Share acquisition guidelines issued
The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines for acquisition of shares in listed insurance companies under which the acquirer will be required to adhere to the fit and proper criteria and seek regulators nod for owning voting rights beyond five percent.
“Every person who intends to make any transfer or any arrangement or agreement to transfer one percent or more but less than five percent of the paid up equity share capital of the concerned insurer, may do so, subject to compliance of Fit and Proper criteria,” stated the IRDAI (Listed Indian Insurance Companies) Guidelines, 2016.
The self-certification of the Fit and Proper criteria of the acquirer and filing with the concerned insurer shall be considered as deemed approval of the Authority…,”
For acquisition of five percent or more prior approval of the regulator would be needed, it said.
As of now no insurance company is listed, but ICICI Prudential Life plans to hit the capital markets with its initial public offer during the current fiscal year.
Irdai further stated it may undertake due diligence on the applicant to assess his ‘fit and proper’ status.
The guidelines stipulate that the minimum shareholding by promoters/promoter group should 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 per cent, such holding should be the minimum holding.
Further, the foreign investment in the insurance company at any point of time should be in accordance with the limits allowed under the Insurance Act, 1938, as reported in the Times of India.
Every insurance company will have to also ensure that it is compliant with ‘Indian owned and controlled’ guidelines.
The guidelines also state that any transfer or agreement to transfer the paid up equity shares capital of the concerned insurer would be subject to compliance of the “lock-in period requirement, if any, specified by the Authority.”
