IRDA (ISSUANCE OF CAPITAL BY GENERAL INSURANCE COMPANIES) REGULATIONS, 2013
NOTIFICATION F. NO. IRDA/REG./12/70/2013, DATED 16-2-2013
In exercise of powers conferred under section 14 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), read with sections 6AA and 114A of the Insurance Act, 1938, the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations, namely :—
1. Short title and commencement
i. These Regulations shall be called the IRDA (Issuance of Capital by General Insurance Companies) Regulations, 2013
ii. They shall come into force on the date of their publication in the Official Gazette.
2. In these Regulations, unless the context otherwise requires:
a. ‘Act’ means the Insurance Act, 1938 (4 of 1938);
b. ‘Applicant Company’ means a General Insurance Company coming within the definition of Indian Insurance Company;
c. ‘Authority’ means Insurance Regulatory and Development Authority established under section 3 of the Insurance Regulatory and Development Authority Act, 1999;
d. ‘Application’ means application submitted to the Authority under the IRDA (Issuance of Capital by General Insurance Companies) Regulations, 2013;
e. ‘Corporate Governance Guidelines’ means the guidelines issued by the Authority vide its Circular no. IRDA/F&A/CIR/025/2009-10, dated 5th August, 2009 as amended and modified from time to time.;
f. ‘Date of commencement of business’ means the date of grant of certificate of registration under IRDA (Registration of Indian Insurance Companies) Regulations, 2000;
g. ‘Excess Shareholding’ means shareholding over and above the limits of shareholding prescribed under section 6AA of the Insurance Act;
h. ‘Insurance company’ means the ‘Indian Insurance Company’ as defined in section 2(7)A of the Insurance Act, 1938;
i. ‘SEBI’ means the Securities and Exchange Board of India;
j. ‘ICDR Regulations’ means the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended and modified from time to time;
k. ‘Key Managerial Personnel’ shall include but not limited to the key persons as defined in IRDA (Registration of Indian Insurance Companies) Regulations, 2000;
l. ‘Offer Document’ means a document as defined under the ICDR Regulations;
m. ‘Promoter’ of an applicant company means a promoter as defined under Regulation 2(m) of the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011;
n. ‘Proposal’ means the application filed by the applicant company with the Authority under Form ‘A’ attached to these Regulations for obtaining formal approval of the Authority.
All words and expressions used herein and not defined in these Regulations but defined in the Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), shall have the same meaning respectively assigned to them in those Acts.
Prior Written Approval by the Authority
3. No general insurance company shall approach the SEB1 for public issue of shares and for any subsequent issue, by whatsoever name called, under the ICDR Regulations without the specific previous written approval of the Authority accorded in the manner prescribed herein.
Manner and Procedure
4. These Regulations shall be applicable to divestment of the excess shareholding by the promoters of the applicant company as prescribed in section 6AA of the Act and/or to otherwise raise funds under the ICDR Regulations, inter alia through any of the following options;
a. Issue of capital under ICDR Regulations; and
b. Divestment of equity by one or more of the promoters through a public offer for sale under the ICDR Regulations.
The application for the approval of the Authority shall be filed in Form ‘A’ forming part of these Regulations.
Provided that no issuance and allotment of capital by an insurance company shall be in any form other than as fully paid up equity shares.
Further provided that any issue of capital other than as specified at (a) and (b) above, including any transfer of shares beyond the specified limits as laid down under section 6A(4)(ii)/(iii) of the Insurance Act, 1938 shall require the specific prior approval of the Authority. Such approvals shall be governed by the stipulations laid down by the Authority.
5. Approval of the Authority
(i) An applicant company proposing to raise share capital through a public issue in terms of these regulations may do so only on completion of 10 years from the date of commencement of business by the applicant company or such other period as may be prescribed by the Central Government.
(ii) The approval granted by the Authority shall have a validity period of one year from the date of issue of the approval letter, within which the applicant company shall file the Draft Red Herring Prospectus (DRHP) with SEBI under the ICDR Regulations.
(iii) Any approval by the Authority in terms of the Regulations herein, shall not in any manner be deemed to or serve as a validation of the representations by the applicant company in any offer document, which fact shall be disclosed in bold letters in any offer document.
(iv) The Authority reserves the right not to accord its approval if, in its opinion, (i) the applicant company is not compliant with the regulatory framework; or (ii) where it may be detrimental to the interests of policyholders; or (iii) it may not be in the interest of the insurance business in the country.
Criteria for consideration for approval
6. The Authority shall generally consider the applicant company’s overall financial position; its regulatory record; the proposal for issue/offer of capital; the capital structure post issue/offer of capital; and the purposes to which the share capital proposed to be raised will be applied. In particular, the Authority shall consider the following parameters amongst others:
(i) the period for which the applicant has been in the general insurance business;
(ii) the history of compliance with the regulatory requirements by the applicant company;
(iii) the maintenance of the prescribed regulatory solvency margin as at the end of the preceding six quarters commencing from the quarter immediately prior to the date of filing the application;
(iv) compliance with the disclosure requirements mandated under IRDA Circular No. IRDA/F&I/CIR/F&A/012/01/2010, dated 28th January, 2010 as amended and modified from time to time;
(v) compliance with the Corporate Governance Guidelines; and
(vi) its record of policyholder protection.
Conditions for approval
7. While according its approval, the Authority may prescribe:
(i) the extent to which the promoters shall dilute their respective shareholding;
(ii) the maximum subscription which could be allotted to any class of foreign investors;
(iii) minimum lock-in period for the promoters from the date of allotment of shares. The lock-in period shall be without prejudice to the requirements which may be in place under the ICDR Regulations; and
(iv) the disclosures in the Prospectus/Offer document, in addition to such disclosures as may be prescribed by SEBI, which may include the disclosures as indicated at Annexure-1 to these Regulations.
Timelines for approval by the Authority
8. The Authority shall process and grant approval on the application as expeditiously as possible, and the applicant company shall ensure prompt response to the queries and requests for information from the Authority for processing the application.