22 July, 2015
- The Insurance Regulatory and Development Authority of India (‘IRDA’), has notified the Insurance Regulatory and Development of Authority of India (Transfer of Equity Shares of In- surance Companies) Regulations, 2015 (‘Transfer Regulations’), with effect from April 15, 2015. The salient features of the Transfer Regulations are as follows:
- The prior approval of the IRDA will be required for any transfer or issue of equity shares of an insurance company, which will result in a change in its shareholding, where:
- After the transfer, the total paid up holding of the transferee in the shares of the insurance company is likely to exceed 5% of its paid up capital; or
- The nominal value of the shares intended to be transferred exceeds 1% of the paid up equity capital of the insurance company.
- Further, the Transfer Regulations segregate shareholders of insurance companies into two categories, i.e. investors and Indian promoters. Investors are persons that are eligible to invest in the equity shares of insurance companies (including for- eign investors). The Transfer Regulations stipulate a ceiling on the holdings of In- dian investors, as follows:
- where there are one or more investors in an insurance company, no Indian investor will hold shares in an insurance company exceeding 10% of the paid up equity capital of such insurance company; and
- all Indian investors will not jointly hold more than 25% of the paid up equity share capital of the insurance company.
For further information, please contact:
Zia Mody, Partner, AZB & Partners