Section 20A of The Small Industries Development Bank of India Act, 1989
1[20A. Free transferability of shares.--(1) Save as otherwise provided in sub-section (2), the equity shares of the Small Industries Bank shall be freely transferable.
- (2)Nothing contained in sub-section (1) shall entitle the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government to transfer any shares held by them in the Small Industries Bank if such transfer will result in reducing the equity shares held in aggregate by them to less than fifty-one per cent. of the issued equity share capital of the Small Industries Bank.]
Summary
- The equity shares of the bank can generally be transferred freely from one person or entity to another.
- There is a strict restriction on certain government entities, such as the Development Bank, public sector banks, and government insurance corporations.
- This ensures the government and its institutions permanently maintain majority control of the bank.
Practical examples
FAQ
1. Can anyone buy and sell shares of the bank?
Generally yes, as the equity shares are stated to be freely transferable for most shareholders.
2. Which specific institutions face this transfer restriction?
The Development Bank, public sector banks, the General Insurance Corporation, the Life Insurance Corporation, and other institutions owned or controlled by the Central Government.
Test yourself
Q1.Under Section 20A of The Small Industries Development Bank of India Act, 1989, what is the general rule for the bank's equity shares?
Q2.Under Section 20A of The Small Industries Development Bank of India Act, 1989, what is the minimum combined ownership percentage that certain government institutions must maintain?
Q3.Which of the following entities is NOT specifically restricted from transferring shares below the collective 51 percent limit under Section 20A of The Small Industries Development Bank of India Act, 1989?
Q4.Under Section 20A of The Small Industries Development Bank of India Act, 1989, what happens if the General Insurance Corporation wants to sell shares but it would drop the combined government institutional holding to 50 percent?