In an attempt to regulate the corporate holding company structures, the Reserve Bank of India (RBI) on 21 April announced a proposed regulatory framework for governing core investment companies (CICs) with an asset size of more than Rs1 billion (US$22.5 million).
This follows announcements made by the RBI in its annual monetary policy statement a day earlier, where CICs were referred to as companies which have their assets predominantly as investments in shares not for trading but for holding stakes in group companies. CICs also do not carry on any other financial activity.
While earlier all CICs were required to obtain a certificate of registration from the RBI, the new framework proposes to exempt CICs with asset size of less than Rs1 billion from RBI supervision subject to certain conditions given in the RBI circular.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
