Section 3 in The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002
3. Registration of [asset reconstruction company] [Substituted by Act No. 44 of 2016.].
(1)No [asset reconstruction company] [Substituted by Act No. 44 of 2016.] shall commence or carry on the business of securitisation or asset reconstruction without(a)obtaining a certificate of registration granted under this section; and(b)[ having net owned fund of not less than two crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify:] [Substituted by Act No. 44 of 2016.]Provided that the Reserve Bank may, by notification, specify different amounts of owned fund for different class or classes of [asset reconstruction company] [Substituted by Act No. 44 of 2016.]:Provided further that a [asset reconstruction company] [Substituted by Act No. 44 of 2016.] existing on the commencement of this Act, shall make an application for registration to the Reserve Bank before the expiry of six months from such commencement and notwithstanding anything contained in this sub-section may continue to carry on the business of securitisation or asset reconstruction until a certificate of registration is granted to it or, as the case may be, rejection of application for registration is communicated to it.(2)Every [asset reconstruction company] [Substituted by Act No. 44 of 2016.] shall make an application for registration to the Reserve Bank in such [form] [Reserve Bank of India has specified the form of application for registration, vide Noti.No.DMNS.1/CCM (CSM)-2003, dated 7.3.2003.] and manner as it may specify.(3)The Reserve Bank may, for the purpose of considering the application for registration of a [asset reconstruction company] [Substituted by Act No. 44 of 2016.] to commence or carry on the business of securitisation or asset reconstruction, as the case may be, require to be satisfied, by an inspection of records or books of such [asset reconstruction company] [Substituted by Act No. 44 of 2016.] or otherwise, that the following conditions are fulfilled, namely:(a)that the [asset reconstruction company] [Substituted by Act No. 44 of 2016.] has not incurred losses in any of the three preceding financial years;(b)that such [asset reconstruction company] [Substituted by Act No. 44 of 2016.] has made adequate arrangements for realisation of the financial assets acquired for the purpose of securitisation or asset reconstruction and shall be able to pay periodical returns and redeem on respective due dates on the investments made in the company by the [qualified buyers] [Substituted by Act No. 44 of 2016.] or other persons;(c)that the directors of [asset reconstruction company] [Substituted by Act No. 44 of 2016.] have adequate professional experience in matters related to finance, securitisation and reconstruction;(d)[ * * *] [Omitted 'that the board of directors of such asset reconstruction company does not consist of more than half of its total number of directors who are either nominees of any sponsor or associated in any manner with the sponsor or any of its subsidiaries;' by Act No. 44 of 2016.](e)that any of its directors has not been convicted of any offence involving moral turpitude;(f)[ that a sponsor of an asset reconstruction company is a fit and proper person in accordance with the criteria as may be specified in the guidelines issued by the Reserve Bank for such persons;] [Substituted by Act No. 44 of 2016.](g)that the [asset reconstruction company] [Substituted by Act No. 44 of 2016.] has complied with or is in a position to comply with prudential norms specified by the Reserve Bank;(h)[ that [asset reconstruction company] [Inserted by the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004 (30 of 2004), Section 3 (w.e.f. 11.11.1004).] has complied with one or more conditions specified in the guidelines issued by the Reserve Bank for the said purpose.](4)The Reserve Bank may, after being satisfied that the conditions specified in sub-section (3) are fulfilled, grant a certificate of registration to the [asset reconstruction company] [Substituted by Act No. 44 of 2016.] to commence or carry on business of securitisation or asset reconstruction, subject to such conditions, which it may consider, fit to impose.(5)The Reserve Bank may reject the application made under sub-section (2) if it is satisfied that the conditions specified in sub-section (3) are not fulfilled:Provided that before rejecting the application, the applicant shall be given a reasonable opportunity of being heard.(6)Every [asset reconstruction company] [Substituted by Act No. 44 of 2016.] shall obtain prior approval of the Reserve Bank for any substantial change in its management [including appointment of any director on the board of directors of the asset reconstruction company or managing director or chief executive officer thereof] [Inserted by Act No. 44 of 2016.] or change of location of its registered office or change in its name:Provided that the decision of the Reserve Bank, whether the change in management of a [asset reconstruction company] [Substituted by Act No. 44 of 2016.] is a substantial change in its management or not, shall be final.Explanation. For the purposes of this section, the expression substantial change in management means the change in the management by way of transfer of shares [change affecting the sponsorship in the company by way of transfer of shares or] [Inserted by Act No. 44 of 2016.] or amalgamation or transfer of the business of the company.
