The Insurance Regulatory and Development Authority of India (IRDAI) issued an order against an insurance broker after identifying two major regulatory violations during the renewal review of its Certificate of Registration. First, the broker failed to obtain prior IRDAI approval before implementing significant shareholding changes in February and May 2024, despite the transactions exceeding prescribed thresholds under the IRDAI (Insurance Brokers) Regulations, 2018. Second, the broker’s net worth fell below the mandatory minimum requirement of ₹50 lakh and remained negative from March 2023 to March 2024, resulting in prolonged non-compliance. The broker attributed the lapses to administrative oversight, post-pandemic operational losses, technology investments, and market conditions, while highlighting subsequent corrective measures and financial recovery. Considering the broker’s explanations, improved financial position, restoration of net worth, and compliance initiatives, IRDAI chose not to impose a monetary penalty and instead issued warnings for both violations, directing the broker to ensure strict future compliance and place the order before its Board for corrective action.
Insurance Regulatory and Development Authority of India
Order No. IRDAI/INT/ORD/MISC/71/5/2026 Date: 21 May, 2026
Order of Insurance Regulatory and Development Authority of India
in the matter of M/s Omega Insurance Broking Services Private Limited
Based on the:
1. Show Cause Notice (hereinafter referred to as “SCN”) with reference No. IRDAI/INT/BRK/DB 809/20/SCN dated 24th February, 2026, issued to M/s Omega Insurance Broking Services Private Limited (hereinafter referred to as “the Broker”).
2. Response to the above SCN made by the Broker in their reply dated 13st March, 2026.
3. Response of the Broker dated 20th March, 2026 declining personal hearing.
Background
4. The Insurance Regulatory and Development Authority of India (hereinafter referred to as “the Authority”) received an application bearing URN No. BR-RNW-14441-2024 dated 25th March, 2024 from the Broker, seeking renewal of its Certificate of Registration (CoR) to continue acting as a Direct (Life and General) Insurance Broker for the period from 11th May, 2024 to 10th May, 2027, in accordance with Regulation 14 of the IRDAI (Insurance Brokers) Regulations, 2018 (hereinafter referred to as “the Regulations”). The CoR was renewed on 10th May, 2024.
5. During the processing of the renewal application and the material submitted therewith, certain regulatory violations and non-compliances were observed, which required further examination.
6. Accordingly, the Authority engaged in several correspondences with the Broker seeking clarifications and additional information in respect these specific observations.
Show Cause Notice, Reply and Personal Hearing
7. After examination of the information and submissions made by the Broker, and without prejudice to the renewal of the Certificate of Registration granted in the interim, a Show Cause Notice dated 24th February, 2026 was issued to the Broker for the alleged violation of the following provisions of the Regulations:
A. Violation of Regulation 25(2) read with Clause (1) of Schedule II, Form T of the Regulations
B. Violation of Regulation 22(1) of the Regulations
8. The Broker submitted its reply to the Show Cause Notice (SCN) on 13th March, 2026. Further, vide its submission dated 20th March, 2026, the Broker did not avail a personal hearing in the matter.
9. The charges set out in the SCN dated 24th February, 2026, the Broker’s written reply dated 13th March, 2026 has been duly considered. The Authority’s findings and decision on the charges are detailed hereunder.
Charge 1- Violation of Regulation 25(2) read with Clause (1) of Schedule II, Form T of the IRDAI (Insurance Brokers) Regulations, 2018
10. Regulation 25(2) read with Clause 1 of Schedule II, Form T, inter-alia, reads as: “1. The insurance broker shall seek prior approval of the Authority for transfer of shares or issue of equity capital of an insurance broker which would result in change in the shareholding, where:
a. after transfer, the total paid-up capital holding of the transferee in the shares of the insurance broker is likely to exceed twenty per cent of its paid-up capital; or
b. the nominal value of the shares intended to be transferred by an individual, or group, constituents of a group or body corporate under the same management, jointly or severally exceeds ten per cent of the paid-up capital of the insurance broker.”
Observations
11. It is observed that the Broker effected changes in its shareholding on 12st February, 2024 and 08th May, 2024. The joint/cumulative change in the shareholding pattern on account of the said transactions were 25% and 13.43% respectively, which exceeded ten per cent of its paid-up capital, the limit beyond which approval of the Authority is required as stipulated in under Regulation 25(2) read with Schedule II – Form T of the Regulations. The Broker did not seek prior approval of the Authority as mandated under Regulation 25(2) read with clause (1) of Schedule II – Form T of the Regulations, for the transfer of the shareholdings of the above mentioned values.
12. The shareholding pattern of the Broker as on 12.02.2024 is summarised below:
| SN | Name of the
shareholders |
Prior to allotment /
transfer of shares (A) |
After the allotment / transfer of shares (B) | Promoter / Investor | ||
| No. of
shares held |
% of
capital |
No. of
shares held |
% of
capital |
|||
| 1 | Prasada Kamineni | 5,87,500 | 42.94 | 3,41,975 | 25 | Promoter |
| 2 | Valluru Sharan | 3,76,650 | 27.53 | 3,41,975* | 25 | Promoter |
| 3 | Praneeth Sai
Bobba |
2,500 | 0.18 | – | – | Promoter |
| 4 | Sai Satwik
Kamineni |
4,01,250 | 29.33 | 3,41,975 | 25 | Promoter |
| 5 | Rajesh Prasad | – | – | 3,41,975 | 25 | Investor |
| Total | 13,67,900 | 100% | 13,67,900 | 100 | ||
13. The shareholding pattern of the Broker as on 08.05.2024 is summarised below:
| SN | Name of the Shareholders | Prior to allotment / transfer of shares (A) | After the allotment / transfer of shares (B) | Promoter / Investor | ||
| No. of
shares held |
% of
capital |
No. of
shares held |
% of
capital |
|||
| 1 | Prasada Kamineni | 3,41,975 | 24.81 | 5,41,975 | 28.86 | Promoter |
| 2 | Valluru Sharan | 3,51,975* | 25.54 | 3,51,975 | 18.74 | Promoter |
| 3 | Sai Satwik
Kamineni |
3,41,975 | 24.81 | 6,41,975 | 34.19 | Promoter |
| 4 | Rajesh Prasad | 3,41,975 | 24.81 | 3,41,975 | 18.21 | Investor |
| Total | 13,77,900 | 100% | 18,77,900 | 100 | ||
*The difference in the figures in the two tables is due to the change that was carried out on 30.03.2024 as mentioned in the table below at S.No. (7)
It was also observed that on multiple instances, issuance of capital was carried out by the Broker that resulted in change in shareholding as mentioned below-
| S.No. | Date of issuance of capital | Percentage change in shareholding |
| 1 | 06.06.2021 | 2.78% |
| 2 | 30.03.2022 | 1.05% |
| 3 | 24.03.2023 | 2.22% |
| 4 | 13.09.2023 | 4.38% |
| 5 | 01.11.2023 | 1.78% |
| 6 | 20.12.2023 | 1.35% |
| 7 | 30.03.2024 | 0.54% |
The said changes were not intimated to the Authority by the Broker either.
Submission of the Broker (Verbatim)
14. Regarding the transfer of shareholding beyond the limit stipulated, the Broker submitted that – ‘the induction of new shareholder was due to him being an established CA with sizeable client base wherein we anticipated his contributions shall take immediate effect in adding value to the financial growth of the company which was need of the hour. He is “Fit and Proper” as per the guidelines stipulated. This was also an internal realignment that did not result in a change of “Ultimate Beneficial Ownership” or the management control of the firm. The omission to seek prior approval was an inadvertent administrative oversight and was not intended to circumvent any regulatory oversight. We have updated our internal Compliance Manual to ensure all future equity movements are flagged 30 days in advance for prior approval’.
Decision of the Authority:
15. It is an admitted position that the Broker did not obtain prior approval of the Authority before effecting changes in its shareholding pattern on 12st February, 2024 and 08th May, 2024, which formed the basis of the charge in the SCN dated 24th February, 2026.
16. In view of the above facts and circumstances, it is evident that the Broker has violated Regulation 25(2) read with clause (1) of Schedule II – Form T of the Regulations. However, as it presently stands, considering the submissions made by the Broker and the corrective steps initiated by the Broker, the Authority deems it appropriate to issue a warning to the Broker for failure to obtain prior approval for change in its shareholding pattern. The Broker is advised to ensure strict and continuous compliance with the regulatory requirements in future, failing which appropriate action shall be initiated as per law.
Charge 2 – Violation of Regulation 22(1) of the IRDAI (Insurance Brokers) Regulations, 2018
17. Regulation 22(1) reads as:
“(1) The net-worth of an Insurance Broker shall at no time during the period of certificate of registration fall below:
i. rupees fifty lakh for direct broker…”
Observations
18. The net worth of the Broker for the relevant periods, as submitted in Annexure IA, is as under:
| S.No | Date | Net worth (Rs.) |
| 1 | September 2022 | 50,67,218 |
| 2 | March 2023 | (8,03,233) |
| 3 | September 2023 | (11,84,466) |
| 4 | March 2024 | (10,28,020) |
| 5 | September 2024 | 52,16,523 |
| 6 | March 2025 | 1,48,79,245 |
| 7 | September 2025 | 2,96,03,122 |
| 8 | March 2026 | 2,80,45,812 |
19. From the above, it is evident that from March 2023, the net worth of the Broker had fallen below the stipulated minimum requirement of rupees fifty lakh as per Regulation 22 (1). The net worth remained negative during the period from March 2023 to March 2024, however in September 2024, the net worth increased marginally to Rs. 52.16 lakh, and in March 2025, the net worth of the broker has increased to 148 lakhs.
Submission of the Broker (Verbatim)
20. Broker submitted that – ‘regarding the observed shortfall in the minimum net worth requirement, we wish to express that the deficit is primarily attributable to a temporary operational loss sustained during the tenure post Covid. This loss was driven by operational overheads, a strategic investment in technology infrastructure and a cyclical downturn in market demand, which necessitated a higher-than-anticipated utilization of our working capital. Our Incomes have increased significantly in the last 2 years due consequent to the base laid during the first two-three years of operation. While these expenditures temporarily compressed our equity base below the regulatory threshold, they were essential for maintaining the long-term viability and competitive positioning of the firm. We emphasize that this is a non-recurring event, and the entity has already stabilized its cash-flows to prevent further erosion of its capital position.’
Decision of the Authority:
21. The records clearly establish that the net worth of the Broker remained below the minimum requirement of rupees fifty lakh during multiple periods. The net worth is observed to be 148 lakhs in August 2025 and maintained since then. In view of the above facts, it is evident that the Broker has violated Regulation 22(1) of the Regulations on multiple occasions and has remained non-compliant for a prolonged period. However, as it presently stands, considering the submissions made by the Broker, and the corrective steps taken by the Broker, the Authority deems it appropriate to issue a warning to the Broker with reference to the mentioned violation/non-compliance. The Broker is advised to ensure strict and continuous compliance with the regulatory requirements in future, failing which appropriate action shall be initiated as per law.
22. This Order shall be placed before the Board of the Broker at its next immediate meeting so that the Board can take notes of the violations and for initiation of appropriate corrective and preventive measures, to avoid such violations in the future. The Broker shall submit a copy of the extracts of the minutes of the said Board meeting to the Authority.
23. If the Broker is aggrieved by this Order, an appeal may be preferred to the Hon’ble Securities Appellate Tribunal in accordance with the provisions of Section 110 of the Insurance Act, 1938.
Sd/-
(Swaminathan Iyer)
Member (Life), In-charge – Distribution
Sd/-
(Deepak Sood)
Member (Non-Life)
Place: Hyderabad
Date: 21 May, 2026
