Minimum Capitalisation for NBFC

Chandan Kini (Querist) 18 September 2008 This query is : Resolved
Dear All,

As per Press Note 7 of 2008 issued by the DIPP (available on the DIPP website) the minimum capitalisation of foreign holding requirements are as follows:

1. US$ 0.5 million in case the shareholding percentage is below 51%
2. US$ 5 million in case the shareholding percentage is between 51% & 75% &
3. US$ 20 million in case the shareholding percentage is between 75% & 100%

I want to know whether such minimum capitalisation requirement will also include the premium at which the shares are issued? Or whether 0.5, 5 & 20 millions should make up the total nominal amount of the face value of shares only.

Also any Act, Rule, circular or notification or any other document where the definition of minimum capitalisation is given..

Would really appreciate an answer at the earliest.

Thanks in advance, Regards,

Chandan

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ARVIND JAIN (Expert) 18 September 2008
It is the face value of shares not including the premium paid.

Chandan Kini (Querist) 18 September 2008
Thanks a lot Arvind,

It would be nice if you could tell me provision of law or notification which defines or explains that premium is not included.

Regards,

Chandan