MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 30th June, 2021

G.S.R. 460 (E).—In exercise of the powers conferred by section 48 of the Life Insurance Corporation Act, 1956 (31 of 1956), the Central Government hereby makes the following rules further to amend the Life Insurance Corporation Rules, 1956, namely:—

1. (1) These rules may be called the Life Insurance Corporation (Amendment) Rules, 2021.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Life Insurance Corporation Rules, 1956 (hereinafter referred to as the said rules), in rule 1, after the word “Corporation”, the word “General” shall be inserted.

3. In rule 2 of the said rules, —

(i) For the words “In these rules”, the following shall be substituted, namely:- “(1) In these rules”;

(ii) clause (ia) shall be omitted;

(iii) after clause (ii), the following clause shall be inserted, namely:—

‘(iia) “Securities and Exchange Board of India”means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);’;

(iv) after clause (iii), the following shall be inserted, namely:—

“(2) Words and expressions used herein and not defined in these rules, but defined in the Act shall have the meanings respectively assigned to them in the Act.”

4. For rules 3, 3A, 4, 5, 6, 7, 8 and 9 of the said rules, the following rules shall be substituted, namely:—

“3. Term of office and conditions of service of directors appointed or nominated by Central Government.—Every director appointed or nominated by the Central Government under clause (a) or clause (b) or clause (c) or clause (e) of sub-section (2) of section 4—

(i) shall hold office during the pleasure of the Central Government, for such term not exceeding five years as the Central Government may specify and be eligible for re-appointment;

(ii) may resign his office by giving notice thereof in writing to the Central Government, and the resignation shall take effect from the date, if any, specified by the director or the date on which it is accepted by the Central Government, whichever is later.

4. Certain other terms and conditions of service of whole-time directors appointed by Central Government.—(1) If a whole-time director appointed by the Central Government under sub-clause (i) of clause (a) or clause (b) or clause (c) of sub-section (2) of section 4 is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of his office, the Central Government may appoint another person to act in his place during his absence.

(2) Notwithstanding anything contained in rule 3,—

(i) the Central Government shall have the right to terminate the services of a whole-time director at any time before the expiry of the term specified under that rule by giving him notice of not less than three months in writing or three months’ salary and allowances in lieu thereof;

(ii) a whole-time director shall have the right to relinquish his office at any time before the expiry of the term specified under that rule by giving the Central Government notice of not less than three months in writing.

(3) Notwithstanding anything contained in rule 3 or sub-rule (2) of rule 4, the Central Government may remove a whole-time director from office if it is satisfied that—

(i) in the public interest or for securing the proper management of the Corporation it is necessary so to do; or

(ii) he has abused his position or has acted in a manner prejudicial to the interests of the Corporation:

Provided that no such removal shall be made unless he has been given a reasonable opportunity of being heard in the matter.

5. Term of office and conditions of service of directors appointed by Board.—(1) Every director appointed by the Board under clause (f) or clause (g) of sub-section (2) of section 4, and whose appointment is approved at the annual general meeting,—

(i) shall hold office for a term of four years and shall be eligible for one further term of four years:

Provided that notwithstanding anything contained in this sub-rule, the first three directors appointed under the said clause (g) shall hold office for such term as the Board may decide, not exceeding six months, and shall be eligible for appointment for one further term of four years;

(ii) may resign his office by giving a notice in writing to the Corporation, and the resignation shall take effect from the date, if any, specified by the director or the date when such notice is received by the Corporation, whichever is later:

Provided that the director shall specify in such notice the reasons for his resignation and shall affirm that there is no material reason other than those specified.

(2) The members at a general meeting may, by a resolution passed by a simple majority, remove a director appointed under clause (f) or clause (g) of sub-section (2) of section 4, after giving him a reasonable opportunity of being heard:

Provided that an independent director appointed for a second term under sub-rule (1) shall be removed only by passing a special resolution, and after giving him a reasonable opportunity of being heard.

(3) Notwithstanding anything contained in sub-rules (1) and (2), in the event of the Corporation applying to list its equity shares under any regulation made by the Securities and Exchange Board of India in this behalf, higher requirements, if any, under any regulation made by the said Board in respect of listing obligations and disclosure requirements shall apply with regard to the matters provided for in the said sub-rules.

6. Disclosure of interest.—(1) Every director shall disclose his concern or interest in any body corporate (including shareholding interest), in pursuance of the provisions of sub-section (1) of section 4B, by giving a notice in writing in Form 1 set out in the Schedule to these rules.

(2) All notices shall be kept at the central office of the Corporation and such notices shall be preserved for a period of ten years from the end of the financial year to which it relates and shall be kept in the custody of the Company Secretary or such other person authorised by the Board for the purpose.

Explanation.—For the purposes of this rule,—

(i) “body corporate” shall have the meaning assigned to it in the Explanation to section 4B;

(ii) “Company Secretary” shall mean a person who is a member of the Institute of Company Secretaries of India, constituted under the Company Secretaries Act, 1980 (56 of 1980) and who is the head of the secretarial function of the Corporation.

7. Contract or arrangement with related party.—(1) Any contract or arrangement entered into by the Corporation with a related party shall be in accordance with the provisions of section 4C, clause (d) of sub­section (2) of section 19C and sub-section (3) of section 19C, and the agenda of the meeting of the Audit Committee and the Board at which such contract or arrangement is proposed to be considered shall disclose the following, namely:—

(i) the name of the related party and nature of relationship;

(ii) the nature, duration and particulars of the contract or arrangement;

(iii) the material terms of the contract or arrangement, including the value thereof, if any;

(iv) advance paid or received, if any, for the contract or arrangement;

(v) the manner of determining the pricing and other commercial terms, irrespective of whether or not the same are included in the contract;

(vi) whether all factors relevant to the contract have been considered and, if not, the details of the factors not considered, along with the rationale for the same not being considered;

(vii) any other information relevant for the Audit Committee or the Board, as the case may be, to take decision in the matter.

(2) Where any director is interested in any contract or arrangement with a related party, such director shall not be present at the meeting of the Audit Committee or the Board at which such contract or arrangement is considered.”.

5. In rule 10 of the said rules, in sub-rule (1), in clause (ii), for the words “by the Corporation”, the words “by the Board” shall be substituted.

6. In rule 14 of the said rules, for the words “by the Corporation”, the words “by the Chief Executive” shall be substituted.

7. In rule 16 of the said rules, for the word “Corporation”, the words “Chief Executive” shall be substituted.

8. After rule 20 of the said rules, the following rules and Schedule shall be inserted, namely:—

“21. Form and manner in which financial statement may be issued, circulated or published.— The Corporation shall—

(i) send to each member and every other person entitled to receive the same, either by electronic mode or by despatch of physical copy by way of registered post or speed post or courier to, or delivery at, the address entered in the register of members referred to in section 5B in the case of members and at the registered office or the last known address in case of other persons, a copy each of the financial statement of the Corporation;

(ii) place its financial statements for the preceding ten years on its website after the same have been adopted at an annual general meeting.

Explanation.—For the purposes of this rule,—

(a) “financial statement” includes the consolidated financial statement of the Corporation, along with the Board’s report, auditor’s report and other documents required to be attached therewith under sub-section (8) of section 24B;

(b) “courier” means any person who delivers a document and provides proof of its delivery;

(c) “electronic mode” means any communication sent by the Corporation through its authorised and secured computer programme, which is capable of generating a confirmation of the communication having been sent and of keeping a record of such communication addressed to the person entitled to receive the same, at the electronic mail address of the addressee;

(d) “address” in relation to sending of financial statement by electronic mode shall mean the electronic mail address of the addressee.

22. Manner and procedure of selection of auditors and conditions of their appointment.—(1) The Audit Committee shall formulate and recommend to the Board for adoption of a policy for selection of auditors of the Corporation or of any branch or office of the Corporation as is referred to in sub-section (6) of section 25B (hereinafter referred to as “Auditor”):

Provided that such policy shall include submission of a certificate by the proposed Auditor that—

(a) the individual or the firm, as the case may be, is eligible for the proposed appointment and is not disqualified for appointment under the Act and the Chartered Accountants Act, 1949 (38 of 1949), and the rules and regulations made thereunder, and that the auditor satisfies the criteria provided for eligibility for appointment as an auditor of a company under section 141 of the Companies Act, 2013 (18 of 2013);

(b) the proposed appointment is as per the term provided under the Act;

(c) the proposed appointment is within the limits laid down by or under the authority of the Act;

(d) the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, to be disclosed in the certificate, is true and correct.

(2) The Board shall adopt the policy recommended under sub-rule (1) without any modifications or with such modifications as it may consider necessary.

(3) The Audit Committee shall, in accordance with the policy adopted by the Board under sub-rule (2), draw up a panel of names of auditors who may be considered for appointment as an Auditor.

(4) For selecting an Auditor from out of the panel referred to in sub-rule (3), the Audit Committee shall take into consideration the qualifications and experience of the individual or the firm proposed to be considered for appointment as Auditor and whether such qualifications and experience are commensurate with the size and requirements of the Corporation or its branch or office, as the case may be:

Provided that while considering the appointment, the Audit Committee shall have regard to any order or pending proceeding relating to professional matters of conduct against the proposed Auditor before the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949 (38 of 1949) or any competent authority or any court.

(5) The Audit Committee may call for such other information from the proposed Auditor as it may deem fit.

(6) Subject to the provisions of sub-rule (4), the Audit Committee shall recommend to the Board for its consideration the name of an individual or a firm as Auditor.

(7) If the Board agrees with the recommendation of the Audit Committee under sub-rule (6), it shall recommend the appointment of an individual or a firm as Auditor to the members in the annual general meeting.

(8) If the Board disagrees with the recommendation of the Audit Committee under sub-rule (6), it shall refer the recommendation back to the Audit Committee for reconsideration, while citing the reasons for the disagreement.

(9) If the Audit Committee, after considering the reasons given by the Board under sub-rule (8), decides not to reconsider its original recommendation, the Board shall record the reasons for its disagreement with the Audit Committee and give its own recommendation for consideration of the members in the annual general meeting; and if the Board agrees with the recommendations of the Audit Committee, it shall place the matter for consideration by members in the annual general meeting.

(10) The Auditor appointed in the annual general meeting shall hold office from the conclusion of that meeting till the conclusion of the sixth annual general meeting, with the meeting wherein such appointment has been made being counted as the first meeting.

Explanation.—For the removal of any doubts, it is hereby clarified that until the first annual general meeting is held, the Board shall perform the functions required to be performed by the members in the annual general meeting under this rule, subject to fulfilment of the requirement of previous approval of the Central Government under sub-section (8) of section 25 for appointment of duly qualified auditors.

23. Other matters to be included in auditor’s report.—(1) The report of the auditor of the Corporation shall include—

(i) the auditor’s views and comments in relation to the Corporation on matters prescribed by the Central Government to be included in the auditor’s report for audit in respect of companies, under sub-section (2) of section 143 of the Companies Act, 2013 (18 of 2013), and

(ii) a statement in relation to the Corporation on such matters whose inclusion in the auditor’s report in respect of companies may be directed by any order issued by the Central Government under sub-section (11) of section 143 of the Companies Act, 2013 (18 of 2013),

subject to such modifications and exceptions as the Central Government may by notification specify.

(2) The requirement of inclusion in the auditor’s report of any statement regarding reporting of fraud by the auditor of the Corporation under clause (ii) of sub-rule (1) shall also apply to the auditor’s report of the auditor of a branch or office of the Corporation, to the extent it relates to such branch or office.

24. Duties and powers of Corporation’s auditor with reference to audit of branch or office of the Corporation and its auditor.—For the purposes of sub-section (6) of section 25B, the duties and powers of the Corporation’s auditor with reference to the audit of a branch or office of the Corporation and its auditor shall be as contained in sub-sections (1) to (4) of section 25B.

25. Resignation of auditor.—(1) For the purposes of sub-section (2) of section 25A, when an auditor has resigned from the Corporation, he shall file a statement with the Corporation in Form 2 as set out in the Schedule to these rules.

(2) In the event of the Corporation applying to list its equity shares under any regulation made by the Securities and Exchange Board of India in this behalf, any additional requirements specified by the Board in respect of resignation of statutory auditors from listed entities shall be complied with.

26. Reservation in favour of and allotment to life insurance policyholders in a public issue.—(1) Any reservation made by the Corporation in favour of its life insurance policyholders on a competitive basis in a public issue under clause (a) of sub-section (9) of section 5 shall be made in a manner similar to that applicable to a reservation on a competitive basis for employees in a public issue under any regulation made and circular issued by the Securities and Exchange Board of India regarding issue of capital and disclosure requirements, to the extent not repugnant to the provisions of the Act, and be subject to fulfilment of the terms and conditions in this regard, as disclosed in the offer document approved by the Board.

(2) Allotment of equity shares to life insurance policyholders against any reservation made in their favour shall be made in consultation with the stock exchanges concerned.

Explanation.—Words and expressions used in this rule but not defined in the Act shall have the meanings assigned to them in the regulations made by the Securities and Exchange Board of India regarding issue of capital and disclosure requirements, to the extent not repugnant with the provisions of the Act.

27. Use of electronic records and electronic signature.—For the purposes of these rules, any requirement

(a) giving notice, or submission of a certificate, or calling for information, or filing of a statement shall be satisfied if the same is given, submitted, called for or filed, as the case may be, in the form of an electronic record as defined in the Information Technology Act, 2000 (21 of 2000);

(b) a person signing a notice, certificate, a call for information or a statement shall be satisfied if he affixes thereon his electronic signature as defined in the Information Technology Act, 2000 (21of 2000).

SCHEDULE
FORM 1
[See rule 6]
Notice of interest by director

To,

The Board of Directors
Life Insurance Corporation of India

Dear madam/sir,

I, ………………………………………………………………………………………………………………………. , son/daughter/spouse of …………………………………………………………………………………………………………………………………………….. , resident of ………………………………………………. , being a director of the Corporation hereby give notice of my interest or concern in the following bodies corporate:—

S. No. Name of the body
corporate
Nature of interest or
concern/ change in interest
or concern
Shareholding Date on which interest or
concern arose/ changed

Note: “Body corporate” includes a company, a body corporate as defined under clause (11) of section 2 of the Companies Act, a firm, a financial institution or a scheduled bank or a public sector enterprise established or constituted by or under any Central Act or State Act, and any other incorporated association of persons or body of individuals.

Place:
Date:

Signature
Managing Director/Director/Chairperson/Chief Executive

FORM 2
[See rule 25]
Notice of resignation by the auditor

Life Insurance Corporation of India (“Corporation”)

1. (a) Address of the Central Office of the Corporation:

(b) Email address of the Corporation:

2. Category of auditor: Individual Firm

3. (a) Income tax PAN of auditor or auditor’s firm:

(b) Name of the auditor or auditor’s firm:

(c) Membership number of auditor or auditor’s firm registration number:

(d) Address of the auditor or auditor’s firm:

(e) City:

(f) State:

(g) PIN code:

(h) Email address of the auditor or auditor’s firm:

4. Reason for resignation:

5. Whether letter of resignation is enclosed: Yes/No

6. Any other facts relevant to the resignation:

Verification

I hereby confirm that the information given in this form and enclosed documents are correct and complete.

I am duly authorised to sign and submit this form.

Signature

Auditor/Partner of the audit firm

Whether Associate or Fellow? Associate Fellow

Membership number:

Enclosures:

1. Resignation letter, if enclosed

2. Any other document”.

[F. No. I-13011/01/2021-Ins.I]

SAURABH MISHRA, Jt. Secy.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification number S.R.O. 1889A, dated the 28th August, 1956 and were subsequently amended vide the following notifications:

(1) G.S.R. 317, dated the 30th April, 1958

(2) G.S.R. 1101, dated the 8th November, 1958

(3) G.S.R. 1568, dated the 23rd October, 1964

(4) G.S.R. 1094, dated the 22nd July, 1965

(5) G.S.R. 1116, dated the 2nd December, 1988

(6) G.S.R. 278(E), dated the 28th May, 1997

(7) G.S.R. 474(E), dated the 23rd July, 2004

(8) G.S.R. 669(E), dated the 26th October, 2006

(9) G.S.R. 2, dated the 3rd January, 2012

(10) G.S.R. 199, dated the 14th October, 2015

G.S.R. 96(E), dated the 10th February, 2020

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