Lawgist12Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders
1[12. Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders.-- (1) No banking company shall carry on business in India, unless it satisfies the following conditions, namely:--
(i) that the subscribed capital of the company is not less than one-half of the authorised capital, and the paid- up capital is not less than one-half of the subscribed capital and that, if the capital is increased, it complies with the conditions prescribed in this clause within such period not exceeding two years as the Reserve Bank may allow;
2[(ii) that, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), the capital of such banking company consists of--
(a) equity shares only; or
(b) equity shares and preferences shares:
Provided that the issue of preference share shall be in accordance with the guidelines framed by the Reserve Bank specifying the class of preference shares, the extent of issue of each class of such preference shares (whether perpetual or irredeemable or redeemable), and the terms and conditions subject to which each class of preference shares may be issued:
Provided further that no holder of the preference share, issued by the company, shall be entitled to exercise the voting right specified in clause (b) of sub-section (2) of section 87 of the Companies Act, 1956 (1 of 1956);]
3* * * * *
(2) No person holding shares in a banking company shall, in respect of any shares held by him, exercise voting rights 4[on poll] 5[in excess of 6[ten per cent]] of the total voting rights of all the shareshare-holders of the banking company:
7[Provided that the Reserve Bank may increase, in a phased manner, such ceiling on voting rights from ten per cent. to twenty-six per cent.]
(3) Notwithstanding anything contained in any law for the time being in force or in any contract or instrument no suit or other proceeding shall be maintained against any person registered as the holder of a share in a banking company on the ground that the title to the said share vests in a person other than the registered holder:
Provided that nothing contained in this sub-section shall bar a suit or other proceeding--
(a) by a transferee of the share on the ground that he has obtained from the registered holder a transfer of the share in accordance with any law relating to such transfer; or
(b) on behalf of a minor or a lunatic on the ground that the registered holder holds the share on behalf of the minor or lunatic.
(4) Every chairman, managing director or chief executive officer by whatever name called of a banking company shall furnish to the Reserve Bank through that banking company returns containing full particulars of the extent and value of his holding of shares, whether directly or indirectly, in the banking company and of any change in the extent of such holding or any variation in the rights attaching thereto and such other information relating to those shares as the Reserve Bank may, by order, require and in such form and at such time as may be specified in the order.]
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1. Subs. by Act 95 of 1956, s. 3, for section 12 (w.e.f. 14- 1-1957).
2. Subs. by Act 4 of 2013, s. 3, for clause (ii) (w.e.f. 18-1-2013).
3. The proviso omitted by s. 3, ibid. (w.e.f. 18-1-2013). 4. Ins. by Act 33 of 1959, s. 8 (w.e.f. 1-10-1959).
5. Subs. by Act 55 of 1963, s. 9, for "in excess of five per cent." (w.e.f. 1-2-1964).
6. Subs. by Act 20 of 1994, s. 6, for "one per cen." (w.e.f. 31-1-1994).
7. Ins. by Act 4 of 2013, s. 3 (w.e.f. 18-1-2013).
- 6 Form of business in which banking companies may engage
- 7 Use of words "bank", "banker", "banking" or "banking company"
- 8 Prohibition of trading
- 9 Disposal of non-banking assets
- 10 Prohibition of employment of managing agents and restrictions on certain forms of employment
- 10A Board of directors to include persons with professional or other experience
- 10B Banking company to be managed by whole time chairman
- 10BB Power of Reserve Bank to appoint chairman of the Board of directors appointed on a whole-time basis or a managing director of a banking company
- 10C Chairman and certain directors not to be required to hold qualification shares
- 10D Provisions of sections 10A and 10B to override all other laws, contracts, etc
- 11 Requirement as to minimum paid-up capital and reserves
- 12 Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders
- 12A Election of new directors
- 12B Regulation of acquisition of shares or voting rights
- 13 Restriction on commission, brokerage, discount, etc., on sale of shares
- 14 Prohibition of charge on unpaid capital
- 14A Prohibition of floating charge on assets
- 15 Restrictions as to payment of dividend
- 16 Prohibition of common directors
- 17 Reserve Fund
- 18 Cash reserve
- 19 Restriction on nature of subsidiary companies
- 20 Restrictions on loans and advances
- 20A Restrictions on power to remit debts
- 21 Power of Reserve Bank to control advances by banking companies
- 21A Rates of interest charged by banking companies not to be subject to scrutiny by courts
- 22 Licensing of banking companies
- 23 Restrictions on opening of new, and transfer of existing, places of business
- 24 Maintenance of a percentage of assets
- 25 Assets in India
- 26 Return of unclaimed deposits
- 26A Establishment of Depositor Education and Awareness Fund
- 27 Monthly returns and power to call for other returns and information
- 28 Power to publish information
- 29 Accounts and balance-sheet
- 29A Power in respect of associate enterprises
- 30 Audit
- 31 Submission of returns
- 32 Copies of balance-sheets and accounts to be sent to registrar
- 33 Display of audited balance-sheet by companies incorporated outside India
- 34 Accounting provision of this Act not retrospective
- 34A Production of documents of confidential nature
- 35 Inspection
- 35A Power of the Reserve Bank to give directions
- 35AA Power of the Central Government to authorize Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process
- 35AB Power of Reserve Bank to issue directions in respect of stressed assets
- 35B Amendments of provisions relating to appointments of managing directors, etc., to be subject to previous approval of the Reserve Bank
- 36 Further powers and functions of Reserve Bank
- 36A Certain provisions of the Act not to apply to certain banking companies
