November 23, 2017
The Chairman/ Managing Director/ Chief Executive Officer
All registered Asset Reconstruction Companies
Conversion of debt into equity- Review
Please refer to our Circular DNBS(PD)CC.No. 35/SCRC/26.03.001/2013-14 dated January 23, 2014 on the above subject.
2. On a review of the limit imposed on shareholding of the post converted equity of the borrower company under reconstruction by Asset Reconstruction Companies (ARCs), it has been decided to exempt ARCs meeting the criteria set out in paragraph 3 below from the cap of 26% subject to compliance with the provisions of the SARFAESI Act, 2002, Guidelines/ Instructions issued by Reserve Bank of India from time to time as applicable to ARCs as well as Foreign Exchange Management Act, 1999, Reserve Bank of India Act, 1934, Companies Act, 2013, SEBI Regulations and other relevant Statutes. The extent of shareholding post conversion of debt into equity shall be in accordance with permissible Foreign Direct Investment (FDI) limit for that specific sector.
3. ARCs that meet the conditions mentioned below are exempted from the limit of shareholding at 26% of post converted equity of the borrower company:
4. 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.
(C D Srinivasan)
Source: RBI Notification