What is Core Investment Company?
- Review of Eligibility Norms for CIC
- Filing of Application with RBI
- Lisoning & Responding to RBI queries
- Certificate of Registration from RBI
- Developing Robust Compliance Mechanism
Core Investment Company is a type of NBFC which hold shares, bonds and debentures but are not allowed to trade in any of the instruments they hold.
Key features of the company are :
- At least 90% of its total assets should be in form of investment of any of the listed i.e. equity shares, preference shares, debentures, debt or loan in the group.
- At least 60% of its net assets should be in form of investment in the equity shares as on the date of last audited balance sheet.
- It should not trade in its own investment in form of shares, bonds, debentures or debt or loan in its own group companies, except through block safe for dilution or disinvestment
- It carry out any activity mentioned in section 45-1(C) and 45-1(F) of the RBI Act, except investing in-
– Bank Deposits
– Money Market Instruments
– Government Securities
– Guarantees Issued on behalf of Group Companies
– Bonds or Debentures issued by Group Companies /Loans to Group Companies
What are types of Core Investment Company?
Basically any Core Investment Company can be categorized in one of the below mentioned types:
Documents required for registration as CIC
RBI mentions a comprehensive list of all the documents to register itself as CIC , nearly 52 documents are required but still that itself is not an exhaustive list, RBI may ask for other necessary documents , if required.
- Details of access to Public Funds.
- Application to be submitted in two separate sets tied up properly in two separate files and properly page numbered.
- Identification particulars (Annex I).
- Statement on prudential norms (Annex II).
- Details of change in the management of the company during last financial year till date if any and reasons thereof.
Regulatory framework to be followed by RBI:
- If the asset size of the company after aggregation of the entire group is not more than Rs 100 crore will not require registration with RBI.
- Even if the asset size of the company is more than Rs 100 crore but it does not access public funds will also not require registration with RBI.
Why is the need of Core Investment Company?
With all the strict conditions imposed on NBFC, if NBFC forms itself as investment firm , it needs to get itself registered under section 45-1A of the RBI Act, 1939. Now such formed firms are also scrutinized subjected to NBFC regulations, even though they do not accept any public deposits. Whereas when it comes to Core Investment Company, the requirement to be registered is little relaxed and many such companies are exempted.
Frequently Asked Questions on What is Core Investment Company?
If a single group has more than one company with total asset size of more than 100 crores, then in such case does the company require registration with bank?
Yes, in such a case registration with bank would be required. Infact, each company of the group that are core investment company will be treated as CIC-ND-SI, provided that they have access to public funds.
What all items can be included in remaining 10% of the net assets outside the group?
The remaining 10% can either be real estate or any other fixed assets which are necessary for the proper functioning of the company, but it can not involve other financial investments or loans in companies which are not in group.
Is there any provision to use statutory assets that are not dated 31st March?
While any such account will be taken in consideration keeping the view of the fact that changes do happen on the balance sheet even after 31st March. But all NBFC’s including CIC-ND-SI would necessarily have to finalize all their accounts as on the last day of the financial year and along with that submit all their annual certificates based on the report.
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