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Section 6 – The State Financial Corporations (Amendment) Act,2000

The State Financial Corporations (Amendment) Act,2000

Section 6. Insertion of new section 4D

After section 4C of the principal Act, the following sections shall be inserted, namely:-

“4D. Issue of redeemable preference shares.

(1) On and after the commencement of the State Financial Corporations (Amendment) Act,2000, the Financial Corporation may-

(a) Issue redeemable preference shares on such terms and in such manner as the Board may decide; and

(b) convert, such number of equity shares as it may decide into redeemable preference shares, with the prior approval of the State Government and the Small Industries Bank, by a resolution passed in the general meeting of the shareholders:

Provided that such conversion shall in no case reduce the equity shares held by the parties referred to in clauses (a), (b) and (c) of sub-section (3) of section 4 to less than fifty-one per cent. of the issued equity capital of the Financial Corporation

(2) The redeemable preference shares referred to in sub-section (1) shall-

(a) Carry such fixed rate of dividend as the Financial Corporation may specify at the time of such issue or conversion; and

(b) Neither be transferable nor carry any voting rights

(3) The redeemable preference shares referred to in sub-section (1) shall be redeemed by the Financial Corporation in such instalments and in such manner as the Board may determine

4E. Reduction of share capital.

(1) The Financial Corporation, with the prior approval of the State Government and the Small Industries Bank, may, by resolution passed in a general meeting of the shareholders, reduce its share capital in any way (2) Without prejudice to the generality of the foregoing power, the share capital may be reduced by-

(a) Extinguishing or reducing the liability on any of its equity shares in respect of share capital not paid-up; or

(b) Either with or without extinguishing or reducing liability on any of its equity shares, cancelling any paid-up share capital which is lost or is unrepresented by available assets; or

(c) Either with or without extinguishing or reducing liability on any of its equity shares, paying off any paid-up share capital which is in excess of the wants of the Financial Corporation

4F. Restriction on exercising of voting right.

Every shareholder of the Financial Corporation holding equity shares shall have a right to vote in respect of such shares on every resolution and his voting right on a poll shall be in proportion to his share of the paid-up equity capital of the Financial Corporation:

Provided, however, that no shareholder, other than a shareholder referred to in clauses (a), (b) and (c) of sub-section (3) of section 4, shall be entitled to exercise voting rights in respect of any equity share held by him in excess of ten per cent. of the issued equity capital

4G. Proxy voting.

In a general meeting referred to in clause (b) of sub-section (1) of section 4D and sub-section (1) of section 4E, the resolution for conversion or reduction of share capital shall be passed by shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of votes, if any, cast against the resolution by shareholders so entitled and voting

4H. Transfer of share capital to Small Industries Bank.

On such date as the Central Government may, by notification in the Official Gazette, notify (hereinafter referred to as the notified date) all the shares of every Financial Corporation subscribed by the Development Bank and the amount outstanding in respect of loans in lieu of capital provided
by the Development Bank as on the date immediately preceding the notified date, shall stand transferred to, and vested in, the Small Industries Bank, such transfer shall be at such rate and be paid in cash or such other manner as may be mutually agreed upon between the Development Bank and the Small Industries Bank.”

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The State Financial Corporations (Amendment) Act,2000

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