Core Investment Companies are limited companies which hold equity shares, and also preference shares or debentures in other group companies. Very often these companies are primarily establishing as group businesses and they control the subsidiaries through holding majority shareholding.
Core Investment Companies are not allowed to do trading of shares or debentures. In other words, a Core Investment Company (CIC) is essentially a company which holds the stake in the group companies without practically being involved in its trading. A core investment company is also defined by the Reserve Bank of India as Non-Banking Financial Company (CIC).
Classification of Core Investment Company/CIC
Core Investment Company can be classified into two categories: CIC-ND- Non Systemically Important (NSI) and CIC-ND- Systemically Important (SI).
- Non-Systemically Important CIC (NSI): It is a non-deposit taking CIC which has an asset size of less than Rs. 100 crore according to the last audited balance sheet.
- A Systemically Important CIC (SI): It is a CIC that has total assets of Rs. 100 crore or more whether individually or collectively along with other CICs in the Group according to the last audited balance sheet, and holds or raises public funds.
Prerequisites for Registering a Core Investment Company
Every Company which wants a certificate of CIC should apply for systemically important Core Investment Company (CIC-ND- SI). For registration as a CIC, the company must satisfy the below conditions as on the date of last audited balance sheet:
- Company should hold at least 90% of its net assets, in the form of preference shares, bonds, debentures, investment in equity shares, debt or loans in group companies.
- Its investment in the equity shares in group companies is at least 60% of its net assets.
- It does not trade in its investments in bonds, debentures, shares, debt or loans in group companies except by block sale for dilution or disinvestment.
- It carries out the financial activity according to the Section 45-I(c) and 45-I(f) of the RBI Act, 1934 except investment in
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