Section 12 of The Banking Regulation Act, 1949: Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders.
Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders. – (1) No banking company shall carry on business in India, unless it satisfies the following conditions, namely:-
(i) that the subscribed capital of the company is not less than one-half of the authorised capital, and the paid-up capital is not less than one-half of the subscribed capital and that, if the capital is increased, it complies with the conditions prescribed in this clause within such period not exceeding two years as the Reserve Bank may allow;
[(ii) that, notwithstanding anything contained in the Companies Act, 1956, the capital of such banking company consists of-
(a) equity shares only; or
(b) equity shares and preference shares:
Provided that the issue of preference share shall be in accordance with the guidelines framed by the Reserve Bank specifYing the class of preference shares, the extent of issue of each class of such preference shares (whether perpetual or irredeemable or redeemable), and the terms and conditions subject to which each class of preference shares may be issued :-
Provided further that no holder of the preference share, issued by the company, shall be entitled to exercise the. voting right specified in clause (b) of sub-section (2) of section 87 of the Companies Act, 1956;]
(2) No person holding shares in a banking company shall, in respect of any shares held by him, exercise voting rights [on poll] [in excess of [ten per cent.] of the total voting rights of all the shareholders of the banking company.
[Provided that the Reserve Bank may increase, in a phased manner, such ceiling on voting rights from ten percent to twenty-six per cent.]
(3) Notwithstanding anything contained in any law for the time being in force or in any contract or instrument no suit or other proceeding shall be maintained against any person registered as the holder of a share in a banking company on the ground that the title to the said share vests in a person other than the registered holder:
Provided that nothing contained in this sub-section shall bar a suit or other proceeding-
(a) by a transferee of the share on the ground that he has obtained from the registered holder a transfer of the share in accordance with any law relating to such transfer; or
(b) on behalf of a minor or a lunatic on the ground that the registered holder holds the share on behalf of the minor or lunatic.
(4) Every chairman, managing director or chief executive officer by whatever name called of a banking company shall furnish to the Reserve Bank through that banking company returns containing full particulars of the extent and value of his holding of shares, whether directly or indirectly, in the banking company and of any change in the extent of such holding or any variation in the rights attaching thereto and such other information relating to those shares as the Reserve Bank may, by order, require and in such form and at such time as may be specified in the order.]
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