G.S.R. 337(E).—Whereas, certain draft rules, namely, the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021, were published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), dated 15th April, 2021 under the notification of the Government of India in the Ministry of Finance (Department of Financial Services) number G.S.R. 266 (E), dated the 13th April, 2021, inviting suggestions from persons likely to be affected thereby within a period of fifteen days from the date on which they are published; And whereas suggestions received on the said draft rules were considered by the Central Government.
Now, therefore, in exercise of the powers conferred by clause (aaa) of sub-section (2) of section 114 of the Insurance Act, 1938, read with sub-clause (b) of clause (7A) of section 2 of the said Act, the Central Government hereby makes the following rules further to amend the Indian Insurance Companies (Foreign Investment) Rules, 2015, namely:—
1. (i) These rules may be called the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021.
(ii) They shall come into force from the date of their publication in the Official Gazette.
2. In the Indian Insurance Companies (Foreign Investment) Rules, 2015 (hereinafter referred to as the principal rules),—
(i) rule 2 shall be numbered as sub-rule (1) thereof, and in sub-rule (1) as so numbered,—
(I) clauses (c), (e), (k) and (l) shall be omitted;
(II) for clause (o), the following clause shall be substituted, namely:—
‘(o) “Resident Indian Citizen” shall have the meaning assigned to it in such policy as the Central Government may frame from time to time on foreign direct investment;’;
(III) for clause (p), the following clause shall be substituted, namely:—
‘(p) “Total Foreign Investment” in an Indian Insurance Company, shall mean the sum total of direct and indirect foreign investment by Foreign Investors in such company, calculated in such manner as is specified in regulations made by the Authority with regard to registration of Indian Insurance Companies;’;
(IV) clause (q) shall be omitted;
(ii) in rule 2, after the sub-rule (1) as so numbered, the following sub-rule shall be inserted, namely:—
“(2) Words and expressions used herein and not defined in these rules, but defined in the Act or in the rules or regulations made thereunder, shall have the same meanings respectively assigned to them in the Act or in the rules or regulations.”.
3. In the principal rules, in rule 3, for the word “forty-nine”, the word “seventy-four” shall be substituted.
4. In the principal rules, for rule 4, the following rules shall be substituted, namely:—
“4. (1) In an Indian Insurance Company having foreign investment,—
(a) a majority of its directors,
(b) a majority of its Key Management Persons, and
(c) at least one among the chairperson of its Board, its managing director and its Chief Executive Officer, shall be Resident Indian Citizens.
Explanation.—For the purposes of this rule and rule 9, the expression “Key Management Person” shall have the same meaning as assigned to it in guidelines made by the Authority on corporate governance for insurers in India.
(2) Every Indian Insurance Company having foreign investment, existing on or before the date of commencement of the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021, shall within one year from such commencement, comply with the requirements of the provisions of sub-rule (1).
4A. In an Indian Insurance Company having foreign investment exceeding forty-nine per cent.,—
(a) for a financial year for which dividend is paid on equity shares and for which at any time the solvency margin is less than 1.2 times the control level of solvency, not less than fifty per cent. of the net profit for the financial year shall be retained in general reserve; and
(b) not less than fifty per cent. of its directors shall be independent directors, unless the chairperson of its Board is an independent director, in which case at least one-third of its Board shall comprise independent directors.”.
5. In the principal rules, in rule 5, for the word “forty-nine”, the word “seventy-four” shall be substituted.
6. In the principal rules, in rule 8, for the letters “FEMA”, the words, figures and brackets “Foreign Exchange management Act, 1999 (42 of 1999)” shall be substituted.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification number G.S.R. 115 (E), dated the 19th February, 2015 and were subsequently amended by notification numbers G.S.R. 534(E), dated the 3rd July, 2015, G.S.R. 314(E), dated the 16th March, 2016 and G.S.R. 619(E), dated the 2nd September, 2019.
