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Title: Exposure Draft
Reference No.: --
Date: 28/09/2015
IRDAI (Issuance of Capital by Indian Insurance Companies transacting other
Insurance Laws (Amendment) Act 2015 has deleted section 6AA which provided for compulsory divestment of the holding of Indian promoter. The Act has also carried out amendments to the section 6A.
In exercise of the powers conferred by Section 114A read with Section 6 of the Insurance Act, 1938 (4 of 1938), sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Insurance Regulatory and Development Authority of India, in consultation with the Insurance Advisory Committee, proposes to substitute the Insurance Regulatory and Development Authority (Issuance of Capital By General Insurance Companies) Regulations, 2013 with the the attached draft Regulations.
The draft regulations includes the following
1. It allows an insurance company to go for IPO subject to compliance of lock-in period specified at the time of grant of certificate of registration.
2. Public Sector Undertaking can go for IPO subject to compliance of the provisions of 10B of the General Insurance Business (Nationalisation) Act, 1972
3. It empowers the Authority to issue direction to an Indian insurance company to go for IPO if the circumstance warrants so. Such company, within a period of one year from the date of such direction shall comply with these Regulations;
4. No provisions for mandatory divestment;
5. Applicant Company can issue the shares as fully paid up. In case partly paid up shares have been issued, Applicant Company shall not allow any period exceeding one year for payment of calls on the shares;
6. Criteria for consideration for approval to include compliance of “Indian owned & controlled” criteria as defined in explanation 2(7A) (b) read with Indian Insurance Companies (Foreign Investment) Rules, 2015
7. Provides for the following additional disclosures:
o Agent Productivity;
o Value of New Business;
o Investment in Equity and Bonds – yield, exposure to each industry and total investment;
o Reinsurance Strategy; and
o Significant Accounting Policies
8. In order to ensure compliance of the provisions of Section 6A, condition for approval shall include the following:
“The modification in the Article of the Association of the Applicant so as to explicitly provide that no transfer beyond the limit specified in Section 6A shall be registered without the approval of the Authority”
9. Others :
o Provision for extension of validity period of the Approval of the Authority by another six month;
o Lock in period to be applicable to Investors also;
o Delinking of “Excess Shareholding”;
All are requested to offer their valuable comments / suggestions on the proposed regulations for consideration of the same.
The comments/suggestions should reach us by 9th October, 2015 in the format attached to the undersigned by e-mail at rksharma@irda.gov.in with a copy to Dr. Mamta Suri, HOD-F&A at mamta@irda.gov.in
R K Sharma
Joint Director
