News & Updates
July 31, 2020 12:02 pm

IRDAI ISSUED AN IMPORTANT CLARIFICATION ON THE ASPECT OF TRANSFER AND ISSUANCE OF SHARES IN INSURANCE COMPANIES

Last week, the Insurance Regulatory and Development Authority of India (IRDAI) issued an important clarification on the aspect of transfer and issuance of shares of insurance companies.

The key takeaway is that if a shareholder exceeds the 1% or 5% (as the case may be) threshold of share acquisitions over multiple transactions in a financial year, the IRDAI will consider all such transactions cumulatively to determine whether prior IRDAI approval was necessary.

Previously, shareholders would undertake multiple acquisition transactions in a financial year, but keep each individual transaction below the threshold trigger for IRDAI approval, and in this way avoid having to seek IRDAI’s prior approval. This will not be possible anymore.

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