i.            These Guidelines shall be in addition to, and should be read with any other law for the time being in force, including the IRDAI (Transfer of Equity shares of Insurance Companies) Regulations, 2015;

                  ii.            These Guidelines shall be called Insurance Regulatory and Development Authority of India (Investment by Private Equity Fund or Alternate Investment Fund in Indian Insurance Companies) Guidelines, 2017;

                iii.            These Guidelines shall be applicable to unlisted Indian insurance companies and to the Private Equity Funds who have invested in the unlisted Indian insurance companies either as investor or as promoter;

                 iv.            These guidelines shall come into effect on the day of the issuance.

 

 

2.   Definitions: In these guidelines, unless the context otherwise requires, -

                         i.        “Act” means Insurance Act, 1938 (4 of 1938);

 

                       ii.        “Authority” means the Insurance Regulatory and Development Authority of India established under sub-section (1) of Section 3 of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);

 

                     iii.        “Private Equity Fund” includes an Alternative Investment Fund registered with SEBI under the SEBI (Alternative Investment Fund) Regulations, 2012 and / or a Fund specifically formed for investment in one or more entities by one or more persons.

 

Provided that foreign investment in such Fund will be determined in accordance with the guidelines issued by DIPP, Govt of India from time to time.

 

                     iv.        “Special Purpose Vehicle”, for the purpose of these Guidelines, means a company registered under the provisions of Companies Act, 2013 or a Limited Liability Firm formed under the Limited Liability Partnership Act, 2008 by the Private Equity Fund for the purpose of investment in insurance company as investor or promoter or both.  

 

                       v.        All words and expressions used herein and not defined, but defined in the Insurance Act, 1938 (4 of 1938) or in the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), or in any Rules or Regulations made thereunder, shall have the meaning respectively assigned to them in those Acts or Rules or Regulations.

 

3.      A Private Equity Fund may invest directly in an Indian insurance company in capacity of investor subject to compliance of the following conditions:

                    i.            Investment shall be as per the fund’s strategy reflected in its placement memorandum to its investors;

 

                  ii.            The Fund shall not hold shares in the insurance company exceeding ten percent of the paid up equity share capital of insurance company;

 

                iii.            All Indian investors including the investment by the Private Equity Fund /s jointly shall not hold more than twenty-five percent of paid up equity share capital of the insurance company;

 

                 iv.            The minimum shareholding by promoters / promoter group shall at all times be maintained at 50 percent of the paid up equity capital of the insurer. However, where the present holding of the promoters is below 50 percent, such holding shall be the minimum holding.

 

                   v.            The investment shall be subject to compliance of Fit and Proper criteria. A self-certification for “Fit & Proper” shall be filed along with the application for transfer of the shares. The determination as to Fit and Proper status shall be made on the basis of the criteria laid down in Annexure A read with part C below;

 

                 vi.            A specific undertaking shall be given by the Private Equity Fund/s to not to create any encumbrance on or leverage the investment;

 

               vii.            In case the investment is onetime, then the Private Equity Fund shall make an upfront disclosure to this effect.

 

4.      A Private Equity Fund may also invest in an Indian insurance company through a Special Purpose Vehicle either in capacity of promoter or investor. Where a Private Equity Fund (through an SPV) invests in an insurance company in capacity of Indian investor then the Private Equity Fund shall comply with the stipulations stated in para 3 above.

5.      A Private Equity Fund shall not be allowed to invest directly in an Indian insurance company in capacity of promoter. However, a Private Equity Fund can invest through a Special Purpose Vehicle in an Indian insurance company subject to the following:

 

               i.                 A Private Equity Fund through an SPV shall not be a promoter for more than one life insurer, one general insurer, one health insurer and one reinsurer;

 

             ii.                 Scheme to be filed with SEBI in accordance with the provisions of the relevant SEBI regulations, as applicable;

 

 

           iii.                 Investment shall be as per the fund’s strategy reflected in its placement memorandum to its investors and shall be made entirely out of own funds and not from borrowed funds;

 

            iv.                 The investment memorandum or the charter documents of the investor or the investment vehicle, as the case may be, must permit the investment to be made in the least upto the proposed limits including in respect of the future capital requirements of the insurance company;

 

              v.                 The investment shall be subject to compliance of Fit and Proper criteria. A declaration for “Fit & Proper” shall be filed with the Authority in the format given in Annexure-A. The determination as to Fit and Proper status shall be made on the basis of the criteria laid down in Annexure A read with Part-C below;

 

            vi.                 A specific undertaking to be given to not create any encumbrance on or leverage the investment made through borrowings;

 

          vii.                 The investments made shall be subject to a lock in period of five years. The lock in period shall be applicable on SPV and also on the shareholders of the SPV.

 

 

        viii.                 Any induction of new shareholder/s in SPV by issue of fresh shares beyond 25 percent shall require the prior approval of the Authority.

 

            ix.                 The minimum shareholding by promoters / promoter group shall at all times be maintained at 50 percent of the paid up equity capital of the insurer. However, where the present holding of the promoters is below 50 percent, such holding shall be the minimum holding.

 

              x.                 The Indian insurance company shall comply with Guidelines on “Indian owned and Controlled” issued by the Authority;

 

            xi.                 The Indian insurance company shall comply with the Indian Insurance Companies (Foreign Investment) Rules, 2015;

 

          xii.                 Chairman of the Board of the Indian Insurance Company shall be an independent director, failing which the CEO / Managing Director / WTD should be a professional and should not be a nominee of a promoter.

 

        xiii.                 At least one third of the directors on the Board of the insurance company must be independent directors;

 

        xiv.                 An undertaking to subscribe to the rights issue of the insurance company to be provided to ensure that the Indian insurance company is not cash strapped. 

 

          xv.                 An undertaking of the post lock in period divestment plan preferably through an IPO in accordance with the relevant regulation applicable for such divestment shall be submitted.

 

6.      Private Equity Funds shall, in addition, to the above shall comply with the provisions of IRDAI (Transfer of Equity Shares of Insurer) Regulations, 2015 including the filing of the application for transfer of the equity shares.

 

 

 

          i.          For acquisition of upto 10 per cent shareholding in the concerned insurer

a)        The applicant’s integrity, reputation and track record in financial matters and compliance with tax laws;

b)        Whether the applicant has been subject of any proceedings of a serious disciplinary or criminal nature, or has been notified of any such impending proceedings or of any investigation which may lead to such proceedings;

c)         Whether the applicant has a record or evidence of previous business conduct and activities where the applicant has been convicted for an offence under any legislation designed to protect members of the public from financial loss due to dishonesty, incompetence or malpractice;

d)        Whether the applicant or any of its promoters or promoter group has indulged in insider trading, fraudulent and unfair trade practices or market manipulation;

e)        Whether the applicant has achieved a satisfactory outcome as a result of due diligence conducted with the relevant regulator, revenue authorities, investigation agencies and credit rating agencies etc., as considered appropriate;

f)          Whether the applicant has a record of any serious financial misconduct, bad loans or whether the applicant was adjudged to be bankrupt;

g)        The source of funds for the acquisition;

h)        Where the applicant is a body corporate, its track record or reputation for operating in a manner that is consistent with the standards of good corporate governance, financial strength and integrity in addition to the assessment of individuals and other entities holding more than 1 percent of the capital of the body corporate as enumerated above.

 

        ii.          For acquisition in excess of 10 per cent shareholding in the concerned insurer

a)        All aspects as laid down in clause 7 (i) of these Guidelines;

b)        Sources and stability of funds for acquisition and the ability to access financial markets as a source of continuing financial support for the insurer;

c)         The business record and experience of the applicant including any experience in acquisition of business;

d)        The extent to which the corporate structure of the applicant will be in consonance with effective supervision and regulation of the insurer;

e)        Whether the applicant is a widely held entity, publicly listed and a well-established regulated financial entity in good standing in the financial community;

f)          The acquisition is in public interest;

g)        The acquisition is to secure the proper management of any insurer;

h)        The desirability of diversified ownership of insurer;

i)          Track record of the applicant;

j)          Shareholder agreements and their impact on control and management of the insurer.

 

8.      The interpretation of these regulations shall be that of the Chairperson of the Authority, whose decisions on all issues shall be binding on all applicants.

 

 

Member-Life &

 In-charge of Finance

___***___

 

Name of the insurer in which acquisition is sought:

Registration No.