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Non-banking financial companies (NBFCs) will be required to take prior approval of the Reserve Bank of India (RBI) for change in the shareholding, including progressive increases over time, which would result in acquisition or transfer of shareholding of 26 per cent or more of the paid up equity capital, said the regulator on Thursday.
“Prior approval would, however, not be required in case of any shareholding going beyond 26 per cent due to buyback of shares/reduction in capital where it has approval of a competent court. The same is however required to be reported to the Reserve Bank not later than one month from its occurrence,” RBI said.
According to the central bank, prior approval will also be required for any takeover or acquisition of control of an NBFC, which may or may not result in change in management. Besides that, any change in the management of the NBFC that results in change in more than 30 per cent of the directors, excluding independent directors, will call for a prior approval of RBI.
However, approval would not be required for those directors who get re-elected on retirement by rotation. For obtaining prior approval, NBFCs will be required to submit an application, on the company letter head. “Applications in this regard may be submitted to the regional office of the department of non-banking supervision in whose jurisdiction the registered office of the NBFC is located,” said RBI.
“Prior approval would, however, not be required in case of any shareholding going beyond 26 per cent due to buyback of shares/reduction in capital where it has approval of a competent court. The same is however required to be reported to the Reserve Bank not later than one month from its occurrence,” RBI said.
According to the central bank, prior approval will also be required for any takeover or acquisition of control of an NBFC, which may or may not result in change in management. Besides that, any change in the management of the NBFC that results in change in more than 30 per cent of the directors, excluding independent directors, will call for a prior approval of RBI.
However, approval would not be required for those directors who get re-elected on retirement by rotation. For obtaining prior approval, NBFCs will be required to submit an application, on the company letter head. “Applications in this regard may be submitted to the regional office of the department of non-banking supervision in whose jurisdiction the registered office of the NBFC is located,” said RBI.
RBI also said that a public notice of at least 30 days shall be given before effecting the sale of, or transfer of the ownership by sale of shares, or transfer of control, whether with or without sale of shares. Such public notice shall be given by the NBFCs and also by the other party or jointly by the parties concerned, after obtaining the prior permission of RBI.
“The public notice shall indicate the intention to sell or transfer ownership/ control, the particulars of transferee and the reasons for such sale or transfer of ownership/ control. The notice shall be published in at least one leading national and in one leading local (covering the place of registered office) vernacular newspaper,” RBI said.
