Irda releases draft norms for listing of Indian insurers

New Delhi: Paving the way for listing of insurers, regulator Insurance Regulatory and Development Authority (Irda) on Wednesday proposed that the minimum shareholding by promoters should, at all times, be maintained at 50% of the paid-up equity capital.

“The minimum shareholding by promoters or the promoter group shall at all times be maintained at 50% of the paid-up equity capital of the insurer,” said the draft guidelines for listed Indian insurance companies. However, if the present holding of the promoters is below 50%, such would be the minimum holding.

In his Budget speech, finance minister Arun Jaitley had proposed the listing of four wholly-owned PSU general insurance companies. The four companies are New India Assurance Company, National Insurance Company, Oriental Insurance Company, United India Insurance Company.

Among others, HDFC Life and ICICI Prudential Life Insurance have announced plans to launch an initial public offering (IPO) and get listed. Currently, no Indian insurance company is listed. Furthermore, ownership limits for all shareholders other than promoters or the promoter group, in a definitive time frame, should be based on categorization of the shareholders under two broad categories—natural persons (individuals) and legal persons (entities/institutions).

A subsidiary company can invest in a listed insurance company, said Irda. Irda proposed that these guidelines would be applicable to all insurers that have listed their shares or are in the process of getting their shares listed on the stock exchanges in relation to transfer or proposed transfer of shares.

On provisions relating to transfer of shares, the draft said every person who intends to make any transfer or make any arrangement for transferring 1% or more but less than 5% of equity share capital of the concerned insurer, “may do so, subject to the compliance of fit and proper criteria”.

An acquisition, which is likely to take the aggregate holding of “such person together with shares held by him, his relatives, associate enterprises and persons acting in concert with him” to 5% or more of the paid-up equity share capital of the insurer will have to seek prior approval of Irda.