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citizens or Indian companies, which are owned and defined under the Act, 2013 is wider than the same as
controlled by resident Indian citizens; explained under the Guidelines. However, in order to
ensure that the control is neither transferred nor influenced
Rule 2(l) defines the term Indian Ownership. However the by the foreign investors, Para 4 of the Guidelines specifies
same was amended through an Indian Insurance Companies five conditions which every Indian insurance company needs
(Foreign Investment) Amendment Rules, 2015 (hereinafter to ensure. The Indian promoter(s) or Indian Investor(s) shall-
referred to as "Amendment Rules, 2015") dated 8th July, i. Appoints majority of the directors excluding
2015 as under -
independent directors;
"Indian Ownership" of an Indian Insurance Company means
more than 50 per cent of the equity capital in it is ii. Appoints key management person including Chief
beneficially owned by resident Indian citizens or Indian Executive Officer / Managing Director /Principal officer,
companies, which are owned and controlled by resident if not, the same is routed through the Board of
Indian citizens provided that the manner of computation Directors;
of foreign holding of such Indian promoter or Indian
Investor, Company shall be in accordance with clause (p) of iii. Control over significant policies of the company is
rule 2. exercised by the Board (Board needs to be as specified
in (i));
Rule 3 states that the total foreign holding (incl. portfolio
investors) shall not exceed 49 per cent of the paid up capital iv. Nominate the Chairman, in case the Chairman of the
of the Indian Insurance Company which implies that the rest Board is having a casting vote;
holding needs to be in the hands of Indians. However, Rule
4 puts an additional condition that the Indian Insurance v. Quorum shall mean and include presence of majority
Company needs to be owned and controlled by resident of the Indian directors irrespective of whether a
Indian citizen. Undoubtedly the Rules 2015 has created lots foreign investor's nominee is present or not.
of confusion on part of compliances due to lack of clarity.
Indian Owned and Controlled (IOC)
Guidelines on Indian owned and
controlled The term Indian owned and controlled was introduced by
way of the Insurance Laws (Amendment) Ordinance, 2014
Indian Control which was then reproduced under the Amendment Act,
2015. Section 2(7A) of the Amendment Act, 2015 states as
The term "control" has been defined as an explanation to under -
clause (b) of Section 7(2A) of the Amendment Act, 2015 to
include the right to appoint a majority of the directors or "Indian insurance company" means any insurer, being a
to control the management or policy decisions included by company which is limited by shares, and, -
virtue of their shareholding or management rights or (a) Which is formed and registered under the companies
shareholders agreement or voting agreements.
Act,2013 as a public company or is converted into such
a company within one year of the commencement of
the insurance laws (Amendment) Act,2015;
Also, Section 2(27) of the Act, 2013 defines the term
"Control" as under-
Control shall include the right to appoint majority of the
directors or to control the management or policy decisions
exercisable by a person or persons acting individually or in
concert, directly or indirectly, including by virtue of their
shareholding or management rights or shareholders
agreements or voting agreements or in any other manner;
As manifested in the above text, the term control as
The Insurance Times, December 2015 41
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