New Delhi: The government would soon come out with rules for insurance companies who want to go for public issue 10 years before their operation as stipulated in the Insurance Act.
“Rules have to be framed (by the government) then only any insurance company can float initial public offer (IPO) even if it has not completed 10 years of operation clause,” official sources said.
Generally, framing of rules takes 3-4 months which are vetted by the law ministry, sources said.
These rules would help companies like Reliance Life Insurance and others to go for capital raising from the public even during the 10-year waiting period.
On Reliance Life’s request, sources said the law ministry has said there is no problem in allowing an insurance firm to go for an IPO but for that rules have to be in place.
It is to be noted that Reliance Life had requested the finance ministry to grant permission for an IPO by waiving off 10-year operation clause few months ago.
Subsequently, the ministry sought an opinion from the law ministry in this regard.
The 6AA provision of the Insurance Act, specifies that Indian promoters having more than 26% shareholding shall after 10 years reduce it in some appropriate manner or within such period the central government may decide.