NOF compliant companies get RBI exemption

By: | Published: November 24, 2017 3:00 AM

The Reserve Bank of India (RBI) on Thursday exempted from the limit of shareholding at 26% of post converted equity of the borrower company asset reconstruction companies (ARCs) that are compliant with the net owned fund (NOF) requirement of Rs 100 crore and have at least half their board of directors comprised of independent directors.

NOF, Reserve Bank of India , foreign direct investment, foreign direct investment limit, ARCThe equity shares acquired under the scheme will be periodically valued and marked to market.

The Reserve Bank of India (RBI) on Thursday exempted from the limit of shareholding at 26% of post converted equity of the borrower company asset reconstruction companies (ARCs) that are compliant with the net owned fund (NOF) requirement of Rs 100 crore and have at least half their board of directors comprised of independent directors. In a notification posted on its website, the central bank said that such ARCs shall frame policy on debt to equity conversion with the approval of their board and may delegate powers to a committee comprising a majority of independent directors for taking decisions on proposals of debt to equity conversion. The equity shares acquired under the scheme will be periodically valued and marked to market. The frequency of valuation will be at least once a month.The extent of shareholding post conversion of debt into equity shall be in accordance with the permissible foreign direct investment (FDI) limit for that specific sector, the RBI said. The notification stated, “The ARC shall explore the possibility of preparing a panel of sector-specific management firms/ individuals having expertise in running firms/ companies which could be considered for managing the companies.”

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