Equity Investors
Cap on Shareholding- No shareholder of the Securitisation Company/ Reconstruction Company can hold equity shares in excess of 50% of its share capital.
Investment in equity of other Securitisation Company/ Reconstruction Company (SC/RC) – A Securitisation Company/ Reconstruction Company, may as a sponsor and for the purpose of establishing a joint venture, invest in the equity share capital of other SC/RC formed for the purpose of asset reconstruction.
Option to convert debt into equity - Securitisation Companies / Reconstruction Companies (SC/RCs) are permitted to convert a portion of debt into shares of the borrower company as a measure of asset reconstruction provided their shareholding does not exceed 26% of the post converted equity of the company under reconstruction.
Foreign Investment in SC/RC- The ceiling for Foreign Direct Investment (FDI) in ARCs has been increased from 49% to 100% subject to the condition that no sponsor may hold more than 50% of the shareholding in an ARC either by way of Foreign Direct Investment (FDI) or by routing through a Foreign Institutional Investment (FII). The foreign investment limit of 100% in SC/RC would be a combined limit of FDI and FII/FPI.
Investment upto 49% can be done through automatic route, and beyond 49% on the Government route. The total shareholding of an individual FII shall not exceed 10% of the total paid-up capital. Equity Investors Investment by Trust Funds floated by Angels