Section 11: Provision on sale or pledging of Securities

1) The promoter of the bank or financial institution shall not be entitled to sell or pledge any share registered under his/her ownership for at least five years from the date of commencement of financial transactions.

2) Notwithstanding anything contained in sub-section (1), in case of arising a special circumstance due to the emergence of any obstruction or hindrance in the operation of the bank or financial institution or the promoter shareholder is included in the blocklist owing to transactions with another bank or financial institution, shares may be sold or brought amongst promoters by obtaining approval from the Rastra Bank.

Explanation:  For the purpose of this Section, “special circumstance” means failure to hold a meeting of the Board of Directors due to lack of quorum for a consecutive period of three times or a situation of indecision because of disputes amongst Directors.

3) If the promoter of the bank or financial institution wishes to sell or pledge the shares held in his/her name after five years from the date of commencement of financial transactions by the bank or financial institution, his/her may sell or pledge such shares by obtaining approval from the Rastra Bank subject to belong such share under the promoter’s group.

Provided that approval of the Rastra Bank shall not be required while selling or pledging the shares by the promoter having subscribed the shares of less than two percent of the paid-up capital.

4) Notwithstanding anything contained in sub-section (1) and sub-section (2) of Section 9, after completion of a period of ten years of transactions of bank or financial institution, the promoter shares may be converted into ordinary shares with the approval of the Rastra Bank by giving due consideration to impact it causes on the capital market, banking and overall financial sector.

5) In case any company or body corporate has subscribed promoter shares, prior approval of the Rastra Bank shall be obtained before the alteration of shareholders or sale or transfer of the ownership of shares among the shareholders having substantial ownership of such company or body corporate.

Provided that approval of the Rastra Bank shall not be required while selling or mortgaging the shares by a company or body corporate having subscribed the shares of less than two percent of the paid-up capital of the bank or financial institution.