RBI/DNBR/2018-19/66
Master Direction DNBR. PD (ARC) CC. No. 06/26.03.001/2018-19
October
25, 2018
The Chairman / Managing Director
/ Chief Executive Officer
All registered Asset Reconstruction Companies
Dear Sir/ Madam,
Master Direction - Fit and
Proper Criteria for Sponsors - Asset Reconstruction Companies (Reserve
Bank) Directions, 2018
In exercise of the powers
conferred by clause (f) of sub-Section 3 of Section (3) of the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (the Act) and of all the powers enabling it in
this behalf, Reserve Bank of India (the Bank) hereby issues the Directions
on Fit and Proper Criteria for Sponsors of Asset Reconstruction Companies
(ARCs) registered under the Act.
1. Short title and commencement
(i) These Directions shall be
called Fit and Proper Criteria for Sponsors - Asset Reconstruction
Companies (Reserve Bank) Directions, 2018.
(ii) These Directions shall come
into force with immediate effect.
2. Applicability
The provisions of these
Directions shall apply to the existing and proposed sponsors of the ARCs.
3. Definitions
In these Directions, unless the
context otherwise requires, the terms herein shall bear the meanings
assigned to them below :
(i) “Act” means Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 and amendments thereto.
(ii) “Applicant” means the
person making an application under Section 3 of the Act.
(iii) “Sponsor” has the meaning
as given in Section 2(1)(zh) of the Act and means any person holding not
less than ten per cent of the paid-up equity capital of an asset
reconstruction company.
4. Eligibility criteria for
sponsors of ARCs
The sponsors should be fit and
proper in order to be eligible to promote ARCs.
5. Determinants of fit and
proper status of sponsors of ARCs
In determining whether the
sponsor is fit and proper, the Bank shall take into account all relevant
factors, as appropriate, including, but not limited to, the following:
(i) The sponsor’s integrity,
reputation, track record and compliance with applicable laws and regulations;
(ii) The sponsor’s track record
and reputation for operating business in a manner that is consistent with
the standards of good corporate governance, integrity, in addition to the
similar assessment of individuals and other entities associated with the
sponsor;
(iii) The business record and
experience of the sponsor;
(iv) Sources and stability of
funds for acquisition and the ability to access financial markets;
(v) Shareholding agreements and
their impact on control and management of the ARC.
6. Information to be furnished
by the sponsors along with relevant supporting documents
(i) Information by a natural
person
Self-declaration as per Form I (Part
A, B and C) as specified in the
schedule to these Directions.
(ii) Information by the legal
person
Self-declaration as per Form I (Part
A, B, C and D) as specified in the schedule
to these Directions.
(iii) The ARC should furnish
additional information as per Form I (Part E).
7. Continuous monitoring
arrangements for due diligence in case of existing sponsors
(i) For the purpose of ensuring
that all its sponsors are fit and proper, every ARC shall
(a) obtain within one month of
the close of financial year a declaration from all its sponsors in Form I as specified in the schedule to these
Directions;
(b) furnish a certificate
in Form III, by the end of May every
year, to the Reserve Bank on the changes in the status of the sponsor.
(ii) Every ARC shall examine any
information on the sponsors which may come to its notice that may render
such persons not fit and proper to hold such shares and shall
immediately furnish a report on the same to the Bank.
8. Compliance with prior
approval requirement
(i) The ARCs shall make an
application along with Form II as
specified in the schedule to these Directions, for the Bank’s prior
approval for change in shareholding of the ARCs as indicated in circular DNBR(PD)CC.No.01/SCRC/26.03.001/2014-15 dated
February 24, 2015 on ‘Bank’s prior approval for change in
Shareholding’ as amended from time to time.
(ii) The Bank shall, inter alia,
seek feedback on the persons from other domestic as well as foreign
regulators and enforcement and investigative agencies as deemed appropriate
to make an assessment whether a sponsor is fit and proper.
Yours faithfully,
(Manoranjan Mishra)
Chief General Manager
SCHEDULE
FORMS
Form
I
Declaration
to be submitted by the Sponsor
Name of the ARC :
Sl.
No.
|
Particulars
|
Remarks
|
PART
A
|
1.
|
Name of the Sponsor (including
previous names, if any, alongwith date of such changes)
|
|
2.
|
Present & Permanent
address of the Sponsor
|
|
3.
|
Registered & Corporate
Office address of the Sponsor
|
|
4.
|
Occupation/ Nature of business
of the Sponsor
|
|
5.
|
Citizenship and Resident
status if the Sponsor is an individual/ ownership and control status if
the Sponsor is an entity (as per FEMA)
|
|
6.
|
Date of Birth / Incorporation
|
|
7.
|
CIN/ Registration No./ PAN/
TAN
|
|
8.
|
Details of bank accounts -
bank, branch and account no.
|
|
9.
|
Profitability and Average
Income for the last three years and Net Worth (Duly certified by the
Statutory Auditors)
|
|
10.
|
Sources of fund for
acquisition of shares/ compulsorily convertible preference shares/
debentures/ bonds (Duly certified by the Statutory Auditors)
|
|
11.
|
Income Tax Returns and audited
financial statements of the sponsor for the last three years
|
|
12.
|
Details of directorship/
shareholding/ voting rights/ compulsorily convertible preference shares/
debentures/ bonds, etc. of the sponsor in banks and other institutions in
the financial sector
|
|
13.
|
Details of acquisition by the
sponsor (shareholding in Rs. and %) in ARC
|
|
14.
|
Whether any other person has
beneficial interest in the proposed acquisition
|
|
15.
|
Detailed profile on the
background and experience of the sponsor, expertise and track record of
business
|
|
16.
|
Whether the sponsor is a
financial sector entity/ Government/ public sector undertaking
|
|
17.
|
Whether the sponsor has been
declared as a wilful defaulter at any time in the preceding five years
If yes, whether they continue as a wilful defaulter
|
|
PART
B
|
18.
|
(A) List of ‘Relatives’ of the
sponsor
(B) List of “Persons acting in concert’ with the sponsor
(C) List of Associate Enterprises of the sponsor
(D) List of Entities which hold 10% or more of the paid-up share capital
of the sponsor
(E) List of HUFs where the Sponsor or his family member is a member/
karta
(F) List of entities in which the HUF at (E) above is holding 10% or more
of the paid-up share capital of that entity
(G) List of entities in which the Sponsor is holding 10% or more of the
paid-up share capital of that entity
(H) Entities, if any, in which the Sponsor is considered as being
interested (Refer Section 184 of Companies Act, 2013)
(I) Entities where there are common shareholders of the sponsor who
collectively hold 20% or more of the paid-up share capital of the Sponsor
and also those entities
(J) Related Party (Refer AS 18) of the Sponsor
Explanation: For the purpose of this part,
(i) “Relatives” means ‘relatives’ as defined in Section 2(77) of the
Companies Act 2013.
(ii) Persons shall be deemed to be “acting in concert” who, for a common
objective or purpose of acquisition of shares in excess of 10%, pursuant
to an agreement or understanding (formal or informal) directly or
indirectly cooperate by acquiring or agreeing to acquire shares in the
ARC;
(iii) ‘Associate enterprises of the sponsor’, means a company whether
incorporated or not, which
a.
is a
holding company or a subsidiary company of the sponsor; or
b.
is a
joint venture (defined in terms of AS 23) of the sponsor; or
c.
controls
the composition of the Board of Directors or other body governing the
sponsor; or
d.
is
able to obtain economic benefits from the activities of the applicant.
|
|
PART
C
|
19.
|
Has the sponsor or the
persons/ entities listed in Part B been adjudged bankrupt/insolvent at
any time
|
|
20.*
|
If the sponsor or the persons/
entities listed in Part B is a member of a professional association/
body, details of disciplinary action, if any, pending or commenced or
resulting in conviction in the past against him/ her or whether he/ she
has been banned from entry at any profession/ occupation at any time
|
|
21.*
|
Details of serious
disciplinary or criminal prosecution, if any, pending or commenced or
resulting in conviction in the past against the sponsor or the persons/
entities listed in Part B
|
|
22.*
|
Has the sponsor or the
persons/ entities listed in Part B at any time been found guilty of
violation of rules / legislative requirements by customs / excise/ income
tax/ foreign exchange/ other revenue authorities/ investigative agencies/
economic laws/ any regulation, including issuance of Show Cause Notice,
if so give particulars
|
|
23.
|
Whether the sponsor or the
persons/ entities listed in Part B have been convicted for any offence
due to dishonesty, incompetence or malpractice under any legislation
designed to protect members of the public from financial loss
|
|
24.
|
Whether the persons/ entities
listed in Part B has been declared as a wilful defaulter at any time in
the preceding five years? If yes, whether he/she continues as a wilful
defaulter?
|
|
PART
D
|
25.
|
If the sponsor is a regulated
entity, names and addresses of the regulators of the applicant in India
and abroad
|
|
26.
|
Shareholding pattern of the
sponsor
|
|
27.
|
Details of capital raised by
the sponsor during the past 3 years
|
|
28.
|
Detailed corporate structure
of the Group in case the sponsor belongs to a Group (preferably in a
pictorial form)
|
|
*Though it shall not be
necessary for a person to mention in the column about orders and findings
made by regulators which have been later on reversed / set aside in toto,
however, it would be necessary to make a mention of the same, in case the
reversal / setting aside is on technical reasons like limitation or lack of
jurisdiction, etc., and not on merit. If the order of the regulator is
temporarily stayed and the appellate / court proceedings are pending, the
same also should be mentioned.
Undertaking
I confirm that the above
information to the best of my knowledge and belief, is true and complete. I
undertake to keep the ARC fully informed, as soon as possible, of all
events which take place subsequent to submission of this declaration, which
are relevant to the information provided above.
Signature and stamp of the
sponsor
Place :
Date :
I solemnly declare that to the
best of my knowledge and belief the information furnished in the statement
above is correct, complete and truly stated.
Signature of Authorised Official
of the Company
Name :
Designation :
Company Seal :
Date :
Place :
PART
E
Additional information to be
submitted by the ARC
Sl.
No.
|
Particulars
|
Remarks
|
29.
|
Any other explanation /
information in regard to items above considered relevant for judging “fit
and proper” status of the sponsor
|
|
30.
|
Brief details of shareholder
agreements
|
|
Signature of Authorised Official
of the Company
Name :
Designation :
Company Seal :
Date :
Place :
Form
II
Information to be furnished to
the Reserve Bank by the Asset Reconstruction Company (ARC) while forwarding
the application for seeking prior approval of Sponsors
Sl.
No.
|
Particulars
|
Remarks
|
1.
|
Name of the ARC
|
|
2.
|
Paid-up share capital of the
ARC
|
|
3.
|
Name of the existing sponsors
of the ARC
|
|
4.
|
Name of the proposed sponsor
|
|
5.
|
Proposed sponsor’s track
record on integrity and reputation
|
|
6.
|
Report of the ARC on the
acquisition (based on a review by the Board of Directors)
|
|
7.
|
Whether the proposed sponsor
is resident or non-resident
|
|
8.
|
Whether the proposed sponsor
or persons/ entities listed in Part B of Form
I has been subject to any proceedings of serious disciplinary
or criminal nature
|
|
Encl :
1. Report of the ARC
2. Copy of the Board Resolution
3. Form I for individual sponsors
Signature of Authorised Official
of the Company
Name :
Designation :
Company Seal :
Date :
Place :
Form
III
Annual declaration (as on March
31 every year) to be furnished to the ARC by all the existing Sponsors of
ARCs
Name of the ARC:
Sl.
No.
|
Particulars
|
Remarks
|
1.
|
Name of the sponsor
|
|
2.
|
Address of the sponsor
|
|
3.
|
Occupation of the sponsor (in
case of individuals)
|
|
4.
|
Total number of shares
/compulsorily convertible preference shares/ debentures /bonds held by
the sponsor in the ARC
|
|
5.
|
Date/s of acquisition of
shares/ compulsorily convertible preference shares/ debentures/ bonds in
the ARC in the past 5 years
|
|
6.
|
Details of regulatory actions
against the sponsors and persons/ entities listed in Part B of Form I by regulators in India or abroad,
during the last 5 years
|
|
7.
|
Whether there have been any
criminal proceedings against the sponsor and persons/ entities listed in
Part B of Form I during the
last 5 years, if so, details thereof.
|
|
8.
|
Whether there have been any
civil proceedings against the sponsor and persons/ entities listed in
Part B of Form Iduring the last 5
years, if so, details thereof.
|
|
9.
|
Change of ownership of the
sponsor in the last 5 years (in case of entities), if any
|
|
Signature and stamp of the
sponsor
Place :
Date :
|