Page 27 - Life Insurance Today January 2018

proposed limits including in respect of the future that the Indian insurance company is not cash
capital requirements of the insurance company; strapped.

v. The investment shall be subject to compliance of xv. An undertaking of the post lock in period
Fit and Proper criteria. A declaration for “Fit & divestment plan preferably through an IPO in
Proper” shall be filed with the Authority in the accordance with the relevant regulation applicable
format given in Annexure-A. The determination as for such divestment shall be submitted.
to Fit and Proper status shall be made on the basis
of the criteria laid down in Annexure A read with 6. Private Equity Funds shall, in addition, to the above shall
Part-C below; comply with the provisions of IRDAI (Transfer of Equity
Shares of Insurer) Regulations, 2015 including the filing
vi. A specific undertaking to be given to not create of the application for transfer of the equity shares.
any encumbrance on or leverage the investment
made through borrowings; Part-C
vii. The investments made shall be subject to a lock 7. DETERMINATION OF “FIT AND PROPER” STATUS:
in period of five years. The lock in period shall be Illustrative criteria for determining “fit and proper”
applicable on SPV and also on the shareholders of status of applicants:
the SPV. In determining whether the Private Equity Fund or SPV is
Provided that the above said lock in period shall “fit and proper” to be a promoter / or investor of Indian
not be applicable on the shareholder / s of SPV insurance companies, the Authority may take into account
holding less than 10 percent capital of SPV; all relevant factors, as appropriate, including, but not
limited to the following:
viii. Any induction of new shareholder/s in SPV by
issue of fresh shares beyond 25 percent shall i. For acquisition of upto 10 per cent shareholding in the
require the prior approval of the Authority. concerned insurer
a) The applicant’s integrity, reputation and track
ix. The minimum shareholding by promoters / record in financial matters and compliance with
promoter group shall at all times be maintained tax laws;
at 50 percent of the paid up equity capital of the
insurer. However, where the present holding of b) Whether the applicant has been subject of any
the promoters is below 50 percent, such holding proceedings of a serious disciplinary or criminal
shall be the minimum holding. nature, or has been notified of any such
impending proceedings or of any investigation
x. The Indian insurance company shall comply with which may lead to such proceedings;
Guidelines on “Indian owned and Controlled”
c) Whether the applicant has a record or evidence
issued by the Authority;
of previous business conduct and activities where
xi. The Indian insurance company shall comply with the applicant has been convicted for an offence
the Indian Insurance Companies (Foreign under any legislation designed to protect
Investment) Rules, 2015; members of the public from financial loss due to
xii. Chairman of the Board of the Indian Insurance dishonesty, incompetence or malpractice;
Company shall be an independent director, failing d) Whether the applicant or any of its promoters or
which the CEO / Managing Director / WTD should promoter group has indulged in insider trading,
be a professional and should not be a nominee of fraudulent and unfair trade practices or market
a promoter. manipulation;
xiii. At least one third of the directors on the Board of e) Whether the applicant has achieved a satisfactory
the insurance company must be independent outcome as a result of due diligence conducted
directors; with the relevant regulator, revenue authorities,
xiv. An undertaking to subscribe to the rights issue of investigation agencies and credit rating agencies
the insurance company to be provided to ensure etc., as considered appropriate;

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Life Insurance Today January 2018 27

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