Query reg death of one Director in NBFC

[CA Kamal Mall]

Dear Professional,

We have an Investment Pvt. Ltd. NBFC company with a Net Owned Fund (NOF) of ₹10 crore, which meets the current regulatory requirement. The company presently has two directors.

One of the directors passed away on 5th April. We now need to appoint a new director. However, as per my understanding, if there is a change of more than 30% in the board composition of an NBFC, prior approval from the Reserve Bank of India is required.

Accordingly, we submitted an application to the RBI about 5 days ago but are uncertain how long the approval process will take.

In this situation, my query is:
Can the company continue to operate with only one director until RBI approval is received? If yes, we can wait for approval. If not, what course of action should we take to remain compliant?

Regards

CA. Kamal Mall (कमल मल्ल)

Partner

Kamal Mall & Co.

Mob- 9831567000 / 9883567000

[Arun Kumar Maitra]

The Reserve Bank of India (RBI) does not prescribe a strict statutory timeline for approving changes in board composition. However, in practice, obtaining approval for a "change in management" (which triggers when more than 30% of the board changes) typically takes between 3 to 6 months.

CA CS Arun Kumar Maitra

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