Page 46 - Insurance Times December 2015 SAMPLE

(b) In which the aggregate holdings of equity shares by Example 2: Foreign Total Foreign Holding
foreign investors, including portfolio investors, do not Company (directly and
exceed forty-nine per cent of the paid up equity capital Holds 100%
of such Indian insurance company, which is Indian owned indirectly) - 49%
and controlled, in such manner as may be prescribed. Indian
Company Indian
(c) Whose sole purpose is to carry on life insurance businessRight to control the management Company
or general insurance business or re-insurance business Holds 44%
or health insurance business. Holds 51%
and Policy
Let us understand, when the company will be termed as Insurance decisions
an IOC company with few examples. Company
Holds 5% (Company A)
Example 1:

Holds 100% Foreign Total Foreign Holding u Whether the Company A will be treated as an Indian
Company (directly and owned and controlled company?
Yes, since the resident Indian Company holds more than
IndianHolds 5% indirectly) - 49% 50 per cent of the equity capital of the Company A and
Company Holds 44% controls the Company through policy decisions the
Indian Company A will be treated as an Indian owned and
Company controlled Company.

Holds 51% Example 3:

Insurance Total Foreign Holding (directly and
Company indirectly) - 49.5%
(Company A)

u Whether the Company A will be treated as an Indian Holds 80% Holds 2% Right to appoint majority of directors
owned company?
Yes, the Company will be treated as an Indian owned Foreign Indian
Company since it complies with the requirement of Company Company
holding more than 50 per cent of the equity capital.
Indian Holds 44% Holds 75%
u Whether the Company A will be treated as an Indian Company
owned and controlled company? Indian
No, to be qualified as an Indian owned and controlled Company
company, both the conditions i.e. the Company needs
to be owned by resident Indian citizens or companies Insurance Holds
and the Company needs to be controlled by such 50.5%
resident Indian citizens or companies. Company
Holds 5% (Company A)

u Whether the Company A will be treated as an Indian
Insurance company?
No, Section 2(7A)(b) states that the Indian insurance
company means any insurer, being a company which is
limited by shares, and in which the aggregate holdings
of equity shares by foreign investors, including portfolio
investors, do not exceed forty-nine per cent of the paid

42 The Insurance Times, December 2015

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