender this American antagonism. My prodigious sin was, and still is, being a non-conformist. Although I am not a Communist I refused to fall in line by hating them. Secondly, I was opposed to the Committee on Un-American Activities — a dishonest phrase to begin with, elastic enough to wrap around the throat and strangle the voice of any American citizen whose honest opinion is a minority of one.” – My Autobiography (1964)

Chaplin had great comic talent; this was a talent that shone through in his silent films but also in later years.

“I remain just one thing, and one thing only — and that is a clown. It places me on a far higher plane than any politician.”

Charlie Chaplin, as quoted in The Observer (17 June 1960)

Chaplin was put forward for a knighthood in 1956, but, it was blocked by the Conservative cabinet who feared a backlash from the American government.

Chaplin was eventually knighted in 1975. He also was awarded an Oscar in 1972 for his music score in the 1952 film Limelight . He was also awarded an honorary award in 1972 for “the incalculable effect he has had in making motion pictures the art form of this century.”

He came out of exile to receive the award and the longest standing ovation in the history of the Oscars.

Charlie Chaplin had a turbulent personal life. He had 11 children with three different women and had several other girlfriends and marriages.

He died in his sleep in Vevey, Switzerland on Christmas Day 1977.

Citation: Pettinger, Tejvan. “Biography of Charlie Chaplin”, Oxford, UK.  www.biographyonline.net , 30th Nov. 2009. Last updated 16 February 2018.

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English comic actor and filmmaker (1889–1977) / from wikipedia, the free encyclopedia, dear wikiwand ai, let's keep it short by simply answering these key questions:.

Can you list the top facts and stats about Charlie Chaplin?

Summarize this article for a 10 year old

Sir Charles Spencer Chaplin KBE (16 April 1889   – 25 December 1977) was an English comic actor, filmmaker, and composer who rose to fame in the era of silent film . He became a worldwide icon through his screen persona, the Tramp , and is considered one of the film industry's most important figures. His career spanned more than 75 years, from childhood in the Victorian era until a year before his death in 1977, and encompassed both adulation and controversy.

Chaplin's childhood in London was one of poverty and hardship. His father was absent and his mother struggled financially—he was sent to a workhouse twice before age nine. When he was 14, his mother was committed to a mental asylum . Chaplin began performing at an early age, touring music halls and later working as a stage actor and comedian. At 19, he was signed to the Fred Karno company, which took him to the United States. He was scouted for the film industry and began appearing in 1914 for Keystone Studios . He soon developed the Tramp persona and attracted a large fanbase. He directed his own films and continued to hone his craft as he moved to the Essanay , Mutual , and First National corporations. By 1918, he was one of the world's best-known figures.

In 1919, Chaplin co-founded the distribution company United Artists , which gave him complete control over his films. His first feature-length film was The Kid (1921), followed by A Woman of Paris (1923), The Gold Rush (1925), and The Circus (1928). He initially refused to move to sound films in the 1930s, instead producing City Lights (1931) and Modern Times (1936) without dialogue. His first sound film was The Great Dictator (1940), which satirised Adolf Hitler . The 1940s were marked with controversy for Chaplin, and his popularity declined rapidly. He was accused of communist sympathies , and some members of the press and public were scandalised by his involvement in a paternity suit and marriages to much younger women. An FBI investigation was opened, and Chaplin was forced to leave the U.S. and settle in Switzerland. He abandoned the Tramp in his later films, which include Monsieur Verdoux (1947), Limelight (1952), A King in New York (1957), and A Countess from Hong Kong (1967).

Chaplin wrote, directed, produced, edited, starred in, and composed the music for most of his films. He was a perfectionist, and his financial independence enabled him to spend years on the development and production of a picture. His films are characterised by slapstick combined with pathos , typified in the Tramp's struggles against adversity. Many contain social and political themes, as well as autobiographical elements. He received an Honorary Academy Award for "the incalculable effect he has had in making motion pictures the art form of this century" in 1972, as part of a renewed appreciation for his work. He continues to be held in high regard, with The Gold Rush , City Lights , Modern Times, and The Great Dictator often ranked on lists of the greatest films .

Charlie Chaplin: Biography

Despite Chaplin's fierce temper and accusations that he fathered children by underage girls, Oona, his fourth wife, stood firmly by her 'Little Tramp'.

Charles Spencer Chaplin was born into a poor London family of music hall entertainers called Hannah Chaplin and Charles Chaplin SR. Even as a child he found success as a performer, making his stage debut in 1894. Biographer David Robinson has gone so far as to say that Chaplin's life was the ultimate rags to riches tale.

His early years were spent with his mother, who had no means of income, and brother in Kennington. Their father provided no support for his children causing Chaplin to be sent to the workhouse at the age of seven.

Chaplin spent his childhood going in and out of the workhouse as well as being educated by a range of charitable schools. In 1898, his mother was committed to a mental asylum due to a psychosis caused by syphilis and malnutrition. She remained in care until her death in 1928, leaving the young Charles and his brother Sydney to look after themselves.

He started his career in entertainment when he played a paperboy in 'Sherlock Holmes', which ran from 1903-6 from the age of 14, after which he worked as a mime in vaudeville theatres, until he left London for America. When Chaplin first arrived in the States he joined the Karno pantomime troupe, and toured with them for six years.

He signed his first film deal at the end of 1913, with Keystone pictures. His film debut was called 'Making a Living'. It was in the 1915 film, 'The Tramp', that Chaplin first appeared as the downtrodden, dreamy character for which he is most famous.

Chaplin's first controversy occurred during WWI when his loyalty to his native country was called into question as he lived in the US. Many British citizens called him a coward and a slacker.

In 1918, he married Mildred Harris with whom he had son Norman Spencer Chaplin, who only lived for three days. The couple divorced in 1920.

By the early 1920s, Chaplin was making his own films with actors Mary Pickford and Douglas Fairbanks due to the establishment of Chaplin Studios and United Artists in 1919. Having control of his own films lead to classics such as 'The Kid', 'The Gold Rush', 'City Lights', 'Modern Times' and 'The Great Dictator'. These films made him the most popular and successful film star of his time.

During this period, Chaplin was married to Lita Grey, with whom he had sons Charles and Sydney. They had divorced by 1927. This was then followed by a brief marriage to Paulette Goodard between 1936 and 1942.

Chaplin was known for his innovative film-making techniques, although he kept tight-lipped about how he achieved them. He said that revealing his methods would be akin to a magician spoiling his own illusion.

However, it is known that he almost never worked from a finished script, improving jokes and dialogue once the set had been constructed.

Chaplin is often compared to the other great silent comedian - Buster Keaton - however, fans have noted that while Keaton is more cynical in his act, Chaplin had a love for sentimentality and pathos.

The actor also composed the music for many of his films, most notably the song 'Smile', which he wrote for 'Modern Times' and was later covered by Nat King Cole, reaching number two in the UK charts.

When sound films appeared, Chaplin's natural terrain of silent film was eclipsed by the novelty and realism of this new technology.

Chaplin was accused of being a communist by senator McCarthy, and a file was produced that supposedly detailed his subversive political activities since 1922. His first 'talkie' 'The Great Dictator' in 1940 added heat to this accusation and caused a stir. The film saw Chaplin play a caricature version of Adolf Hitler, which was seen as being in bad taste.

Despite this, it grossed over $5 million and won five Academy Awards. His support in aiding the Russian struggle against the invading Nazis was also scrutinized, leading the House of Un-American Activities Council issuing a subpoena against him in 1947 but later decided he didn't need to testify.

In 1952, Chaplin visited Europe for the premiere of his film 'Limelight' and was not allowed to return to the US; he settled in Switzerland. He made a film, 'The King In New York', in 1957, which was full of criticism of McCarthy and American society in general.

In 1964, he released his first autobiography called 'My Autobiography', which was followed by 'My Life in Pictures' in 1974.

He was allowed to return to the US in 1972 to receive an Oscar for his services to film. Chaplin was then given a Knighthood of the British Order by the Queen in 1975.

He died in Switzerland aged 88 from natural causes in 1977.

By the time of his death, Chaplin had fathered 12 children, eight of those with his last wife Oona O'Neill, the daughter of playwright Eugene O'Neill, whom he had married in 1943.

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Charles chaplin (1889-1977).

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• 27 wins & 6 nominations total

• Writer (as Charlie Chaplin)

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• A Factory Worker (as Charlie Chaplin)
• A Tramp (as Charlie Chaplin)

• Charles Chaplin (uncredited)

• The Lone Prospector

• Station Porter (uncredited)

• Charles Chaplin
• Director (as Charlie Chaplin)

• Director (uncredited)

Personal details

• 5′ 4″ (1.63 m)
• April 16 , 1889
• Walworth, London, England, UK
• December 25 , 1977
• Vevey, Vaud, Switzerland (stroke)
• Spouses Oona Chaplin June 16, 1943 - December 25, 1977 (his death, 8 children)
• Children Victoria Chaplin
• Parents Hannah Chaplin
• Relatives Oona Chaplin (Grandchild)
• Other works Composed the love theme for Modern Times (1936) , as a totally instrumental, unnamed composition (although it was the music for a sequence of the film in which smiling was the emphasis. Much later the song became widely known as the named song that we came to know in the late twentieth and early twenty-first century as "Smile" after lyrics had been added by James John Turner Phillips (as John Turner ) & Geoffrey Parsons in the 1950s, at John Turner's Peter Maurice Music Company in the late 1950s. Chaplin was known to be less than pleased that his little melody was re-written with lyrics.
• 20 Biographical Movies
• 68 Print Biographies
• 25 Portrayals
• 158 Articles
• 4 Pictorials
• 16 Magazine Cover Photos

Did you know

• Trivia Most people (now and during his lifetime) believe that Chaplin had brown eyes because they had only seen him in black and white with black eye makeup on. It fact they were very blue. Chaplin remarked in his autobiography that people meeting him for the first time were always struck by his blue eyes. And his future wife Oona Chaplin wrote "Just met Charlie Chaplin. What blue eyes he has!" to a girlhood friend in 1942.
• Quotes All I need to make a comedy is a park, a policeman and a pretty girl.
• Trademarks A tramp with toothbrush mustache, undersized bowler hat and bamboo cane who struggled to survive while keeping his dignity in a world with great social injustice.
• The Little Tramp
• Salaries The Tramp ( 1915 ) $1,250 /week
• When did Charles Chaplin die?
• How did Charles Chaplin die?
• How old was Charles Chaplin when he died?

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Chaplin - a musical biography.

“Chaplin’s musical genius is that of organized revolt against conventions, combined with perfect feeling for the real thing.” - Ray Rasch

Charles Chaplin recalled that in his childhood his mother would take him to the theatre, where he would stand in the wings listening to her and the other acts of the music hall shows. At home, in the happier times, she would entertain him and his step-brother by singing, dancing, reciting and imitating other artists. His own very first appearance on the stage at the age of five was precipitated when her voice broke in front of a particularly tough crowd. Charlie, already a natural performer, it seems, was pushed on in her stead and sang two songs, pausing only to pick up coins thrown by the surprised and amused audience.

In 1898, aged 9, he began his own music hall career with a troupe of juvenile clog dancers, the Eight Lancashire Lads. He was to remain in the theatre, alternating work and periods of unemployment, until he joined Fred Karno’s company. As a rising star with Karno he went to America in 1910 to tour the vaudeville circuits. Stan Laurel, a fellow Karno performer, recalled that during their 1912 US tour Charlie “carried his violin wherever he could. Had the strings reversed so he could play left handed, and he would practise for hours. He bought a ‘cello once and used to carry it around with him. At these times he would always dress like a musician, a long fawn coloured overcoat with green velvet cuffs and collar and a slouch hat. And he’d let his hair grow long at the back. We never knew what he was going to do next.” Chaplin later wrote that “each week I took lessons from the theatre conductor or from someone he recommended. I had great ambitions to be a concert artist, or, failing that, to use [my violin] in a vaudeville act, but as time went on I realised that I could never achieve excellence, so I gave it up.”

At the end of 1913 Chaplin left Karno to remain in America and work in moving pictures. While working at the Mutual Film Company he had the opportunity to meet musicians such as Paderewski and Leopold Godowsky who visited the now famous movie star. In 1916 he set up his own music publishing company. “We printed two thousand copies of two very bad songs and musical compositions of mine – then we waited for customers. The enterprise was collegiate and quite mad. I think we sold three copies, two to pedestrians who happened to pass our office on their way downstairs.” In fact the Charles Chaplin Music Company closed shop after publishing three Chaplin songs: Oh! That Cello, There’s Always One You Can’t Forget, and The Peace Patrol.

Film was obviously Chaplin’s most important concern, and in 1918 he moved into his own studios and could exert total production control.

In the silent period it was usual to commission professional arrangers to devise suitable musical accompaniments for major films. These were generally compiled from published music, and performed live by whatever instrumental combinations each individual cinema could afford. Chaplin always had an interest in the music for his feature films. He approved and co-compiled scores for A Woman of Paris (1923) with Fredrick Stahlberg, and with Karli Elinor for The Gold Rush (1925). However not until City Lights did he complete a full-length score – a début heard by millions around the world when the film was released.

According to conductor-composer (and Chaplin music expert) Timothy Brock, Chaplin was a born tunesmith with real composing talent. “Even if he could neither read nor write music, complex, sophisticated compositions were complete in his head. His only problem was to get his collaborators to understand and transpose onto paper what he could hum or sketch out for them on the piano.” Chaplin remembered the only happy thing in his view about the arrival of the talkies as being “that I could control the music, so I composed my own. I tried to compose elegant and romantic music to frame my comedies in contrast to the tramp character, for elegant music gave my comedies an emotional dimension. Musical arrangers rarely understood this. They wanted the music to be funny. But I would explain that I wanted no competition, I wanted the music to be a counterpoint of grave and charm, to express sentiment ….”

As Brock explains: “For his scores, Chaplin was aided by what he termed as a ‘musical associate.’ This was a person who, to varying degrees of participation, helped with the notation and orchestration of his compositions. Chaplin played both the violin and piano by ear, but, like many of the great popular composers of any era, was unable to transcribe the notes on paper. Yet however constrained in his ability to notate his work, nearly every score has the indelible Chaplin mark. No matter who the associate, the musical structure and approach remains distinctively his own. Furthermore, the soundtrack recordings contain extremely specific stylistic choices unique to Chaplin. For example, as a violinist himself, he required the string player to mimic his style of playing and his unambiguous traits are ever-present in the extended violin solos in each of his scores. The majority of the extended violin solos (and every Chaplin film score has them) are written in a beautifully odd, yet specific, manner. His string writing in general contains a unique set of principles revealing that he was a composer bent on sound, and not technical affability.”

After City Lights, Chaplin composed the scores for all of his films. As Brock remarks, “His writing was so moment-specific, so tightly synchronized, that one can nearly follow a Chaplin film by only hearing its score without the benefit of the image.”

The Gold Rush, originally released in 1925 as a silent film, was re-released in 1942 with a narration by Chaplin and a musical score that he composed. The Great Dictator and Monsieur Verdoux followed. Later he took obvious pleasure in creating the pastiches of Edwardian music hall songs and acts for Limelight (1952), and later writing parodies of 50s pop songs for A King in New York (1957). His interest in pastiche and parody is not limited to the music, as the lyrics too are full of humour and word-play.

The Chaplin family left Hollywood in 1952. In his home in Switzerland Chaplin continued to develop his love and knowledge of music and to entertain musicians, among them Arthur Rubinstein, Isaac Stern, Rudolf Serkin, and Clara Haskil. His daughter Josephine has nostalgic memories of how, regularly after supper, he would insist that the lights were turned off, and that the family listen by candle-light to record after record of classical music.

The Chaplin family archives hold many audio tapes of Chaplin working on the piano, improvising and humming as he composed. He once said that even if he did not remember how a tune went, he could remember the pattern it made on the black and white notes of the keyboard. Between 1958 and the early 1970s he composed and recorded music for all his other silent 1918-1928 films: Shoulder Arms, The Pilgrim and A Dog’s Life (re-released together as The Chaplin Revue), The Circus, The Kid, The Idle Class, Pay Day, A Day’s Pleasure, Sunnyside and A Woman of Paris. Many of his tunes were hits, in particular those from A Countess from Hong Kong sung by Petula Clark in the late 1960s. Smile from Modern Times has been recorded by hundreds of artists, from Nat King Cole to Michael Jackson.

“To work is to live - and I love to live,” Chaplin, aged 87, told journalists on June 30, 1976. He died a year and a half later on Christmas day 1977. The music he composed until nearly the end of his life is a testament to his love for work, and for life.

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The Younger Brother: W. Dryden

The son of Hannah Chaplin and Leo Dryden, Wheeler Dryden was taken away from his mother as a baby. He was touring India and the Far East as a vaudeville comedian when he first learned from his father that the famous Charlie Chaplin was his half brother.

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In This Article Expand or collapse the "in this article" section Charles Chaplin

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Charles Chaplin by Donna Kornhaber LAST REVIEWED: 23 August 2022 LAST MODIFIED: 28 July 2015 DOI: 10.1093/obo/9780199791286-0191

Charles Chaplin (b. 1889–d. 1977), better known as Charlie Chaplin, was one of the greatest film stars of the 20th century and one of the most important filmmakers in the history of the medium. Born into poverty in London to a family of music hall performers, Chaplin grew up in destitution with his mother, who suffered from periods of insanity. He joined the prestigious Karno stage company while a teenager and from there was recruited to the fledgling Keystone Studios, famous for its raucous brand of slapstick films. Chaplin excelled at Keystone, quickly developing the “Tramp” character that would become his mainstay and graduating to directing his own short films after only weeks on the job. He left Keystone within a year for a series of more lucrative contracts, quickly becoming one of the highest-paid figures in the film industry and creating a classic body of short films. By 1919 Chaplin had amassed a large enough fortune to start his own film studio and co-founded United Artists to distribute his works, leaving him all but free from outside influence or interference. Throughout the 1920s he created the feature films that would help define his legacy but struggled with the advent of sound technology, refusing to include spoken dialogue in his films for nearly a decade. Chaplin’s first full talkie, The Great Dictator (1940), offered a scathing parody of fascist dictatorship and marked a newfound political mode in his filmmaking. Chaplin’s leftist politics, coupled with a scandalous and protracted paternity suit in the mid-1940s, soon led to a marked decline in his popularity, such that when he left for a worldwide publicity tour for Limelight (1952) he was denied reentry to the country. Chaplin lived the remainder of his life in Switzerland, returning to America only in 1972 to accept an honorary Academy Award. Critical appraisal of Chaplin’s body of work has varied over the decades. Hailed as a genius from early in his career, he saw his critical fortunes fall with his transition to talking pictures. Yet Chaplin always had a coterie of dedicated critical supporters, including such illustrious figures as André Bazin and Andrew Sarris, and the critical estimation of his work has only grown since his death. He remains today one of the most lauded and beloved figures in film history.

The literature on Chaplin is vast, and readers without an existing familiarity with the basic contours of Chaplin’s life and career may be in search of a primer on the artist and his films. The works cited below represent a combination of brief, personal reflections and more lengthy works designed explicitly to serve as an introduction to Chaplin’s biography and films, all by some of the leading voices in Chaplin scholarship. Bazin 2005 , Sarris 1996 , and Truffaut 1994 each present a short meditation on a theme of Chaplin’s filmmaking or persona that is particularly important to their view of him as an artist: Bazin writes on the mythology and typology of Chaplin’s famous Tramp character, Sarris weighs in on Chaplin’s status as a consummate director and artist of the cinema, and Truffaut looks at the philosophical and existential resonances of Chaplin’s films. Robinson 1996 and Larcher 2011 both present book-length introductory works designed for readers who are new to the Chaplin literature. Robinson, who served as Chaplin’s official biographer, offers a purposefully concise and attractively designed introduction. Larcher, who served as editor of the legendary French cinema journal and bastion of French Chaplin scholarship Cahiers du cinema , introduces readers to the major themes and works of Chaplin’s career. For more lengthy and detailed treatments of the broad arc of Chaplin’s life and works, see those sources cited under General Overviews and Biographies .

Bazin, André. “Charlie Chaplin.” In What is Cinema? Vol. 1. Edited and translated by Hugh Gray, 144–153. Berkeley: University of California Press, 2005.

Brief consideration of the essence of Chaplin’s famous Tramp character, considered as a quasi-mythical figure. Includes reflections on the role of time, repetition, movement, and ritual in Chaplin’s films, with detailed examples of specific gags drawn from across the shorts and features.

Larcher, Jérôme. Masters of Cinema: Charlie Chaplin . London: Phaidon, 2011.

Introductory overview of Chaplin’s career and work by a former editor of the esteemed French film journal Cahiers du cinema . Part of Phaidon’s introductory Masters of Cinema series.

Robinson, David. Charlie Chaplin: Comic Genius . New York: Abrams, 1996.

Extensively illustrated and meticulously designed pocket introduction to Chaplin’s life and career by one of his major biographers.

Sarris, Andrew. “Charles Chaplin.” In The American Cinema: Directors and Directions, 1929–1968 . By Andrew Sarris, 40–42. Cambridge, MA: Da Capo, 1996.

Brief overview of Sarris’s views on Chaplin as a consummate film director and storyteller (if not a master technician), part of what he famously calls the “pantheon” level of American filmmakers alongside such figures as D. W. Griffith and Orson Welles.

Truffaut, François. “Who is Charlie Chaplin?” In The Films in My Life . Translated by Leonard Mayhew, 60–62. Cambridge, MA: Da Capo, 1994.

Brief, personal reflections by Truffaut on the major themes in Chaplin’s films and their importance to the cinema and to his own work.

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Biography of Charlie Chaplin, Legendary Movie Comedian

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Charlie Chaplin (1889-1977) was an English filmmaker who wrote, acted, and directed his films. His "Little Tramp" character remains an iconic comedy creation. He was arguably the most popular performer of the silent film era.

Fast Facts: Charlie Chaplin

• Full Name: Sir Charles Spencer Chaplin, Knight of the British Empire
• Occupation: Film actor, director, writer
• Born: April 16, 1889 in England
• Died: December 25, 1977, in Vaud, Switzerland
• Parents: Hannah and Charles Chaplin, Sr.
• Spouses: Mildred Harris (m. 1918; div. 1920), Lita Grey (m. 1924; div. 1927), Paulette Goddard (m. 1936; div. 1942), Oona O'Neill (m. 1943)
• Children: Norman, Susan, Stephan, Geraldine, Michael, Josephine, Victoria, Eugene, Jane, Annette, Christopher
• Selected Films: "The Gold Rush" (1925), "City Lights" (1931), "Modern Times" (1936), "The Great Dictator" (1940)

Early Life and Stage Career

Born into a family of music hall entertainers, Charlie Chaplin first appeared on stage when he was five years old. It was a one-time appearance taking over from his mother, Hannah, but by age nine, he'd caught the entertainment bug.

Chaplin grew up in poverty. He was sent to a workhouse when he was seven. When his mother spent two months in an insane asylum, the nine-year-old Charlie was sent with his brother, Sydney, to live with his alcoholic father. When Charlie was 16, his mother was committed to an institution permanently.

At age 14, Chaplin began performing on stage in plays in London's West End. He quickly became a noted comedy performer. In 1910, the Fred Karno comedy company sent Chaplin on a 21-month tour of the American vaudeville circuit. The company included another notable performer, Stan Laurel.

First Movie Success

During a second vaudeville tour, the New York Motion Picture Company invited Charlie Chaplin to be part of their Keystone Studios troupe. He began working with Keystone under Mack Sennett in January 2014. His first appearance on film was in the 1914 short "Making a Living."

Chaplin soon created his legendary "Little Tramp" character. The character was introduced to audiences in February 1914 in "Kid Auto Races at Venice" and "Mabel's Strange Predicament." The films were so successful with audiences that Mack Sennett invited his new star to direct his own films. The first short directed by Charlie Chaplin was "Caught in the Rain," released in May 1914. He would continue to direct most of his films for the rest of his career.

November 1914's "Tillie's Punctured Romance," starring Marie Dressler, included Charlie Chaplin's first feature film appearance. It was a box office success causing Chaplin to ask for a raise. Mack Sennett thought it was too expensive and his young star moved to the Essanay studio of Chicago.

While working for Essanay, Chaplin recruited Edna Purviance to be his co-star. She would go on to appear in 35 of his movies. By the time the one-year contract with Essanay expired, Charlie Chaplin was one of the biggest movie stars in the world. In December 1915, he signed a contract with the Mutual Film Corporation worth $670,000 a year (approximately $15.4 million today).

Silent Star

Located in Los Angeles, Mutual introduced Charlie Chaplin to Hollywood. His stardom continued to grow. He moved to First National for the years 1918-1922. Among his memorable films of the era are his World War I movie "Shoulder Arms," which placed the Little Tramp in the trenches. "The Kid," released in 1921, was Chaplin's longest film to date at 68 minutes, and it included child star Jackie Coogan.

In 1922, at the end of his contract with First National, Charlie Chaplin became an independent producer laying groundwork for future filmmakers to take artistic control over their work. "The Gold Rush," released in 1925 and his second independent feature, became one of the most successful movies of his career. It included key scenes such as the Little Tramp, a gold rush prospector, eating a boot and an impromptu dance of dinner rolls speared on forks. Chaplin considered it his best work.

Charlie Chaplin released his next film "The Circus" in 1928. It was another success and earned him a special award at the first Academy Awards celebration. However, personal issues including a divorce controversy, made the filming of "The Circus" difficult, and Chaplin rarely spoke about it, omitting it entirely from his autobiography.

Despite the addition of sound to films, Charlie Chaplin resolutely continued to work on his next movie "City Lights" as a silent picture. Released in 1931, it was a critical and commercial success. Many film historians considered it his finest achievement and his best use of pathos in his work. One concession to sound was the introduction of a musical score, which Chaplin composed himself.

The final mostly silent Chaplin movie was "Modern Times" released in 1936. It included sound effects and a musical score as well as one song sung in gibberish. The underlying political commentary on the dangers of automation in the workplace prompted criticism from some viewers. While praised for its physical comedy, the movie was a commercial disappointment.

Controversial Films and Reduced Popularity

The 1940s became one of the most controversial decades of Charlie Chaplin's career. It began with his broad satire of the rise to power of Adolf Hitler and Benito Mussolini in Europe before World War II . "The Great Dictator" is Chaplin's most overtly political film. He believed that it was necessary to laugh at Hitler. Some audiences disagreed, and the film was a controversial release. The movie included the first spoken dialogue in a Chaplin piece. Successful with critics, "The Great Dictator" earned five Academy Award nominations including for Best Picture and Best Actor.

Legal difficulties filled most of the first half of the 1940s. An affair with aspiring actress Joan Barry resulted in an FBI investigation and a trial based on an alleged violation of the Mann Act, a law prohibiting the transportation of women across state boundaries for sexual purposes. A court acquitted Chaplin two weeks after the trial began. A paternity suit followed less than a year later that determined Chaplin was the father of Barry's child, Carol Ann. Blood tests that concluded it wasn't true were not admissible in the trial.

The personal controversy intensified with the announcement in 1945, amidst the paternity trials, that Charlie Chaplin married his fourth wife, 18-year-old Oona O'Neill, the daughter of acclaimed playwright Eugene O'Neill. Chaplin was then 54, but both appeared to have found their soul mates. The couple remained married until Chaplin's death, and they had eight children together.

Charlie Chaplin finally returned to movie screens in 1947 with "Monsieur Verdoux," a black comedy about an unemployed clerk who marries and murders widows to support his family. Suffering from audience responses to his personal troubles, Chaplin faced the most negative critical and commercial reactions of his career. In the wake of the release of the film, he was openly called a Communist for his political views, and many Americans raised questions about his reluctance to apply for American citizenship. Today, some observers consider "Monsieur Verdoux" one of Charlie Chaplin's best movies.

Exile From the United States

Chaplin's next film, "Limelight," was an autobiographical work and was more serious than most of his movies. It set politics aside but addressed his loss of popularity in the twilight of his career. It includes the only onscreen appearance with legendary silent film comedian Buster Keaton.

Charlie Chaplin decided to hold the 1952 premiere of "Limelight" in London, the setting for the movie. While he was gone, U.S. Attorney General James P. McGranery revoked his permit to re-enter the U.S. Although the Attorney General told the press that he had a "pretty good case" against Chaplin, files released in the 1980s showed there was no real evidence to support keeping him out.

Despite European success, "Limelight" met a hostile reception in the U.S. including organized boycotts. Chaplin did not return to the U.S. for 20 years.

Final Films and Return to the United States

Charlie Chaplin established a permanent residence in Switzerland in 1953. His next film, 1957's "A King in New York," addressed much of his experience with accusations of being a Communist. It was a sometimes bitter political satire, and Chaplin refused to release it in the U.S. The final Charlie Chaplin movie, "A Countess from Hong Kong," appeared in 1967, and it was a romantic comedy. It co-starred two of the world's biggest movie stars, Marlon Brando and Sophia Loren, and Chaplin himself only appeared briefly. Unfortunately, it was a commercial failure and received negative reviews.

In 1972, the Academy of Motion Picture Arts and Sciences invited Charlie Chaplin to return to the U.S. to receive a special Oscar for his lifetime of achievements. Initially reluctant, he decided to return and earned a 12-minute standing ovation, the longest ever at the Academy Awards ceremony.

While he continued to work, Chaplin's health declined. Queen Elizabeth II knighted him in 1975. He died on Christmas Day, December 25, 1977, after having a stroke in his sleep.

Charlie Chaplin remains one of the most successful filmmakers of all time. He changed the course of comedy in film by introducing elements of pathos and sadness that deepened the emotional impact of his work. Four of his movies, "The Gold Rush," "City Lights," "Modern Times," and "The Great Dictator" are often included on lists of the best films of all time.

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• World Biography

Born: April 16, 1889 London, England Died: December 25, 1977 Vevey, Switzerland English actor, director, and writer

The film actor, director, and writer Charlie Chaplin was one of the most original creators in the history of movies. His performances as "the tramp"—a sympathetic comic character with ill-fitting clothes and a mustache—won admiration from audiences across the world.

Rough childhood

Charles Spencer Chaplin was born in a poor district of London, England, on April 16, 1889. His mother, Hannah Hill Chaplin, a talented singer, actress, and piano player, spent most of her life in and out of mental hospitals; his father, Charles Spencer Chaplin Sr. was a fairly successful singer until he began drinking. After his parents separated, Charlie and his half-brother, Sidney, spent most of their childhood in orphanages, where they often went hungry and were beaten if they misbehaved. Barely able to read and write, Chaplin left school to tour with a group of comic entertainers. Later he starred in a comedy act. By the age of nineteen he had become one of the most popular music-hall performers in England.

Arrives in the United States

In 1910 Chaplin went to the United States to tour in A Night in an English Music Hall. He was chosen by filmmaker Mack Sennett (1884–1960) to appear in the silent Keystone comedy series. In these early movies ( Making a Living, Tillie's Punctured Romance ), Chaplin changed his style. He stopped overacting and became more delicate and precise in his movements. He created the role of "the tramp."

Appearing in over thirty short films, Chaplin realized that the speed and craziness of Sennett's productions was holding back his personal talents. He left to work at the Essanay Studios. Some of his films during this period were His New Job, The Tramp, and The Champion, notable for their comic and sympathetic moments. His 1917 films for the Mutual Company, including One A.M. , The Pilgrim, The Cure, Easy Street, and The Immigrant, displayed sharper humor. In 1918 Chaplin built his own studio and signed a million-dollar contract with National Films, producing silent-screen classics such as A Dog's Life, comparing the life of a dog with that of a tramp; Shoulder Arms, which poked fun at World War I (1914–18); and The Kid, a touching story of slum life.

Established star

In 1923 Chaplin, D. W. Griffith (1875–1948), Douglas Fairbanks (1883–1937), and Mary Pickford (1893–1979) formed United Artists (UA) to produce high-quality feature-length movies. A Woman of Paris (1923), a drama, was followed by two of Chaplin's funniest films, The Gold Rush (1925) and The Circus (1928). Chaplin directed City Lights (1931), a beautiful tale about the tramp's friendship with a drunken millionaire and a blind flower girl. Many critics consider it his finest work. Although movies had made the change over to sound, City Lights was silent except for one scene in which the tramp hic-cups with a tin whistle in his throat while trying to listen politely to a concert.

Modern Times (1936), a farce (broad comedy with an unbelievable plot) about the cruelty and greed of modern industry, contains some of the funniest gags and comic sequences in film history, the most famous being the tramp's battle with an eating machine gone crazy. Chaplin's character of Hynkel in The Great Dictator (1940) is a powerful satire (the use of humor to criticize a person or institution) of German military leader Adolf Hitler (1889–1945). It was the last film using the tramp, and ends with Chaplin pleading for love and freedom.

It was with these more involved productions of the 1930s and 1940s that Chaplin achieved true greatness as a film director. Monsieur Verdoux, directed by Chaplin in 1947 (and condemned by the American Legion of Decency), is one of the strongest moral statements ever put on the screen. Long before European filmmakers taught audiences to appreciate the role of the writer and director, Chaplin revealed his many talents by handling both roles in his productions.

Political views stir trouble

During the next five years Chaplin devoted himself to Limelight (1952), a gentle and sometimes sad work based in part on his own life. It was much different from Monsieur Verdoux. "I was … still not convinced," Chaplin wrote, "that I had completely lost the affection of the American people, that they could be so politically conscious or so humorless as to boycott [refuse to pay attention to] anyone that could amuse them." Further hurting Chaplin's image was a much-publicized lawsuit brought against him by a woman who claimed he was the father of her child. Although Chaplin proved he was not the child's father, reaction to the charges turned many people against him.

While on vacation in Europe in 1952, Chaplin was notified by the U.S. attorney general that his reentry into the United States would be challenged. He was charged with committing immoral acts and being politically suspicious. Chaplin, who had never become a United States citizen, sold all of his American possessions and settled in Geneva, Switzerland, with his fourth wife, Oona O'Neill, daughter of the American playwright Eugene O'Neill (1888–1953), and their children. In 1957 Chaplin visited England to direct The King in New York, which was never shown in the United States. My Autobiography (the story of his own life) was published in 1964. Most critics considered Chaplin's 1967 film, A Countess from Hong Kong, a disaster.

Return to the United States

By the 1970s times had changed, and Chaplin was again recognized for his rich contribution to film. He returned to the United States in 1972, where he was honored by major tributes in New York City and Hollywood, California, including receiving a special Academy Award. In 1975 he became Sir Charles Chaplin after Queen Elizabeth II (1926–) of England knighted him. Two years later, on December 25, 1977, Chaplin died in his sleep in Switzerland.

All of Chaplin's works display the physical grace, ability to express feeling, and intellectual vision possessed by the finest actors. A film about Chaplin's life, titled Chaplin, was released in 1992.

For More Information

Chaplin, Charlie. Charlie Chaplin's Own Story. Edited by Harry M. Geduld. Bloomington: Indiana University Press, 1985.

Chaplin, Charlie. My Autobiography. New York: Simon & Schuster, 1964. Reprint, New York: Plume, 1992.

Hale, Georgia. Charlie Chaplin: Intimate Close-Ups. Metuchen, NJ: Scarecrow Press, 1995.

Lynn, Kenneth S. Charlie Chaplin and His Times. New York: Simon & Schuster, 1997.

Milton, Joyce. Tramp: The Life of Charlie Chaplin. New York: HarperCollins, 1996.

Schroeder, Alan. Charlie Chaplin: The Beauty of Silence. New York: Franklin Watts, 1997.

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Charlie Chaplin was a comedic British actor who became one of the biggest stars of the 20th century's silent-film era. ... It was a short stint, and not a terribly profitable one, forcing the go ...

Charlie Chaplin, British comedian, producer, writer, director, and composer who is widely regarded as the greatest comic artist of the screen and one of the most important figures in motion-picture history. He is known for films such as The Gold Rush (1925), City Lights (1931), and Modern Times (1936).

He died on Christmas day 1977, survived by eight children from his last marriage with Oona O'Neill, and one son from his short marriage to Lita Grey. Charles Spencer Chaplin was born in London, England, on April 16th 1889. Charlie was thrown on his own resources before he reached the age of ten...

Biography 1889-1913: early years Background and childhood hardship Seven-year-old Chaplin (centre, head slightly cocked) at the Central London District School for paupers, 1897. Charles Spencer Chaplin Jr. was born on 16 April 1889 to Hannah Chaplin (née Hill) and Charles Chaplin Sr. His paternal grandmother came from the Smith family, who belonged to Romani people.

Charles Chaplin. Writer: The Great Dictator. Considered to be one of the most pivotal stars of the early days of Hollywood, Charlie Chaplin lived an interesting life both in his films and behind the camera. He is most recognized as an icon of the silent film era, often associated with his popular character, the Little Tramp; the man with the toothbrush mustache, bowler hat, bamboo cane, and a ...

Charlie Chaplin. Charlie Chaplin was an English comic actor, filmmaker, and composer who rose to fame in the silent era. He is mostly famous for his screen persona "the tramp". Born on April 16, 1889, in London, Chaplin is considered one of the most important figures in the history of the film industry. He had been a productive and creative ...

Short bio Charlie Chaplin. Chaplin was born in London, 16 April 1889, to parents who worked in the entertainment industry. At an early age, his alcoholic father passed away, and later his mother had a breakdown and was taken to an asylum. This left Charlie and his brother to fend for themselves.

Charles Spencer Chaplin was born in London, England, on April 16th, 1889. His father was a versatile vocalist and actor; and his mother, known under the stage name of Lily Harley, was an attractive actress and singer, who gained a reputation for her work in the light opera field. Charlie was thrown on his own resources before he reached the age ...

Sir Charles Spencer Chaplin was an English comic actor, filmmaker, and composer who rose to fame in the era of silent film. He became a worldwide icon through his screen persona, the Tramp, and is considered one of the film industry's most important figures. His career spanned more than 75 years, from childhood in the Victorian era until a year before his death in 1977, and encompassed both ...

Charlie Chaplin, in full Sir Charles Spencer Chaplin, (born April 16, 1889, London, Eng.—died Dec. 25, 1977, Corsier-sur-Vevey, Switz.), British-U.S. actor and director.The son of poverty-stricken music-hall entertainers, he became a vaudeville performer at age eight. On tour in New York (1913), he caught the eye of Mack Sennett, who signed him to a film contract.

In 1918, he married Mildred Harris with whom he had son Norman Spencer Chaplin, who only lived for three days. The couple divorced in 1920. By the early 1920s, Chaplin was making his own films with actors Mary Pickford and Douglas Fairbanks due to the establishment of Chaplin Studios and United Artists in 1919.

Gehring, Wes D., Charlie Chaplin: A Bio-Bibliography, Westport, Connecticut, 1983. Kamin, Dan, Charlie Chaplin's One-Man Show, Metuchen, New Jersey, 1984. Smith, Julian, Chaplin, Boston, 1984. ... Appearing in over 30 short films, Chaplin realized that the breakneck speed of Sennett's productions was hindering his personal talents. He left to ...

Charlie, already a natural performer, it seems, was pushed on in her stead and sang two songs, pausing only to pick up coins thrown by the surprised and amused audience. A young Hannah Chaplin in stage costume. In 1898, aged 9, he began his own music hall career with a troupe of juvenile clog dancers, the Eight Lancashire Lads.

Watch a short biography video about Charlie Chaplin's life, including his impoverished childhood, his success in silent films such as "City Lights," "Modern ...

Died. December 25, 1977 (aged 88) • Switzerland. Founder. United Artists Corporation. Awards And Honors. Academy Award (1973) • Academy Award (1972) • Academy Award (1928) • Academy Award (1973): Music (Original Dramatic Score) • Honorary Award of the Academy of Motion Picture Arts and Sciences (1972) • Special Award of the Academy ...

Introduction. Charles Chaplin (b. 1889-d. 1977), better known as Charlie Chaplin, was one of the greatest film stars of the 20th century and one of the most important filmmakers in the history of the medium. Born into poverty in London to a family of music hall performers, Chaplin grew up in destitution with his mother, who suffered from ...

His first appearance on film was in the 1914 short "Making a Living." Chaplin soon created his legendary "Little Tramp" character. The character was introduced to audiences in February 1914 in "Kid Auto Races at Venice" and "Mabel's Strange Predicament." ... "Biography of Charlie Chaplin, Legendary Movie Comedian." ThoughtCo, Sep. 17, 2021 ...

Appearing in over thirty short films, Chaplin realized that the speed and craziness of Sennett's productions was holding back his personal talents. He left to work at the Essanay Studios. ... Very good biography of Charlie Chaplin, but you could have of mentioned his brothers and sisters at the begging. You also could have included his wife's ...

Charles Spencer Chaplin was born in London, England, on April 16, 1889. His parents were music hall performers, and he first appeared on the stage in a dance act at age 8. When Chaplin was 17 he began working for the Fred Karno vaudeville company, which put on shows consisting of short comic sketches. In 1913 the American producer Mack Sennett ...

Biography [edit] 1889-1913: early years [edit] Background and childhood hardship [edit] Seven-year-old Chaplin (middle centre, leaning slightly) at the Central London District School for paupers, 1897. Charles Spencer Chaplin Jr. was born on 16 April 1889 to Hannah Chaplin (née Hill) and Charles Chaplin Sr. His paternal grandmother came from the Smith family, who belonged to Romani people.

Hostile Takeover of Mannesmann by Vodafone: A Case Study

Imagine you are the CEO of a successful telecommunications company, Mannesmann. One day, you receive an unexpected buyout proposition from another giant of the industry, Vodafone. Yet, contrary to a friendly merger or acquisition, this is a hostile takeover attempt. You need to understand what such a takeover entails, why it was initiated, and how it was executed. Your future strategy rides on this.

What is a Hostile Takeover?

A hostile takeover refers to an acquisition attempt by a company wherein the target company's management and board of directors are against the proposed buyout. The acquiring company attempts to bypass the board by directly purchasing the company's shares from other shareholders.

What Happened in the Vodafone-Mannesmann Case?

In 1999, UK-based Vodafone launched an unsolicited takeover bid for Germany's Mannesmann. The move marked an aggressive strategy that eventually led to what was then the largest corporate merger history had ever seen.

Why Did Vodafone Attempt the Hostile Takeover?

Vodafone wanted to create a trans-atlantic telecommunications giant, achieving economies of scale, gaining a broader geographic presence, and leveraging synergies between the two companies. Mannesmann had previously acquired Orange, a UK telecom company, which was directly competing with Vodafone in its home market, turning Mannesmann into an appealing takeover target.

How Was the Takeover Executed?

Vodafone went directly to the shareholders, bypassing Mannesmann's resistant board. Presenting a premium on the existing share price, it sought to persuade the shareholders to sell their stake. After several rounds of bitter negotiations, Vodafone sweetened its bid, and finally, Mannesmann's shareholders accepted the offer.

The Aftermath and Impact

The hostile takeover resulted in Vodafone becoming the largest mobile telecommunications network company globally, commanding 42% of the international market excluding the USA at the time. Meanwhile, the deal highlighted the increasing acceptance of hostile takeovers in Europe, a region traditionally resistant to such M&A tactics.

The Mannesmann saga underscores the need for leaders to understand and prepare for potential hostile takeover attempts. Knowing how these unfold can inform your approach to planning and negotiations, shaping your company's destiny if ever confronted with such a challenge. In an increasingly global and competitive business landscape, every player should be equipped to face potential bids, whether they're initiated with a handshake or a boardroom battle.

Practice Decision-Making

A telecommunications company is pursuing an acquisition of another competitor. The target company's leadership is not interested in selling. The pursuing company's aggressive strategy may result in:

A volunteer cooperation agreement between the two businesses.

An unsolicited attempt to take control, regardless of management's opposition.

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• Union Budget 2024

Vodafone Case Analysis

Introduction

Vodafone’s journey in India has been a significant case in retrospective amendment made to tax laws. The decision made by the Supreme Court in this case and subsequently the decision made by PCA in Cairn UK case following Vodafone case amounts to a huge loss to the government as the reserve of the government depends upon the collection of tax. Tax avoidance has become a common practice today. Tax avoidance is considered as “legitimate tax planning”. Only after this case, strict provisions to govern tax evasion by non-resident companies through indirect transfers were made. Agreeing to the fact that there must be liberal tax policies in order to attract foreign investment, India need not stoop down too low to attract FDI. Moreover, tax laws in the country must be stabilized and strong tax laws must be enacted to cover these types of transactions in order to help the government. This case is a learning experience to know about indirect transfer of assets, taxability of capital gains, retrospective amendments to tax laws and clarity of tax laws in the country. Though various amendments to tax laws have been made, it has been a continuous defeat to the country regarding these offshore transfers.  This is a landmark judgment pronounced by the Supreme Court of India. It was a 3-judge bench decision consisting of Chief justice S.H Kapadia, Swatanter Kumar and K.S. Radha Krishnan. The case was originally dealt by the Bombay HC.

BOMBAY HIGH COURT

Vodafone India Services Pvt. Ltd vs Union Of India, Ministry Of Finance and Anr. EQUIVALENT CITATION: 2009(4) BomCR258, (2008)220CTR(Bom)649

Vodafone International Holdings (VIH), a Dutch Company procured 100% shares in CGP Investments (Holding) Ltd a company situated in Cayman Island, for USD 11.1 billion from Hutchison Telecommunications International Ltd in the year 2007. CGP, through different organizations and actions controlled 67% of Hutchison Essar Limited (HEL), an Indian Company. Vodafone got command over CGP and its downstream the subsidiaries including HEL through the acquisition. It had acquired telecom licenses to give cell communication in various circles in India starting from November 1994. In September 2007, a show-cause notice was given to the Vodafone Company by the Indian Tax Department to clarify the reason for why tax was not retained on instalments made to HTIL in connection to the above said transaction as said transaction of transfer of shares in CGP had an impact of aberrant or indirect transfer of assets in India. 3

Whether the transfer of shares between two foreign companies, resulting in extinguishment of controlling interest in the Indian Company held by a foreign company, amounted to transfer of capital assets in India and whether such transaction is chargeable to tax in India?

Sec 2(14) of Income Tax Act-Capital Asset

Sec 2(24) of Income Tax Act- Definition of Income Sec 5 of Income Tax Act-Scope of total income

Sec 9 of Income Tax Act- Income deemed to accrue or arise in India Sec 45 of Income Tax Act-Capital gains

Sec 191 of Income Tax Act-Direct Payment Sec 195 of Income Tax Act-Other sums

Sec 201 of Income Tax Act-Consequences of failure to deduct or pay

MAINTAINABILITY

The respondent contended that the writ petition is not maintainable because the petitioner had an effective alternative remedy available under Income Tax Act. 4 The petitioner cannot invoke the writ jurisdiction as there is a failure on part of the petitioner as they did not invoke the jurisdiction under tax law. It was held that where a statute creates a right or liability and gives a special remedy when enforced, the remedy provided by that statute only must be availed of. In the present case, the Act provides for a complete machinery to challenge an Order of assessment, therefor the order can only be challenged by the mode prescribed by the Act and not under Article 226 of the Constitution of India.

CONSTITUTIONAL VALIDITY

The respondent contended that the petitioner has not produced the important documents that are essential for determination of tax charges in India and thereby, the petitioner cannot challenge validity of provisions in issue. It was held that even if the burden of proof does not lie on a party, the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. 5 Therefore, when the Petitioner has challenged the constitutional validity of the Amendment to Sections 191 and 201 of the

I.T. Act by the Finance Act, 2008, then the same must be in context of certain facts pleaded and proved by evidence in the form of documents on record and not in vacuum or in the abstract.

Section 9 of the Act provides the formal source rule which provides for taxing gains that arise from the transfer of capital assets that are in India. In this case, Hutchison’s gain arose from the sale of shares of CGP, a capital asset located in Cayman Islands. Therefore Hutchison’s gain was not chargeable to tax in India; thereby, Vodafone BV in not required deducting tax at source under the Act.

Chapter X of the Act does not provide to tax all amounts involved in a particular transaction, which are otherwise not taxable. Before bringing any transaction for charging tax, a taxable income must arise. Therefore ordering to pay tax to amounts involved in International Transaction tantamount to imposing a penalty for entering into a transaction as no taxable income has been incurred.

It emphasized that the law restricted the courts from imposing tax liabilities on the basis of economic substance of the transaction. The legal form of the transaction was that Hutchison had transferred shares of a Cayman Island company. Since, the shares were situated in Cayman Islands, the “formal source rule” failed to capture the Hutchison gains in India’s tax net. To sum it up, Petitioner simply argued that it was not legally right to hold that Hutchison gains were taxable in India.

The issue of shares by the Vodafone to its holding company and receipt of consideration of the same is a capital receipt under the Act 6 . Capital receipts cannot be brought to tax unless specifically/ expressly brought to tax by the Act 7 . It is well settled that capital receipts do not come within the ambit of the word ‘Income’ under the Act, save when so expressly provided as in the case of Section 2 (24) (vi) of the Act. This brings capital gains chargeable under Section 45 of the Act, to tax within the meaning of the word ‘Income’. 8

In this case, attention was drawn to the definition of `Income’ 9 in the Act which includes in its scope amounts received arising or accruing within the provisions of section 56(2) (vii)(b) of the Act. The definition applies to issue of shares to a resident in India. This order relies on the meaning of International Transaction provided in Explanation (i) to Section 92B of the Act. It is submitted that Explanation (i) to Section 92B of the Act only states that capital financing transaction such as borrowing money and/or lending money to AE would be an International Transaction. However, what is brought to tax is not the quantum of amount lent and/or borrowed but the impact on Income due to such lending or borrowing. Similarly, Explanation to Section 92B of the Act, which covers business restructuring, would only have application if said restructuring/ reorganizing impacts income. If there is any impact of income on account of business restructuring/reorganizing, then such income would be subjected to tax as and when it arises whether in present or in future. 10 In this case, such a contingency does not arise as there is no impact on Income which would be chargeable to tax due to issue of shares. 11

The issue of Chapter X of the Act being applicable is no longer an untouched matter because similar provision as provided in Section 92 of the Act was also provided under Section 42(2) of the Income Tax Act, 1922. The Supreme Court held that the action of revenue in seeking to tax a resident in respect of profit which he would have normally made but did not make because of his close association with a non-resident. It observed that it is open to charge tax on notional profits and impose charge on the resident. 12 The aforesaid provision of Section 42(2) of the 1922 Act was incorporated in its new avtar as Section 92 of the said Act. It was thus emphasized that the legislative history supports the stand of the respondent-revenue that even in the absence of actual income, a notional income can be brought to tax. 13

Section 92(1) of the Act uses the word ‘Any income arising from an International Transaction’. Accordingly, we see that, the income of any party to the transaction could be subject matter to charge tax and it does not provide that the income of resident only is taxable. In case of Chapter X of the Act, the matter of real income concept has no applicability. Therefore, the difference between ALP and the contracted price would be added to the total Income.

Chapter X of the Act is a complete code by itself and not merely a machinery provision to compute the ALP 14 . Chapter X of the Act applies wherever the ALP is to be determined by the A.O 15 . The Petitioner itself had submitted to the jurisdiction of Chapter X of the Act by filing/submitting Form 3-CEB, declaring the ALP 16 . It is the hidden benefit in the transaction which is being charged to tax. Therefore, the charging section is inherent in Chapter X of the Act.

OBSERVATION

No express legislation on capital account transaction:

Section 92(1) of the Act states that an income from an international transaction is a condition precedent for the applicability of Chapter X. The meaning of income will not include capital receipts unless it is specifically mentioned as provided in Section 2(24)(vi) of the Act. So, capital gains to be taxed under Section 45 of the Act are deemed to be income under the Act.

Income pre requisite for applicability of Section 56(1):

For application of Section 56 of the Act , an income must arise which can be taxed. Issuing of shares at a premium is on capital account gives rise to no income.

Charge and measure of tax entirely different:

The tax can be charged only on income and in the absence of any income arising, the application of the measure of ALP to the transfer value does not arise. Chapter X of the Act provides that a transaction can be taxed only after working out the income after finding the ALP of a transaction.

No relevance of Section 92(2) in the present case:  

Section 92(2) of the Act deals with a situation where two or more AEs enter into an arrangement whereby they are to receive any benefit, service or facility. This provision is not applicable in this case as there is no situation where there is no allocation of any cost or expense between the petitioner and the holding company.

The transaction entered by the Petitioner amounts to transfer of a capital asset and not a transfer of controlling interest ipso facto in a corporate entity and is chargeable to tax in India.

It was held that any profit or gain arising from the transfer of a company in India has to be considered as a profit and gains of the company which actually owns and controls it. In this case, the income from the transfer is accrued by the HTIL and not Cayman Island Company (CGP). Therefore, the recipient was HTIL. Therefore the interest of the recipient is divested to the petitioner and hence is liable for capital gains tax.

The Effects Doctrine Extra-territorial operation of Section 195 of the I.T Act provides that any state may impose liabilities, even upon persons not within its territory, for conduct outside its borders that has consequences within the borders of its state. Hence, the dominant purpose of entering into agreement by the two foreign companies is to acquire the substantial interest and of which one foreign company is held in the Indian company the municipal laws of the country would be applicable and hence Indian Tax laws will be applied.

If the Hutchison gains were held not to be taxed in India, India would forfeit its right to tax as the country of source. Thereby the taxpayers will try to exploit the unintended loopholes in India’s tax law.

If the Hutchison gains were held taxable in India it would fortify India’s taxing rights as a source country- if you earn value from India, you shall be taxed in India. The entire value earned by HTIL “was only on account of the fruits of the investment made by HTIL in India, goodwill/brand value generated by HTIL for the Hutch brand in India, the telecom licenses granted in India, customer base in India and the prospect of future development and expansion in India 17 .” In the context of capital gains on company’s shares, the settled legal principle is that shares are located where the company’s share register is maintained, normally the place of its incorporation 18 . Rendering Hutchison gains taxable in India would entail imposing “substantial tax liabilities, after the fact, on entities that would avoid such liabilities according to this formal rule” 19 .

SUPREME COURT

Vodafone International Holdings … vs Union Of India & Anr

CITATION-[2012] 1 SCR 573

Whether the Indian Revenue Authority can tax a sale of shares between two non-resident companies on an offshore transaction where the controlling interest of an Indian corporation is purchased on the basis of that transaction?

PRINCIPLES DEALT BY SUPREME COURT

Piercing the corporate veil

Companies are separate legal entities that are independent from its shareholders and management. This is the foundation for company and tax laws. It is a general principle that a holding company is not liable for the acts of the subsidiary.

The Supreme Court held that it is the duty of the court to find the nature of the transaction and when doing it; it must look at the whole transaction and must not deal the elements of the transaction separately.

Considering the facts and circumstances of the transaction, the court must determine whether the transaction made primarily to evade taxes. It can be justified by piercing the corporate veil.

The Supreme Court held that strategic foreign direct investment (FDI) into India must be seen in a holistic manner.

By application of this doctrine, the Supreme Court held that the major purpose in Vodafone was to transfer the shares of CGP and not transferring the rights in HEL (situated in India). The court held that corporate can be pierced and the principal company can be held liable for the acts of the subsidiary company when it is shown that the company has misused to achieve certain wrongful objectives. 20

Tax avoidance and tax planning

The Supreme Court made a detailed difference between tax evasion and tax planning. The court held that tax planning is not illegal, illegitimate or impermissible. The debate over the validity and legality of the decision in Union of India v Azadi Bachao Andolan ((2004) 10 SCC 1)) and its departure from McDowell and Co Ltd v CTO ((1985) 3 SCC 230) on the specific issue of tax avoidance has been settled in this case.

The Court clarified that Justice Reddy’s observations extended only to artificial and colourable devices. Thereby it is wrongful to understand that mean all tax planning is illegal, illegitimate or impermissible.

Limitation Of Benefits clause.

Justice Radhakrishnan (in his concurring judgment) held that in case of absence of LOB clause in the Treaty, and in light of the existence of CBDT Circular No. 789 of 2000 and a TRC certificate, the Revenue cannot at the time of sale, disinvestment or exit from FDI in India, deny benefits to Mauritian companies by stating that the FDI was routed through a Mauritius company from somewhere else.

Tax Residency Certificate

In this case, the court held that the treaty and circular will not restrict the Revenue from denying Treaty benefits, when it is proven that the Mauritian company at the time of disposal of shares, made the transaction with intent to avoid tax. The court also referred to the memorandum of understanding (MOU) signed between India and Mauritius which is to track down transactions tainted by fraud and financial crimes. The court held that Mauritius is a clean jurisdiction to route investments into India and, provided the transaction is not found to illegal or colourable which was designed to evade tax.

Section 9 of the Act  

The Supreme Court explained that section 9(1)(i) gathers in one place various types of income that are deemed to accrue or arise in India. It includes: “All income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India”.

“The Supreme Court noted that the words “directly or indirectly” in section 9(1)(i) of the Act refer to the income and not the transfer of a capital asset (property). It held that to apply the words “directly or indirectly” to the transfer of a capital asset (such as HEL) “would amount to changing the content and ambit of section 9(1)(i). We cannot re-write section 9(1)(i). The legislature has not used the words indirect transfer in section 9(1)(i).” It noted that, “if the word indirect is read into Section 9(1)(i), it would render the express statutory requirement of the 4th sub-clause in section 9(1)(i) nugatory” 21

The court also made reference to the fact that the Direct Taxes Code Bill 2010 (DTC) proposes the taxation of offshore share transactions, which leads to the inference that indirect transfers are not presently covered by section 9(1)(i).

Transfer of HTIL’s property rights by extinguishment  

The court held that the case concerned the sale of shares and not the sale of assets. The court adopted the “look at” approach (as opposed to the “dissecting” approach) and held that the facts and circumstances of the present case must be viewed holistically. Hutchison has been part of Indian telecom business since 1994, and had been paying income tax in India.

Therefore, the transaction entered into cannot be considered sham or colourable. The court was of the view that the transaction took place only with intent to invest in India and not evade tax. The court also held that non-compete rights and the use of the Hutch brand were not property rights and it could not be subject to tax in India.

Withholding tax obligations: sections 195 and 163 of the Act

The transaction entered into by the companies is between two non-resident entities and was executed outside India. Consideration was also passed outside India. The court held that when a payment is made between two non-residents situated outside India, then the transaction has no nexus with the underlying assets in India. Therefore, Vodafone was not legally obliged to respond to the section 163 notice issued which declares a purchaser of an asset as a “representative assessee”.

The tax is levied on the basis of the source and the source is the location where the sale takes and not where the product is derived or purchased from.

HTIL and VIH are foreign companies and the sale takes place outside India, so the source of revenue is outside India. It could be taxable only when this trade is protected by legislation. The tax laws must be strictly construed and tax can be laid only when the language of the statute unambiguously states so. The provision for charging income tax must not be expanded to impose a tax burden which would otherwise be non-taxable. Therefore indirect movement of capital assents cannot be included by expansion of the provision. The present transaction was carried out between two non-resident persons in a contract conducted outside India where the consideration was also rendered outside India and VIH is therefore not legally obligated to respond to the notice referred to in section 163 relating to the purchaser’s care as a representative measure.

The selling of HTIL’s CGP shares to Vodafone or VIH amount to transfer of capital assets under the scope of Section 2(14) of the Income Tax Act and therefore not chargeable under capital gains tax on all rights and entitlements resulting from the shareholder agreement, etc., which form an integral part of CGP ‘s shares. The order of High Court of the demand of nearly Rs.12, 000 crores by way of capital gains tax would amount to imposing capital punishment for capital investment and it lacks authority of law and therefore is quashed.

GROUNDS ON WHICH THE ORDER CAN BE REVERSED

1. On bringing the retrospective amendment which states that any income which arises either directly or indirectly by means of or by reason of transfer of assets in India shall be deemed to accrue or arise in India and can be

2. The explanation inserted by finance Act 2012 to sec. 9(1)(1) in its 2 nd exception provides that CGP Investments is a 100 % subsidiary company of Hutchison company and is wholly controlled by the latter company. Therefore the exception provided in the explanation is not applicable and hence capital gain arising through sale is taxable at source.

The SC through its landmark judgment has removed certain uncertainties revolving around the imposition of taxes in the country. By means of this verdict certain principles have been established and recognized by the SC including:

• Principles relating to tax policies and plans
• The validity of tax avoidance by providing the taxpayers the right to reduce their liabilities to a maximum extent by legitimate arrangement of their income and business affairs provided nothing contrary to such act is specified in the enactments.
• The establishment of corporate structures by multinational companies for business and commercial purpose.
• The application of the principle of lifting of the corporate veil in all transactions done with an objective of evading taxes.
• Lastly the need for a holistic view or approach when dealing with cases involving companies having made investments in tax neutral countries. It further urges to avoid the misconception that presence of corporate structures in tax free countries is necessarily a scheme for avoiding tax.

In short, the SC through its judgment has distinguished tax avoidance from tax evasion and along with certain other significant principles recognized tax avoidance as a legitimate activity while penalizing tax evasion, further highlighting its view on the need for a legitimate tax planning.

CRITICISMS TO THE SC JUDGEMENT:

The judgment pronounced by the SC in this case has been to subject to severe criticisms. The SC is loathed for providing such a verdict. It is argued that SC has set a precedent that brings into jeopardy thousands of crores of potential revenue.it was also pointed out that tax avoidance through artificial devices is now a days very much prevalent in the industry and many large firms gain huge sums of money through such schemes. It was opined that the judgment in McDowell though reverted by 2 other decisions (Azadi Bachao Andholan and Wallfort) has dealt with the issue in the right perspective. The Mauritius companies are considered to be ‘post box companies’ and its remarked that the benign attitude of the tax authorities has led to a blatant evasion of taxes. The SC is blamed for not setting right the mistake it made by transgressing the McDowell judgment in the Vodafone verdict. The SC verdict is condemned on the basis that despite being aware of the transaction’s true nature as being transfer of Indian asset the SC has shown ignorant behaviour by providing such a verdict. This act of SC is viewed as a welcoming gesture for the foreign companies to evade taxes in India, jeopardizing crores and crores of potential revenue to the country and the attitude of courts towards such artificial tax evading devices. This judgment as a contract to the judgment in the 2G scam is considered to be arbitrary in nature.

CASES IN WHICH VODAFONE CASE HAS BEEN CITED

1. M/S Shri Vishnu Eatables (India) … vs Deputy Commissioner Of Income … on 3 October, 2016

“It is necessary for the Assessing Officer to decide the issue of objection to applicability of chapter X, if raised by the assessee, before referring the transaction to the TPO as it is a basic issue and would prevent loss of man hours on both sides in computing the ALP if it is finally concluded that Chapter X is not applicable.” 22 [3]

2. Income Tax Appellate Tribunal – Mumbai

Exind Trading P. Ltd, Mumbai vs Ito 6(2)(4), Mumbai on 7 November, 2019 It was held that the Vodafone case and CBDT Circular was not applicable in this case.

3. Income Tax Appellate Tribunal – Mumbai

Income Tax Officer-1(3) (2), … vs Singhal General Traders Private … on 24 February, 2020

“The premium on share issue was on account of a capital account transaction and does not give rise to income and hence, not liable to transfer pricing adjustment.” 23

4. Allahabad High Court

Rakesh Mahajan vs State Of U.P. And 4 Others on 4 December, 2019

“The legal relationship between a holding company and WOS is that they are two distinct legal persons and the holding company does not own the assets of the subsidiary and, in law, the management of the business of the subsidiary also vests in its Board of Directors.” 24

5. Income Tax Appellate Tribunal – Delhi

M/S. New Delhi Television Ltd., … vs Dcit, New Delhi on 14 July, 2017

“If an actual controlling Non-Resident Enterprise (NRE) makes an indirect transfer through “abuse of organisation form/legal form and without reasonable business purpose” which results in tax avoidance or avoidance of withholding tax, then the Revenue may disregard the form of the arrangement or the impugned action through use of Non-Resident Holding Company, re-characterize the equity transfer according to its economic substance and impose  the tax on the actual controlling Non-Resident Enterprise.”25 [4]

INTERNATIONAL LAW AND VODAFONE CASE

The Permanent Court of Arbitration in The Hague, Netherlands, held that an amendment to Indian tax laws was in violation India and the Netherlands agreement.

The international arbitration proceeding was initiated by Vodafone International Holdings

B.V. (VIH or Vodafone) against the government of India regarding the retrospective amendment made to Indian tax

Permanent Court of Arbitration (PCA) held that the imposition of taxation through a retrospective amendment to domestic tax laws for imposition of tax, was in violation of “fair and equitable treatment” provided under the Agreement between the Republic of India (India) and the Kingdom of Netherlands (Netherlands). Moreover, any attempt to enforce tax demand on Vodafone would amount to breach of international obligations.

The objective of the agreement is for Promotion and Protection of Investments (India- Netherland BIT). This award does not mark the end of dispute as the Indian Government has the opportunity to challenge it before the High Court of Singapore.

The full text of the arbitration award is not in public domain. But it is known that the imposition of a tax liability based on a retrospective amendment is held to be breach of fair and equitable treatment laid down in Article 4(1) of the India-Netherland BIT.

Permanent Court of Arbitration at The Hague ruled that the demand made by India for Rs 22,100 crore by retrospective amendment as capital gains and withholding of imposition of tax for a 2007 deal on Vodafone Company was breaching the provision of agreement regarding fair and equitable treatment.

Recently, the Indian government has challenged the arbitration award in Singapore Court. The government is of the opinion that the matter of taxation is not covered under the treaty and taxation is a sovereign right of the country.

CAIRN’s DISPUTE

Cairn UK Holdings Limited, a company incorporated in the U.K. (Cairn UK), had a wholly- owned subsidiary, Cairn India Holdings Limited, a company incorporated in Jersey (Cairn Jersey). Cairn Jersey owned subsidiaries in India. In the year 2006, Cairn UK transferred its entire shareholding of Cairn Jersey to Cairn India. Subsequently, Cairn India acquired the entire business of the Cairn group in India.

In 2014, pursuant to a survey action carried out at the premises of Cairn India, the Indian income-tax authorities was of the view that the transfer of shareholding in Cairn Jersey had the effect of transferring the business in India and therefore, in view of the retrospective amended income-tax laws, Cairn UK was liable to pay capital gain tax in India. This action was challenged by Cairn UK and is currently sub-judice before the High Court of Delhi in India. While the proceedings were ongoing in India, Cairn group also initiated arbitration proceedings against the Indian Government under Article 9 of the Agreement between the Government of the Republic of India and the Government of Great Britain and Northern Ireland for Promotion and Protection of Investments (India-UK BIT).

BINDING FORCE OF VODAFONE CASE

The “Doctrine of Stare Decisis,” as prevalent in common law legal systems. It means “to abide by the precedents and not to disturb settled points.” There is no similar doctrine in civil law systems or under International Law. The International Centre for Settlement of Investment Disputes (ICSID) and the UN Commission on International Trade Law (UNCITRAL) provides that the award shall be final and binding upon the parties to the dispute. In absence of any prevalent rule of binding precedent of earlier awards, the international arbitration tribunals, functioning under ICSID and UNCITRAL, do consider previous awards to have a persuasive value.

Whether the Vodafone arbitral award would have any persuasive value in arbitration proceedings of Cairn UK would depend upon the factual matrix in both the cases.

Both cases involved indirect transfer of Indian assets prior to retrospective amendment in 2012 coming into effect.

Thereby the case was decided in favor of Cairn UK and it was not liable for capital gains tax.

CONSEQUENCE OF THE CASE

The government has got excessive flak for retaining India’s “retrospective” tax on asset transfers after it recently lost a case against Vodafone in an international arbitration court. Two broad critiques are important to note.

1. Governments should never make tax changes with retrospective

2. Tax laws must be stable in order to attract foreign (or even domestic) investment.

3. Vodafone must have been aware that asset transfers in India would attract capital gains By shifting the relevant jurisdiction to a tax haven, it seems to have got a lower price from Hutchison, a majority owner of the telecommunications company. Therefore, the objective appears to be a case of tax avoidance by using a grey area in Indian tax law.

Professionals have said that there is a need for clarity and certainty in tax laws to attract foreign investments. A liberal tax policy would attract Foreign Direct Investment into India. Some professionals say that the SC could have considered this issue and that is the reason why the decision is in favour of the foreign investor (Vodafone).

The arbitration tribunal also held that the terms of the agreement was not complied by India and it is established that India has contravened the provisions of the agreement. Therefore, the government must stop taking measures to recover tax from Vodafone.

AMENDMENTS IN TAX LAW RELATING TO VODAFONE CASE

In 2012, the government of India changed the Supreme Court’s decision by proposing an Amendment to the Finance Act, which gave the power to Income Tax Department to retrospectively tax such deals.

RETEROSPECTIVE TAXATION

Retrospective taxation gives the state a power to make a rule on taxing certain products, items or services and deals and levy tax on companies even before the date the Act was passed.

Most of the countries use this method to rectify any gaps in their taxation laws that existed and allowed companies to take advantage of such loopholes. Many countries have retrospectively charged tax on companies.

Retrospective amendments are generally given to taxation laws to “clarify” the previously existing laws. It ends up hindering companies which interpreted the rules, knowingly or unknowingly in a different way. These retrospective amendments had been criticised by various investors as, this type of change in laws would affect foreign fund flow into India.

In this case, the Parliament passed the amendment to the Finance Act in 2012, by retrospective effect and subsequently made Vodafone liable for tax payment. Thereby, this case was called ‘retrospective taxation case’.

EFFECT OF RETROSPECTIVE AMENDMENT:

The onus to pay taxes fell on Vodafone after the government enacted the retrospective amendments. This amendment was criticized by investors globally. The amendment was held to be a badly drafted law as it had affected to nullify the decision of the highest court of the Nation. Following such criticisms India tried to settle matters amicably with Vodafone but all its attempts faced failure.

Does the legislature have the right to declare any decision of the court of law to be void or of no effect?

In Shri Prithvi cotton mills limited and another v. Brouch Borough Municipality and others 6 1969(2) SCC 283 the court remarked that even if the legislature has competence it cannot merely pass a law to which the verdict of the court shall not bind as such an act is a tantamount to reversing the decision of the court by exercise of judicial power which the legislative authority does not possess. A court’s decision can only be altered when unless it is fundamentally incorrect.

In Cauvery water disputes Tribunal, a constitutional bench held that legislature is authorized to change the basis of the verdict and thus the law in general affecting a class of persons at large but the legislature cannot bring any laws overriding the court’s decision such that it affects the rights and liabilities of an individual person.

Similarly, in State of Tamil Nadu v. State of Kerala and another 9 (2014)12 SCC 696 the court held that as per the doctrine of separation of powers enriched in the constitution all the 3 organs are independent and thus a law can be set aside only when it breaches the principles of equality as enriched in the article 14 of the constitution. Further it declared that the HC and SC are empowered to determine the validity of any law of the legislature.

From the above decisions its clear that the legislature cannot bring into effect any law which overrides court’s verdict and affects the rights of an individual alone as in the landmark case of Vodafone. But it has the right to effect laws affecting a class of people in general.

As the Supreme Court decided in favor of Vodafone, subsequent amendments to the Act were brought in by the legislative authorities to reverse the judgment. The Act was amended such that it provides for the following:

INCOME THROUGH TRANSFER OF CAPITAL ASSET SITUATED IN INDIA: –

SECTION 9: it provides that the following income shall be deemed to accrue or arise in India:

All income arising directly or indirectly

• Through any business connection in India or
• From or through any property in India or
• Through any asset or source of Income in India or
• Through the transfer of capital asset situate in

The following explanations 4, 5, 6 and 7 was inserted through Finance Act 2012 to section 9(1)(1).

Explanation 4 : it clarifies that the word “through” shall mean and include and shall be deemed to have always included “by means of”, “in consequence of” or “by reason of”.

Explanation 5 : through this it is clarified that an asset or capital asset being shares or interest in a company or entity registered or incorporated outside India shall be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.

But in order to make explanation 5 operational the Finance Act 2015 provided certain clarifications:

Explanation 6 : For the purpose of this clause, it is hereby declared that-

1. Substantial – any share or interest of a foreign company shall be deemed to derive its value substantially from the assets situated in India, if on specified date the value of Indian assets-

• Exceeds the amount of 10cr rupees; and
• Represents at least 50% of all the assets owned by the company or

2. Value of asset – the value of the asset shall be fair market value of such asset without reduction of liabilities, if any in respect of the

3. Specified date – it is the date on which the accounting period of the company or entity ends preceding the date of transfer. If on the other hand the book value as on date of transfer of the assets exceeds at least 15% of book value as on the last balance sheet date preceding the date of transfer, than instead of the date mentioned above the date shall be the specified date of valuation.

4. Mode of determining FMV: the fair market value will be determined as per the rules prescribed.

5. Taxation on proportional basis: the capital gains arising out of the transfer of shares of assets located outside India of any company registered outside India will be taxed proportionally as specified in the

Explanation 7 provides for certain exceptions; they are as follows:

Exemption in case foreign company or entity (whose share or interest get transferred) directly owns Indian assets

Exemption shall be available to the transferor of a share of, or interest in, a foreign entity if the transferor (along with its associated enterprises), at any time in the twelve months preceding the date of transfer,

a. Neither holds the right of control or management of such foreign company or entity;

b. Nor holds voting power or share capital or interest exceeding 5 per cent of the total voting power or total share capital of such foreign company or entity;

Exemption in case foreign company or entity (whose share or interest get transferred) indirectly owns Indian assets

 In case the transfer is of shares or interest in a foreign entity which does not hold the Indian assets directly then the exemption shall be available to the transferor if the transferor (along with its associated enterprises), at any time in the twelve months preceding the date of transfer-

a. Neither holds the right of management or control in relation to such foreign company or the entity

b. Nor holds any rights in such company which would entitle it to either exercise control or management of the company or entity that directly owns the assets situated in India or

c. Nor entitle it to voting power exceeding 5 percent of total voting power of the company or entity that directly owns the assets situated in India.

Impact of the explanations on the final verdict:

From explanation 4 added it can be deduced that any income which arises either directly or indirectly by means of or by reason of transfer of assets in India shall be deemed to accrue or arise in India and is taxable in the hands of Hutchison company, Hong Kong.

Similarly, explanation 5 brings within its scope the transfer of shares of CGP investments, Mauritius being a company incorporated outside India. It provides that the shares are situated in India as such and shares derive its substantial value from the business of a company located in India.

This way through such amendments the coverage of section 9(1)(1) has been increased retrospectively to include indirect transfers.

Impact of the exemptions given in Explanation 7:

As the Vodafone case revolves around indirect transfers the second exemption provided is of importance. From the second exemption it can be seen that to be relieved from tax burden in case of transfer of shares of a foreign entity, here which is shares of CGP Investments, Mauritius, which indirectly holds Indian assets the transferor or the seller in the given case being Hutchison, Hong Kong must not manage, control or hold any rights which may provide for such control over the foreign entity whose shares are being transferred i.e., CGP Investments.

But, CGP Investments being a 100 % subsidiary company of Hutchison, Hong Kong is completely controlled by the latter and thus, Hutchison does not come within the scope of this exception. Hence, any capital gain arising from sale of the shares of CGP Investments is taxable at source in its hands.

Thus, in a way it can be concluded that the amendments brought about through the finance act 2015 become rationally comprehensive in budget 2012. Thereby, through such amendments the coverage of section 9(1)(1) has been increased retrospectively to include indirect transfers to cancel the effect of the SC verdict.

SECTION 2(14) 0F THE INCOME TAX ACT

“ capital asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include:

(i) Any stock- in- trade, consumable stores or raw materials held for the purposes of his business or profession;

(ii) For personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him.

(iii) Agricultural land in India, not being land situate-

(iv) 6 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government;

(v) Special Bearer Bonds, 1991, issued by the Central Government;

(vi) Gold Deposit Bonds issued under the Gold deposit Scheme,1999.

Both the Bombay High Court and the Supreme Court held in this case that “controlling interest” is not a capital asset. The Finance Bill added the following Explanation:

The following explanation was added to the existing provision

Explanation: For the removal of doubts, it is hereby clarified that

1. ‘property’ includes and shall be deemed to have always included

2. Any rights in or in relation to an Indian company,

3. Including rights of management or control or any other rights whatsoever”

Therefore, as per the amendment , the rights of the Hutchison Hong Kong in Indian company shall be included in the term capital asset under section 2(14) including the right of management and control (i.e.,) right to appoint directors , right to access to hutch brand in India and non-competing agreement . Hence, in this case the capital asset in India has been transferred by Hong Kong to Vodafone.

SECTION 2(47) IN THE INCOME TAX ACT

Transfer”, in relation to a capital asset, includes, (i)the sale, exchange or relinquishment of the asset; or

(ii) the extinguishment of any rights therein; or

(iii) the compulsory acquisition thereof under any law; or

(iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock- in- trade of a business carried on by him, such conversion or treatment; or

(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of TOPA Act ; or

(viii) Any transaction (whether by way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.

For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed always to have included,

• Disposing of or parting with an asset or any interest therein, or
• Creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily,
• By way of an agreement (whether entered into in India or outside India) or otherwise,
• Notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company incorporated outside India.”

Therefore, as per amendment, in this case, the transfer made by Hutchison Hong Kong to Vodafone is of the rights of Indian company including rights of management and control, as it has by transferring the shares of CGP Mauritius, disposed of or parted with the rights of the Indian company and through indirect means, created interest of Vodafone in Indian company. It has done this by way of agreement .Transfer of rights take place by way of transfer of shares by a company incorporated in Mauritius.

SECTION 195 OF THE INCOME TAX ACT- Other sums

(1) Any person responsible for paying to a non- resident, not being a company, or to a foreign company, any interest shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income- tax thereon at the rates in force.

Explanation 2 has been inserted in section 195(1) to clarify the obligation to comply with section 195(1) and to make deduction thereunder applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, residents, non-residents, whether or not the non- resident has: –

(i) A residence or place of business or business connection in India.

(ii) Any other presence in any manner whatsoever in India.

Therefore as per amendment, the presence of Vodafone establishment in India or the residence or place of business of Vodafone or its business connection in India is not necessary for deduction under section 195 but Vodafone had sufficient nexus in India.

Retrospective amendments are amendments which have backwards operation i.e., they come into effect from a past date. In India the finance minister has recognized the power to legislate retrospective laws and amendments. But the question as to the constitutional legitimacy of such amendments is a debatable question; though it is held valid in certain situations majorly it is held to be inconsistent. Thus, as a check on such amendments their use is restricted only to exceptional cases.Vodafone was considered to be one such exceptional case were the amendments introduced in Finance act 2012 were given effect from the past date. It was a revolutionary but a clever move made by the GOI to tax the Vodafone company which faced severe criticism from the global investors. The arbitration also held it to be violative of the India-Netherlands BIT.

The Senior advocate and architect behind Vodafone’s win Harish Salve opined his view on the retrospective amendments being a crusher of India’s image in the minds of the overseas investors and citizens. He criticized the instability shown by our government. He stated that the prosperity of the country depends upon the economic and political institutions of the country, on their stability and transparency.

Hence, though the government is granted the power to legislate laws and amendments with retrospective effect, its scope is restricted to exceptional cases and so before making any retro operative law consideration of its necessity, applicability and effects by the government is vital.

Vishnupriya. B | 4 th year B.B.A.LL. B(Hons) SASTRA Deemed to be University. Thirumalaisamudram | [email protected]

Abirami. A. B | 4 th year B.B.A LL. B (Hons) SASTRA Deemed to be University. Thirumalaisamudram | [email protected]

Nithya Parvathy.RG

Soundarya .A.

3 http://ramauniversityjournal.com/law/pdf_dec2019/03.pdf

4 Institute of Chartered Accountants of India v. L.K. Ratna & Ors (1986) 4 SCC 537

5 Krishnaji Ketkar vs Mahomed Haji Latif & Ors on 19 April,1968 AIR 1413, 1968 SCR (3) 862

6 Bombay High court Judgment para 14(f)

7 Cadell Weaving Mill Co. P. Ltd. vs Commissioner Of Income-Tax on 6 February, 2001

8 Section 45 Income Tax Act

9 Section 2(24) (xvi) Income tax Act

10 Bombay High court Judgment para 13(e)

11 Bombay High court Judgment para 16(i)

12 Mazagaon Dock Ltd. V. CIT [1988] 34 ITR 368

13 Taxation of notional income: a comparison of tax regimes-Manu Patra

14 Bombay High Court Judgment para 18(f)

15Bombay High Court Judgment para 6(g)3

16 Bombay High Court Judgment para 18(b)

17 Writ Petition No. 1325 of 2010, decision delivered on September 8, 2010 paragraph 54

18 Brassard v. Smith 39 (1925) AC 371 as quoted in paragraph 95 of the Judicial    Opinion

19 Weisbach, David A. 2002. “An Economic Analysis of Anti-Tax-Avoidance Doctrines”

20 United States v. Bestfoods [141 L Ed 2d 43: 524 US 51 (1998)]

21 Victory for Vodafone in Indian Supreme Court: the final conclusion or another twist in the tale? by Aditi Mukundan and Mansi Seth, Nishith Desai Associates

22 Judgment para 16

23 Judgment para 7

24 Judgment para 68

25 Judgment para 5.12

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Mergers and Acquisitions: Case Study of Vodafone Idea Merger

By: Vaidehi Sharma

Introduction to mergers and acquisition  

‘Mergers and acquisitions’ is a technical term used to define the consolidation of two or more companies. When two companies are combined to form one unit, it is known as a merger, while an acquisition refers to the buying of one company by another one, which means that no new company is formed, only one company has been absorbed into another. Mergers and Acquisitions are an important component of strategic management, which comes under the head of corporate finance. The subject concerns buying, selling, dividing, and combining various companies. It is a  type of restructuring to have rapid growth and increase profitability. 

Mergers and acquisitions are part of the strategic working of any business or working group. It involves the joining of two businesses with the object to increase market share and profits and to have an influential impact on the industry. Mergers and Acquisitions are complicated processes that require preparation, analysis, and deliberation. There are a lot of parties who might be affected by a merger or an acquisition but before a deal is finalized, all parties need to be taken into consideration, their concerns should be addressed, and all possible hurdles that can be avoided must be avoided. 

The term ‘Merger’ has not been defined under the Companies Act, 2013 or  Income Tax Act, 1961 , but as a concept ‘merger’ is a combination of two or more entities into one; with the accumulation of their assets and liabilities, and coming together of the entities into one business. 

The other word for Merger is ‘Amalgamation’. Under The Income Tax Act, 1961  (ITA) ‘amalgamation’ is defined as the merger of one or more entities with another company, or the merger of two or more entities forming one company. It also mentions other conditions to be satisfied for an ‘Amalgamation’ to benefit from the beneficial tax treatment. 

For example -A company called and a company called B merge to form a new company called C . This is called a merger. 

The effect of the merger is that the assets and liabilities of both companies will now be shared and they will cease to exist as independent companies . 

Benefits of Mergers 

⮚ Profit and resource sharing – The resources of both companies are pooled together which increases the profit outcome.

⮚ Access to New Markets – Entering into new markets can be challenging for any company even for established companies. While setting up a subsidiary  or branch is always an option, a merger or acquisition can save companies a  significant amount of time, effort, and money compared to starting from  scratch  

⮚ More Economic Strength and Competitive Edge – mergers and acquisitions mean financial strength for both companies. It can help them to become more powerful in the market, attract more customers and create more resources. 

⮚ Powerful Human Resource -The biggest asset any company can hold is its employees. A skilled and effective stall generates a lot of profit for the company. Therefore in mergers and acquisitions, the human resources of both companies are pooled together. 

⮚ Better infrastructure and Fixed Capital -In mergers and acquisitions the resources of both companies are shared which means access to better infrastructure for the poor company. Big machines and other resources can also be used up for better production. 

Mergers and acquisitions in the telecom industry in India 

Introduction  .

India is currently ranked as the world’s second-largest telecommunications market with more than 1.20 billion subscribers and has shown strong growth in the past one and a half decades. 

The Indian telecom industry is growing at a rapid pace. In 2020-2021 the telecom industry contributed 6% to India’s Gross Domestic Product (GDP). The telecom  sector is set to grow at a Compound Annual Growth Rate (CAGR) of 9.4% from  

2020 to 2025. However, with a CAGR of 15.9% throughout the forecast period, the smartphone industry in India will have the fastest growth. By 2025, India’s digital economy will be worth $ 1 trillion. 

The industry has increased primarily due to favorable regulatory conditions, low prices, increased accessibility, and the introduction of Mobile Number Portability  (MNP), expanding 3G and 4G coverage, and changing subscriber consumption patterns. The deregulation of Foreign Direct Investment (FDI) rules has made the telecom sector one of the fastest-growing sectors in the country and a huge means of employment opportunity generator in the country too.

The subsectors of the telecommunication sector include infrastructure, equipment,  Mobile Virtual Network Operators (MNVO), white space spectrum, 5G, telephone service providers, and broadband. 

It is predicted that 5G technology will boost the Indian economy by $ 450 Bn between 2023 and 2040. According to the Global System for Mobile  Communications (GSMA), there is an excellent opportunity for investment in this sector as India will have almost one billion installed smartphones by 2025 and 920  million unique mobile customers, including 88 million 5G connections. 

Importance of the telecom industry  

The importance of the telecommunication industry is highlighted by the fact that it enables global communication. The relevance of this industry has increased significantly after the pandemic. Services offered by this industry are more frequently used since it allows for a continued virtual connection. The smartphone market will continue to increase as more people are expected to purchase them in the coming years. Given that government reforms have eliminated ambiguity and risks and established a stable investment environment, India’s telecom sector is projected to receive investments totaling $ 25.2 Bn over the next two years. 

Mergers and acquisitions in the telecom industry  

The recent trend of mergers and acquisitions can be widely seen in the telecom sector too. This recent trend in the world of the telecommunications market has been caused by the ongoing regulatory liberalization and privatization of the industry.  These changes have brought about fierce competition and ensuing decreases in profit in both the domestic and international telecommunications service markets. 

Mergers and acquisitions in the telecom sector are considered to be horizontal mergers because both companies deal in the same line of business. In the majority of developed and developing countries, mergers and acquisitions in the telecommunications sector have increased which also resulted in the creation of jobs. 

The legal Framework of Mergers and Acquisitions in the telecom sector  

• ⮚ National Telecom Policy formed in 2012 hasimplifiedde M&A in Telecom  Service Sect, ensuring adequate competition and allowing  100% FDI.
• ⮚ The merger in the case of licenses shall be done for the respective service category. Access to service license allows the provision of internet service and so the merger of ISP license with services license shall also be  
• permitted. 
• ⮚ In a service area, the market share of the merged entity should not be more than 50%. If it is more, it has to reduce it below 50% in an annum. 
• ⮚ The total spectrum held by the merged entity should not be more than 50%  in a service area. If it is excess, it has to be surrendered within an annum. 
• ⮚ The corporation which acquires will have to pay the difference between the market price determined in the auction & the administrative price if an acquired company has got spectrum after paying the administrative price. 
• ⮚ If due to a merger or transfer of license in any service area business,  corporation or entity becomes an important market power, then TRAI’s  Telecommunication Act of the year 2002 will come into place. 

Case study – Merger of Vodafone and Idea 

History of both the companies  .

History of the merger  

In March 2017, it was announced that Idea Cellular and Vodafone India would merge. The merger got approval from the Department of Telecommunications in July 2018. On 30 August 2018, National Company Law Tribunal gave the final nod to the Vodafone-Idea merger. It was completed on 31 August 2018, and the new entity was named Vodafone Idea Limited. Under the terms of the deal, the  

Vodafone Group held a 45.2% stake in the combined entity, the Aditya Birla  Group held 26% and the remaining shares were to be held by the public. 

Reasons for Merger of Vodafone and Idea   

Dominance over the market by JIO- The main reason for the merger of Vodafone and the idea was the dominance of the Jio company. The companies saw a major downfall as Jio announced free internet services for the first 6 months. As a result price war began between companies. the companies began to see losses, and as a result, a merger between Vodafone and Idea happened. 

Key takeaways  

• ⮚ Under the plan submitted to Indian regulators, Vodafone will initially hold a  50 0% stake in the combined entity, while the Aditya Birla Group and public shareholders will hold 21.1% and 28.9%, respectively. Vodafone will then divest a 4.9% stake to the Aditya Birla Group, which would increase the latter’s stake from 21.1% to 26%, thus crossing the threshold for an open offer. 
• ⮚ Vodafone and Idea had individual spectrum holdings of 411 MHz and 316  MHz respectively. The amalgamation of the companies would give, it was expected, the merged company a hold of 728 Mhz increasing the chances of the merged company to rank number one or two in India. 
• ⮚ The merger ratio was 1:1. This ratio was based on the price of Idea at 72.5  per unit. Implied enterprise value for Idea and Vodafone was INR 72  thousand crores and INR 82 thousand and 8 hundred crores respectively.  The agreement had a break fee of Rs 3,300 crore payable upon certain conditions. 
• ⮚ Aditya Birla also has the right to acquire up to 9.5% additional shareholding from Vodafone Group throughout three years post-closure of the deal for an agreed price of INR 130 per share. But these rights by Aditya Group will be exercised based on the growth achieved and the market price of the combined entity .
• ⮚ Idea and Vodafone will have joint control over the appointment of CEO and  COO, the exclusive rights to appoint a CFO is with Vodafone. So Vodafone is not just a major shareholder but also has more financial rights. 
• ⮚ If at the end of 3 years, Aditya Birla Group fails to purchase any stakeout of the additional stake of 9.5%, then they will be given the last opportunity to purchase the stake at the prevailing market price for share equalization. 
• ⮚ Vodafone contributed net debt of Rs 55,200 crore to the merged entity,  whereas Idea contributed Rs. 52,700 crore. Vodafone contributed net debt of Rs. 2,500 crore more than Idea . 
• ⮚ In September 2020, Vodafone – Idea rebranded itself. The company used the initials to rebrand itself as ‘Vi’. The rebranding took place after almost two years of the merger, however, it shows the spirit of integration. 
• ⮚ In the financial year 2022, Vodafone Idea Limited earned revenue of 386.5  billion Indian rupees.

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A Study of Merger and Acquisition and Its Impact on Profitability Performance of Selected Merger (With Reference to Vodafone Idea Merger)

• First Online: 23 August 2022

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• Suruchi Satsangi 12 &
• Prem Das Saini 12  

Part of the book series: Flexible Systems Management ((FLEXSYS))

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Mergers and acquisitions are vital choices taken to boost an endeavor's blast through improving its assembling and promoting tasks. They are adopted to use and gain advantage power, expand the purchaser base, cut competition or enter into a brand new market or product section. When globalization of the Indian financial system was started in 1991, it was believed that it would suggest foreigners were not the handiest doing enterprise in India but additionally taking over Indian organizations. The objectives are to review the case of Vodafone-Idea related to M&As and analyzing its before- & after- performance of the company and its impact on the basis of profitability performance of the selected companies. The study is based on an analytical research. The data are taken from secondary sources from several websites. The time period of the study is two-year pre & two-year post of the selected companies. The base year is considered as zero. To analyze the profitability performance, ratios and t test has been used as a tool for further analysis of the paper.

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Bedi, A. (2018). Post acquisition performance of indian telecom companies: An empirical study. Pacific Business Review International , 56–62.

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Jiang, J. (2019 ). An empirical study on M&A performance: evidence from horizontal mergers and acquisitions in the United States. Open Journal of Business and Management , 976–997.

Poddar, N. (2019). A study on mergers and acquisition in india and its impact on operating efficiency of indian acquiring company. Theoretical Economics Letters , 1040–1052.

Satyanarayana, D., Rao, D., & Naidu , D. (2017). The impact of reliance jio on Indian mobile industry a case study on mergers and acquisitions of idea—Vodafone and Airtel—Telenor. International Journal of Applied Research , 209–212.

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Satsangi, S., Das Saini, P. (2022). A Study of Merger and Acquisition and Its Impact on Profitability Performance of Selected Merger (With Reference to Vodafone Idea Merger). In: Anbanandam, R., Rangnekar, S. (eds) Flexibility, Innovation, and Sustainable Business. Flexible Systems Management. Springer, Singapore. https://doi.org/10.1007/978-981-19-1697-7_12

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5G Evolution

Vodafone plots major m&a moves in europe, confirms ceo.

By Ray Le Maistre

Feb 2, 2022

Vodafone Group CEO Nick Read and Group Chief Financial Officer Margherita Della Valle tackle questions during the operator's Q3 trading update webcast

• Vodafone CEO Nick Read says M&A discussions in Europe are underway
• ‘Industrial merger’ for Vantage Towers just one of those discissions
• New speculation emerges of a potential merger with MásMóvil in Spain
• Talk comes as Vodafone provides positive trading update...
• ...and only days after reports of pressure on Vodafone’s management from an activist investor that wants to see the portfolio further optimized

Vodafone CEO Nick Read addressed M&A speculation head on during his company’s fiscal third quarter trading update today, saying the operator is engaged with other companies on potential mergers and asset sales in multiple markets. Importantly, he added that politicians and regulators across Europe are now more in tune with the economic and operational dynamics of the telco sector and that this could lead to a “new reality” in terms of market consolidation potential.

Vodafone has been at the heart of much M&A speculation in recent months following hints by Read (and other European telco CEOs) that options were being considered, local reports on consolidation discussions involving Vodafone in multiple markets, and following reports that an  activist investor, Cevian Capital, has taken a stake in the operator  and is leaning on the company to optimize its portfolio of operating companies.    

The local speculation has, in the past few weeks, linked Vodafone UK to fellow mobile network operator Three (not for the first time) and Vodafone Italy to Free, which is part of combative Iliad group that initially made its mark in France and which is still expanding its empire. 

And then today, news from Spain emerged, in the  El Confidencial newspaper , that MásMóvil is keen to acquire Vodafone Spain and that talks are underway. MásMóvil, of course, has only just bulked up in recent times courtesy of the acquisition of Euskaltel. (See MásMóvil ready to bring in the brands as Euskaltel bid clears final regulatory hurdle .)

During the Q&A session Read held today alongside Group Chief Financial Officer Margherita Della Valle, he noted that “disposals, acquisitions and combinations” have been a part of the company’s strategy for the past three years, so current engagements and activities are nothing new or unusual, stressing the comp any has been “pragmatic and open-minded” in any asset considerations. 

Right now he said the key M&A considerations have been focused on: Transferring the  Egypt operation into the Vodacom Group  (a deal that is all but done and set to close soon); checking out the potential for an “industrial merger” for Vantage Towers, the standalone but majority-owned towers company that could do a deal with either Deutsche Telekom or Orange’s Totem towers unit; and in-market consolidation.

There “isn’t much we can say on in-market [consolidation] but we are very proactive and very pragmatic and getting good engagement from our counterparties to advance this,” noted the CEO, saying that discussions have been held with multiple parties. “Our goal is to ensure we have a set of strong assets in healthy markets delivering strong returns for our shareholders,” noted Read.

Key for Read and Della Valle in revamping the asset base in any market is achieving what the CEO calls “local scale,” which is as important as “regional scale.” And in multiple markets, which Read identified as the UK, Italy, Spain and Portugal (where he said the regulator had introduced two new entrants instead of the intended one to make the potential for scale even harder...), there are four infrastructure-based mobile network operators and multiple large MVNOs that make those markets “hypercompetitive.”

He added: “We are talking about [moving from] four infrastructure MNOs to three in those markets to get the right economics for scale and returns. The argument is not about whether we want competition – we are the challenger against incumbents, we are pro competition, but we want a new balance, of competition versus encouraging investment, and we think that is a very positive narrative for member state politicians and Brussels, and we think the countries and sector is leaning into the agenda. This is not about needing rule changes – the EC already has enough flexibility, and I think there is a new reality, a new economic context,” stated Vodafone’s CEO, who believes politicians and regulators now see the communications services sector in a different light after two years of Covid-19 and the realization of how important it is that markets have thriving service providers that can invest and deliver the services that companies and individuals need in a digital economy that now has many more remote workers. European telecoms “is a highly fragmented sector in multiple markets,” in contrast to many other markets around the world.  

And there has been a sense for some time that M&A is likely to feature strongly in Europe’s operator community this year. (See  M&A set to change Europe’s digital comms landscape in 2022 .)

In the meantime, Vodafone is managing sales growth: In the third quarter of the fiscal year, ending December 2021, the operator generated revenues of €11.68 billion, up by 4.3% from the same period a year earlier. 

- Ray Le Maistre, Editorial Director, TelecomTV

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• Corpus ID: 219369395

A Post-Merger Analysis of Vodafone-Idea Ltd.

• CMA(Dr.) Ashok Panigrahi
• Published 16 November 2019
• Business, Economics
• IO: Regulation

2 Citations

Impact of mergers and acquisitions in telecom industry: an analytical study of financial performance of vodafone idea limited, long-term performance of acquiring companies after mergers and acquisitions: a systematic review, related papers.

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