Common use of Minimum Equity requirements Clause in Contracts

Minimum Equity requirements. a. The aggregate shareholding of the Consortium Members (in case of Consortium) or Associate/s (in case of Individual Bidder) in the issued and paid up equity share capital of the Concessionaire (here the term “Concessionaire” connotes the special purpose company as formed by the Consortium Members or the individual Bidder) shall be not less than: (i) 100% for a period of two years from the Commercial Operation Date of the Project or issuance of Construction Completion Certificate (i.e. the Lock in Period); (ii) 26% till the Transfer Date/issuance of Concession Agreement Completion Certificate. b. Ii is pertinent to note here that in case of Consortium, the Lead Member of the Consortium and the Technical and O & M member shall maintain a minimum equity component of 26% each in the stipulated issued and paid up equity share capital of the Concessionaire as specified under Article 8.2(a)(i) at all time during the Lock in Period while the Lead Member shall continue to maintain the equity shareholding of 26% in the issued and paid up capital of the Concessionaire at all time till the Transfer Date/issuance of Concession Agreement Completion Certificate. This holds for the single entity bidder also and hence no Bidder who has 100% equity in the Project can dilute it to a level below 100% at any time during the Lock in Period. Remaining stake can be diluted as per the provisions of Article 8.2(a)(ii). c. At no stage shall any change in the Equity Components/ shareholding patterns be made by the Consortium Members or by any of the Associates without obtaining prior approval from the Authority. On an application made for the purpose, Authority may permit the change of Equity Components/ shareholding patterns, provided the Authority is satisfied that the proposed changes shall be in the interest of the implementation of the Project in future and would not be detrimental to any of the rights or interests of the Authority. However, no such change in the Equity Components/ shareholding pattern shall be permitted by Authority, which would make the Consortium Members or Associates or the Concessionaire non‐compliant with Articles 8.2(a) and 8.2(b) above. d. In case any such change in composition of Consortium has been agreed upon, the modified Consortium would be required to submit a revised Memorandum of Understanding to the Authority.