Section 3:
Registration of asset reconstruction companies.
3. Registration of 1[asset reconstruction companies].--(1) No 2[asset reconstruction company] shall
commence or carry on the business of securitisation or asset reconstruction without--
(a) obtaining a certificate of registration granted under this section; and
3[(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;]
Provided that the Reserve Bank may, by notification, specify different amounts of owned fund for
different class or classes of 2[asset reconstruction companies]:
Provided further that a 1[asset reconstruction company], 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 1[asset reconstruction company] shall make an application for registration to the Reserve
Bank in such form and manner as it may specify.
(3) The Reserve Bank may, for the purpose of considering the application for registration of a 1[asset reconstruction company] 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 1[asset reconstruction
company], or otherwise, that the following conditions are fulfilled, namely:--
(a) that the 1[asset reconstruction company] has not incurred losses in any of the three preceding
financial years;
(b) that such 1[asset reconstruction company] 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 4[qualified buyers]or other persons;
(c) that the directors of 1[asset reconstruction company] have adequate professional experience in
matters related to finance, securitisation and reconstruction;
5* * * * *
(e) that any of its directors has not been convicted of any offence involving moral turpitude;
6[(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;]
(g) that 1[asset reconstruction company] has complied with or is in a position to comply with
prudential norms specified by the Reserve Bank;
7[(h) that 1[asset reconstruction company] 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 1[asset reconstruction company] to commence or carry on
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 1[asset reconstruction company] shall obtain prior approval of the Reserve Bank for any
substantial change in its management 8[including appointment of any director on the board of directors of
the asset reconstruction company or managing director or chief executive officer thereof] 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 1[asset
reconstruction company] 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 or 8[change affecting the sponsorship in
in the company by way of transfer of shares or] amalgamation or transfer of the business of the company.
Notes:
1. Subs. by Act 44 of 2016, s. 3, for "securitisation company or reconstruction company" (w.e.f. 1-9-2016).
2. Subs. bys. 3,ibid., for "securitisation companies or reconstruction companies" (w.e.f. 1-9-2016).
3. Subs. by s. 5, ibid., for clause (b) (w.e.f. 1-9-2016).
4. Subs. bys. 3,ibid.,for "qualified institutional buyers" (w.e.f. 1-9-2016).
5. Omitted by s. 5, ibid. (w.e.f. 1-9-2016).
6. Subs. by s. 5, ibid., for clause (f) (w.e.f. 1-9-2016).
7. Ins. by Act 30 of 2004, s. 3 (w.e.f. 11-11-2004).
8. Ins. by s. 5, ibid. (w.e.f. 1-9-2016).