The Insurance Regulatory and Development Authority (Irda) has imposed a penalty of Rs 10 lakh each on Bharti Axa Life Insurance Company Limited (BALIC) and Bharti AXA General Insurance Company Limited (BAGIC) for violating the provisions of registration regulations and not voluntarily intimating the changes in the ownership pattern.
In separate orders issued to BALIC Chief Executive Officer, Glenn Williams, and BAGIC chief executive officer, Amarnath Ananthanarayan, Irda asked both companies belonging to the same group to pay the penalty amount within 15 days of the receipt of the order. The orders have been posted on Irda’s website.
Irda imposed a penalty of Rs 5 lakh on both companies for restructuring the company in violation of the relevant provisions of regulation and an equal amount for not voluntarily intimating the changes in ownership pattern.
Irda said Bharti Ventures Limited, one of the promoters holding 40 per cent shareholding in the two insurance companies and owns 99 per cent by a partnership firm Bharti Enterprises, was converted into Bharti Enterprises (Holding) Private Limited with effect from January 8, 2010.
The insurance companies confirmed that Bharti Enterprises holds 97.57 per cent shares of Bharti Ventures.
“This change in the status of your promoter entity, M/s Bharti Enterprises from a partnership firm to a private limited company had conferred upon it the status of a subsidiary company in terms of Section 4 of the Companies Act, 1956,” Irda said, adding that the restructuring was found to be in violation of registration regulations.
According to Irda, in response to the show cause notices, the companies have not offered adequate reasons for the violations. In a personal hearing held on August 16, the insurers submitted that non-compliances were committed inadvertently and hence be condoned.
The regulating authority, however, said the contention on account of oversight “cannot be a valid ground to condone such non-compliance, which has serious implications on the overall shareholding structure of the company on the basis of which registration was granted to the insurer”.
Irda also said the non-compliance have serious implications on the regulatory status of the insurers, “which will be considered separately”.
