Max Financial Services on Tuesday informed the exchanges that its minority shareholders have given their assent to the payment of Rs 850 crore as non-compete fee to Analjit Singh and family as part of the deal to merge Max Life Insurance with HDFC Life.
According to a stock exchange notification, 64.7 per cent of the minority shareholders gave their assent to the deal, while 35.3 per cent voted against it.
In a three-stage deal announced earlier, Max Life, the life insurance subsidiary of Max Financial Services, will merge with the parent. The life insurance business will then merge with HDFC Life. As part of this deal, Singh and his family will receive a non-compete fee of Rs 501 crore, payable after the transaction is completed. Singh will not be able to start a life insurance business for four years. Subsequently, the promoters will also receive three equal annual instalments totalling Rs 349 crore.
For the quarter ended June 2016, Xenok held 9.02 per cent, GS Mace Holdings held 6.44 per cent, while Moneyline Portfolio Investments held 9.95 per cent in Max Financial Services. Mutual funds held 16.71 per cent in Max Financial Services at the end of Q1 of FY17.
Max Financial had sought approval from its public shareholders, who together held 69.55 per cent in the company in June 2016, on the non-compete fee. For the proposal to be approved, Max Financial needed half of these shareholders to agree.