Irdai proposes changes in listing requirements of insurance companies

The Insurance Regulatory and Development Authority of India (IRDAI) on Friday proposed removing the need for Indian insurance companies to seek prior approval from the regulator before listing on stock exchanges, subject to compliance with specified conditions.

The suggestion is made based on recommendations from the Regulation Review Committee (RRC) that consolidated existing regulation into IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Indian Insurance Companies) Regulations, 2024. The recommendations are expected to help enhance ease of doing business while ensuring protection of customer interests.

The insurance regulator has proposed the merger of seven different regulations namely: IRDAI (Registration of Indian Insurance Companies) Regulations, 2022; IRDAI (Other Forms of Capital) Regulations, 2022; IRDAI (Manner of Assessment of Compensation to Shareholders or Members on Amalgamation) Regulations, 2021; IRDAI (Issuance of Capital by Indian Insurance Companies transacting other than Life Insurance Business) Regulations, 2015; IRDAI (Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business) Regulations, 2015; IRDA (Scheme of Amalgamation and Transfer of Life Insurance Business) Regulations, 2013; and IRDA (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011, into the new regulation.

 

In November 2023, IPO-bound Go Digit General Insurance received a show-cause notice and multiple advisories from the Insurance Regulatory and Development Authority of India (IRDAI) for not disclosing a change in the conversion ratio of the compulsorily convertible preference shares (CCPS) issued by Go Digit Infoworks Services (GDISPL) to FAL Corporation, part of Canada-based Fairfax Financial Holdings.

The exposure draft also proposed instituting a provision that enables relaxation in the lock-in period if the insurance company or the shareholder is in financial distress or to facilitate the amalgamation of insurers or shareholders.

Additionally, the draft suggested that applicants seeking new registration need to provide more clarity on their capital structure.

Further, in the case of transfer of shares, the insurance companies are suggested to provide more clarity on the applicability of the requirement of prior approval for the transfer of shares.

The regulator has provided stakeholders and the public time until February 23, 2024, to give their inputs on the same.