Page 50 - Insurance Times August 2020

holding - fit and proper declaration as specified in It is clarified that the provisions relating to transfer of
the IRDAI (Listed Indian Insurance Companies) shares as contained in (i) Section 6A(4)(b) of the
Guidelines, 2016 shall be provided to the insurance Insurance Act, 1938, and (ii) IRDAI (Transfer of Equity
company; Shares of Insurance Companies) Regulations, 2015 shall

(ii) Transfer of more than 1% but less than 5% of the apply mutatis-mutandis to the creation of pledge or any
paid up share capital - the transferor shall inform other kind of encumbrance over shares of an insurance
the Insurer immediately on execution of the company, by its promoters.
transaction. The transferor is required to ensure E. Suspension of the voting rights
compliance for any transaction(s) aggregating to Insurance companies shall immediately inform the
more than 1 per cent of the paid-up capital.
Authority if any non-compliance is observed with regard
2. Transfer of Shares above 5% of the paid up share to the provisions of the Insurance Act, the regulations
capital: and guidelines framed thereunder and the circulars
It is reiterated that in line with the provisions of the issued regarding the transfer of shares by the Authority.
Insurance Act, 1938 - Further, where transactions are executed beyond the
stipulated threshold limits by the shareholders, without
(i) Where the transfer of shares by the transferor, the prior approval of the Authority:
cumulative with his relatives, associate enterprises
and persons acting in concert will/is likely to exceed (i) the transferee shall not have any voting rights in
5% of the paid up share capital, such transferor any of the meetings of the insurance company;
shall seek the prior approval of the IRDAI as per (ii) the transferee shall promptly dispose of the excess
section 6A(4)(b)(iii) of the Insurance Act, 1938 read shares acquired, beyond the specified threshold limits.
with provisions of IRDAI (Listed Indian Insurance F. Action for Violation/ Non-Compliance
Companies) Guidelines, 2016.The application for
this purpose shall be filed through the concerned Any transfer of shares beyond the stipulated threshold
insurance company. limits without the prior approval of the Authority shall
attract appropriate regulatory action. This Circular shall
(ii) Similarly, any proposal for acquisition whereby the
transferee’s holding is likely to exceed 5% of the be scrupulously complied with and in case of violation/
paid up share capital of the insurance company, has non-compliance with the provisions of the Circular, the
to be submitted for prior approval to the IRDAI Authority may take necessary action as per the extant
through the concerned insurance company. legal and regulatory framework.
B. Determination of extent of transfer – Listed Pravin Kutumbe
and Unlisted Insurance companies Member (F&I)

(i) For the purpose of reckoning the quantum of
transfer/acquisition of shares, scenarios where Filing of “Corona Kavach Policy” as
transfer is executed in favour of one or more group health insurance product
parties, whether in a single or multiple transactions
aggregating to excess of 1 per cent or 5 per cent, IRDAI/HLT/REG/CIR/192/07/2020
the cumulative transfers made during a given Date:21-07-2020
financial year shall be considered. Accordingly,
whenever the specified limits are likely to exceed 1. Reference is drawn to Clause 3 of Section A of
in a financial year, the entity shall be under Guidelines on Covid Standard Health Policy (Ref: IRDAI/
obligation to seek the prior approval of the HLT/REG/CIR/163/06/2020 dated 26th June, 2020) vide
Authority. which all the general and health insurance companies
(ii) Listed companies: The provisions at (i) above shall (insurers) were mandated to offer Individual Covid
be applicable only with respect to the promoters/ Standard Health product, “Corona Kavach Policy”.
promoter group. Further, transfer includes Offer for 2. In partial modification of the above referred guidelines,
Sale as per SEBI (ICDR) Regulations by the existing Insurers are hereby allowed to offer Corona Kavach
shareholders, whether such shareholder is part of Policy as group product by duly complying with the
the promoter/promoter group or not. norms specified hereunder.

C. Pledge of Shares a. Insurers are allowed to use the standard product

50 The Insurance Times, August 2020