The Insurance Regulatory and Development Authority (Irda) today said companies planning to raise share capital through public issues and firms reducing promoters’ share have to first secure the approval of the authority.
The regulator also issued draft guidelines—Irda (Issues of Capital and Disclosure Requirements for Life Insurance Companies) Regulations, 2011—prescribing the norms for initial public offerings or dilution of promoters' stake for life insurers.
To secure such an approval, an insurer would have to complete 10 years in the insurance business, have a satisfactory regulatory record, maintain the prescribed regulatory solvency margin at the end of the preceding six quarters and comply with the disclosures requirements and Irda's corporate governance guidelines. Apart from meeting these conditions, the company would also an have embedded value of at least twice the paid-up equity capital.
“The authority reserves the right not to accord its prior approval if, in its opinion, the applicant company is not fit to tap the markets through a public issue or where it may be detrimental to the interests of policyholders, or it may not be in the interest of the insurance business in the country,” Irda said in the draft guidelines. The regulator has sought opinions and suggestions on the guidelines by June 30.