Section 4C of The Small Industries Development Bank of India Act, 1989
1[4C. Issued capital.--(1) The issued capital, of the Small Industries Bank, of four hundred and fifty crores of rupees, immediately before the commencement of the Small Industries Development Bank of India (Amendment) Act, 2000, shall, on such commencement, stand divided into forty-five crores equity shares of rupees ten each.
- (2)The Board may, from time to time, increase the issued equity share capital or redeemable preference share capital of the Small Industries Bank by allotment of shares to such persons and on such terms and conditions as the Board may determine: Provided that no increase in the issued equity capital shall be made in such a manner that 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, hold in aggregate at any time, less than fifty-one per cent. of the issued equity share capital of the Small Industries Bank.]
Summary
- The issued capital of the Bank was exactly four hundred and fifty crores of rupees immediately before the Amendment Act of 2000 took effect.
- This original capital was divided into forty-five crore equity shares, with each share valued at ten rupees.
- The Board of Directors has the authority to increase the issued equity capital or redeemable preference share capital by allotting new shares.
- Any increase in equity shares comes with a strict condition, which is that specific government-controlled institutions (including the Development Bank, Life Insurance Corporation, and public sector banks) must never hold less than fifty-one percent of the total issued equity capital.
Practical examples
FAQ
1. What was the value of a single equity share before the year 2000 changes?
Each equity share was worth ten rupees.
2. Who decides if the Bank should issue more shares?
The Board of Directors determines when to increase the issued capital and to whom the new shares are allotted.
3. Can private investors ever own the majority of the Bank?
No, the Central Government and its specified institutions must always maintain at least fifty-one percent of the equity share capital.
Test yourself
Q1.Under Section 4C of The Small Industries Development Bank of India Act, 1989, what was the total issued capital immediately before the commencement of the Amendment Act of 2000?
Q2.Under Section 4C of The Small Industries Development Bank of India Act, 1989, which of the following institutions is NOT listed as part of the group that must collectively hold the minimum required percentage of issued equity share capital?
Q3.Under Section 4C of The Small Industries Development Bank of India Act, 1989, what is the minimum percentage of issued equity share capital that government-owned or controlled institutions must hold in aggregate at any time?
Q4.Under Section 4C of The Small Industries Development Bank of India Act, 1989, what type of shares can the Board increase by allotment, besides equity shares?