“Insurance Regulatory and Development Authority of India (Transfer of Equity Shares of Insurance Companies) Regulations, 2015” establishes guidelines for the transfer and issuance of equity shares by insurance companies. Here’s a detailed summary of these regulations:
Chapter I: General Provisions
Title and Commencement: These regulations are officially known as the Insurance Regulatory and Development Authority of India (Transfer of Equity Shares of Insurance Companies) Regulations, 2015, effective from the date of publication in the Official Gazette.
Definitions: Definitions include terms like “Act,” “Authority,” “Transfer of Shares,” “Shareholding Pattern,” “Indian promoter,” “Investor,” and other related terms.
Chapter II: Transfer of Shares
Registration of Transfer: Specifies that no transfer of shares or issue of equity capital resulting in a change in shareholding shall be registered without the prior approval of the Authority if:
The transfer results in any person’s shareholding exceeding 5% of the paid-up capital.
The nominal value of shares intended to be transferred exceeds 1% of the paid-up equity capital of the insurance company.
Application for Transfer: An application for approval must be made in Form A and accompanied by documents specified in Form B. This includes details of the proposed transferee, their financial strength, sources of funds, and other relevant information.
Chapter III: Conditions for Approval
Indian Promoters: Conditions include holding shares as approved by the Authority, potential requirements like a minimum lock-in period, and the necessity for additional capital infusion to maintain solvency.
Foreign Investors: Must comply with the Indian Insurance Companies (Foreign Investment) Rules, 2015. The Authority may impose conditions such as minimum lock-in periods and additional capital infusion requirements.
Ceiling on Holdings of Indian Investors: Specifies that no investor, excluding foreign investors, can hold more than 10% of an insurance company’s paid-up equity capital. Collectively, such investors cannot hold more than 25%.
Miscellaneous Provisions
Interpretation: The interpretation of these regulations is at the discretion of the Authority, whose decisions on all issues will be binding on all parties involved.
Forms: Includes Form A for the application for approval of transfer of shares and Form B for providing complete details of the proposed transferee.
These regulations are designed to ensure that the transfer of equity shares in insurance companies is conducted in a manner that protects the interests of stakeholders and maintains the stability and integrity of the insurance sector.
