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The Insurance Regulatory and Development Authority of India (IRDAI) plays a pivotal role in regulating the insurance sector. The recent issuance of the IRDAI Master Circular 2024 underscores its commitment to ensuring robust governance and operational standards within the industry. This comprehensive circular addresses various aspects such as registration, capital structure, transfer of shares, and amalgamation of insurers, aiming to enhance transparency and efficiency in the insurance landscape.

Insurance Regulatory and Development Authority

Ref: IRDAI/F&I/CIR/78/5/2024 Date: 15.05.2024

Master Circular on Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers, 2024

The Authority has notified the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024 (herein after referred to as “Registration Regulations, 2024”). In exercise of the powers conferred by section 34 of the Insurance Act, 1938 (hereinafter referred to as “the Act”), section 14 of the IRDA Act, 1999 and Regulation 59 and 60 of Registration Regulations, 2024, the Authority hereby issues this Master Circular to specify various forms as referred in the Registration Regulations, 2024 and to provide clarifications on various provisions of the Registration Regulations, 2024.

2. This Master Circular shall be applicable to all Insurers (excluding Foreign Reinsurer’s Branches) and applicants seeking registration to carry on insurance business.

3. This Master Circular shall come into force from the date of its issuance.

4. This has approval of the Competent Authority.

Sd/-
G R Surya Kumar
Chief General Manager

Table of Content

Chapter Description Page
No.
I Applications to be submitted 3
II Clarifications, Submission of Returns and Transitory Provisions 4
Schedule I – List of Repealed Circulars 11
Annexure 1: Form IRDAI/R1 12
Annexure 2 :Form IRDAI/R2 20
Annexure 3 :Form IRDAI/R4 25
Annexure 4 :Form IRDAI/ToS: Application for approval u/s 6A 26

Chapter I : Applications to be submitted

A.1 No-objection Certificate (NOC) [refer Regulation 6(1)(b) of Registration Regulations, 2024]:

The application for issuance of No-Objection Certificate (NOC), as referred in Regulation 6(1)(b) of Registration Regulations, 2024 shall be filed online at IRDAI website i.e. www.irdai.gov.in [currently, the form to apply for NOC for ‘New Insurers Registration’ is placed under the ‘E-services’ section on the website of the Authority.]

B.1 Application for Issuance of Form IRDAI/R1 [refer Regulation 6(1)(c) of Registration Regulations, 2024]:

The application for issuance of Form IRDAI/R1, as referred in Regulation 6(1)(c) of

Registration Regulations, 2024 shall be made on the letter head of the applicant, duly signed by its authorized person and shall be accompanied with the following documents:

i. Copy of Certificate of Incorporation of the applicant.

ii. Copy of Memorandum of Association and Articles of Association of the applicant.

iii. A Resolution passed by the Board of the promoter(s) of the applicant for following:

a. Approval for entering into the insurance business.

b. Authorization of person to act on behalf of the promoter(s).

iv. A Resolution passed by the Board of the applicant for the following:

a. Approval for entering into the insurance business.

b. Authorization of person to act on behalf of the applicant.

B.2 Format of Form IRDAI/R1 is at Annexure 1.

C.1 Format of Form IRDAI/R2 is at Annexure 2.

D.1 Format of Form IRDAI/R4 is at Annexure 3.

E.1 Format of Form IRDAI/ToS is at Annexure 4.

Chapter- II: Clarifications, Submission of Returns and Transitory Provisions

A.1 With respect to Regulation 21: With regard to shares allotted pursuant to Employee Stock Option Plan (ESOP) or any other similar scheme for the benefit of the employees or directors of the insurer, the following shall be complied with:

1. Exercise of ESOP is subject to provisions of section 6A(4)(b) of the Act read with Registration Regulations, 2024.

2. Where specific trust has been formed by an insurer for issuance of ESOPs to their employees, the issue of shares to such trust and exercise of option by one or more employees shall also fall within the ambit of the section 6A(4)(b) of the Act read with Registration Regulations, 2024.

3. Where exercise of ESOP by one or more KMPs or Directors, whether singly or jointly, is beyond the threshold limit specified in section 6A(4)(b) of the Act read with Registration Regulations, 2024, the prior approval of the Authority shall be sought before such exercise, in the manner as specified in Regulation 22 of the Registration Regulations, 2024.

B.1 With respect to Regulation 29(5) of Registration Regulations, 2024: The insurer shall submit the application seeking prior-approval for transfer of shares as per the form IRDAI/ToS, as specified in Annexure -4 of this Circular, subject to following additional requirements:

1. The details of transferee may be furnished if the same is available. In case the details of transferee are unavailable or unascertainable, the same shall not be mandatory to be furnished.

2. The resolution passed by the Board of insurer, certified by the Company Secretary, approving the issuance of capital/ offer for sale proposed shall also be submitted along with the application.

3. The following particulars regarding issuance or transfer of capital, pursuant to proposed listing, shall be furnished:

i. Purpose of Initial Public Offer (IPO)

ii. Size of IPO

a. Total amount

b. Fresh issuance of shares by the insurer

c. Offer for sale by the existing shareholders

iii. Shareholding pattern as per the following format

S. No. Name of Shareholder* Promoter / Investor Country of Incorporation / Citizenship Existing Shareholding Pattern Proposed Shareholding Pattern after listing
No. of shares held Percent of equity held No. of shares held Percent of equity held
100% 100%

*To be submitted separately for shareholders holding more than 1% of paid-up equity capital.

B.2 With respect to Regulation 29(7) of Registration Regulations, 2024: The insurer shall submit intimation that it shall be approaching the appropriate financial sector regulator for listing of equity shares. Along with the said intimation, the insurer shall submit the following confirmation:

Confirmation

I, _____________________________ the undersigned, solemnly declare that, to the best of my knowledge and belief:

(i) The facts disclosed or to be disclosed in the offer documents are true and correct to the best of my knowledge and belief.

(ii) All the regulatory action taken or initiated by the IRDAI has been disclosed suitably in the offer documents.

(iii) The Insurer has complied with and shall comply with all the applicable laws in relation to the proposed listing of its equity shares on the stock exchange.

(iv) The insurer shall ensure protection of interest of policyholders at all times.

(v) The insurer has complied with the conditions as specified in the Regulation 29 of the Registration Regulations, 2024.

Date:
Place:

(Signature)
Name of the CEO

C.1 With respect to Regulation 31(1) of Registration Regulations, 2024:

The Notice of Intention to make an application under the said regulation shall be filed along with following details:

1. A draft of the scheme, agreement or deed under which it is proposed to effect the amalgamation and transfer.

2. Balance-sheets in respect of the insurance business of each of the insurers concerned in such amalgamation and transfer, prepared in the form as indicated in the IRDAI (Actuarial, Finance and Investment Functions of insurers) Regulations, 2024.

3. Financial Condition Report, IBNR Report, and Solvency Statement prepared in conformity with the requirements of relevant Regulations and Circulars issued by the Authority.

4. A report on the proposed amalgamation and transfer, prepared by an independent actuary who has not been professionally connected with any of the parties concerned in the amalgamation and transfer at any time in the three years preceding the date on which he signs his report.

5. A synopsis / executive summary of the proposed transaction, and the terms on which such transaction has been contemplated.

6. A report on the manner in which the interest of policyholders will be protected; and a report on compliance with the applicable laws, including but not limited to, the Competition Act 2002 and the employment laws.

7. Structure of the transacting parties.

8. Board Resolution of the transacting parties approving the steps to undertake transactions which would result in change of structure of the respective transacting parties.

9. Submission of confirmations by shareholders through a special resolution at a general body meeting/extraordinary general meeting of the transacting parties about their intent to pursue the transfer contemplated in the Scheme

10. Details as to protection of interests of policyholders, creditors and/or shareholders of the transacting parties.

11. Composition of Board of Directors of the merged entity along with the role of senior management.

12. Compliance with the Regulations/Circulars on Corporate Governance issued by the Authority.

13. Details of other regulatory approvals in respect of the proposed scheme.

a. Applications submitted to the other Regulators in respect of the proposed scheme as and when they are filed with the other regulators.

b. Approvals granted by the other Regulators in this regard.

14. Share Purchase/Subscription Agreement with respect to the transfer/acquisition of insurance business by the transacting parties.

15. Shareholders’ agreement with respect to the management and governance arrangements, if any, for the transferred business.

16. Actuarial Report(s) on valuation of the insurance business of the transacting parties encompassing the assets, liabilities and solvency position.

17. Rationalization of existing range of products in accordance with the product Regulations/Circulars issued by the Authority.

18. Assessment of impact of Distribution Channels/Intermediaries and Branch Network.

19. Details of Reinsurance strategies and Protection and Maintenance of Reinsurance Assets.

20. Implication of the Scheme on Key Contracts.

21. Issues pertaining to the Information Technology.

22. Projected Financial Statements of the merged entity, as at the appointed date of the Scheme.

23. Such other information which may be required from time to time till the grant of final approval to the Scheme.

The balance sheets, reports and abstracts referred to in clause (2), (3) and (4) above shall be prepared as at the appointed date, on a pro-forma basis. These shall be (i) audited financial statements most proximate to the appointed date and (ii) latest quarter’s unaudited financial statements.

C.2 With respect to Regulation 31(3) of Registration Regulations, 2024: Application seeking “in-principle” approval of the Authority shall be filed on the cover letter of the insurer with following:

1. Proof of payment of processing fees as per regulation 36 of Registration Regulations, 2024.

2. Details of changes in information submitted along with notice of intention.

C.3 With respect to Regulation 34(6) of Registration Regulations, 2024: The transferee insurer shall, within 30 days of the implementation of the scheme, furnish the following documents and information to the Authority:

1. Copy of notice in the newspaper about completion of the process as per Regulation 34(5) of Registration Regulations, 2024.

2. Confirmation by the CEO of the transferee insurer that the scheme has been implemented in compliance with the applicable law and conditions stipulated by NCLT and other statutory/regulatory bodies.

3. Certificate from statutory auditor of the transferee insurer regarding:

a. Confirmation on completion of the process in accordance with the Scheme approved by NCLT.

b. Confirmation that all the policyholders’ liabilities and assets of transferor insurer have been transferred to transferee insurer.

c. Confirmation that conditions stipulated by the statutory/regulatory bodies and NCLT have been complied with.

D.1 With respect to Regulation 45 of Registration Regulations, 2024:

The insurer issuing the instruments under Registration Regulations, 2024, shall within 15 days from the date of allotment, submit the following details:

1. Name of Insurer:

2. Date of Issuance of Other Forms of Capital (OFC):

3. Details of OFC:

S.No. Particulars Details
1 Type and nature of Instrument
2 Rate of Interest or dividend
i. Percentage
ii. Fixed or Floating
3 Quantum of Other Forms of Capital
i. Already issued before the said allotment
ii. Issued in the said allotment
iii. Total as on date
4 Details of subscriber(s) to which allotment has been done
i. Name
i. Address (Registered office and communication address)
ii. Country of Incorporation (country of citizenship in case of individual)
iii. Legal status (Company, LLP, Individual etc.) & CIN Number
iv. Date of Incorporation (Date of birth in case of individuals)
v. Permanent Account Number
vi. Total number of equity shares and Percentage of equity of insurer
held by subscriber
vii. Total OFC subscribed including the said allotment
5 Solvency position of the Insurer
i. Before Issuance of said allotment
ii. After Issuance of said allotment

Confirmation by CEO:

I, _____________________________ the undersigned, solemnly declare that, to the best of my knowledge and belief:

(i) The facts given in the table above are true and correct.

(ii) The Insurer has complied with all the applicable laws in relation to issuance of other forms of capital.

Date:
Place:

(Signature)
Name of the CEO

D.2 With respect to Regulation 50 of Registration Regulations, 2024: The other forms of capital issued by any insurer may be subscribed by any of the following entities, subject to compliance of all other applicable laws:

1. “Indian Promoter” as defined in Registration Regulations, 2024.

2. “Indian Investors” as defined in Registration Regulations, 2024.

3. “Foreign Promoter” as defined in Registration Regulations, 2024.

4. “Foreign Investors” as defined in Registration Regulations, 2024.

E.1 Payment of Annual Fee [Refer Regulation 56 of Registration Regulations, 2024]: After issuance of Certificate of Registration, the insurer shall remit the annual fee, computed in accordance with regulation 56(2), for:

1. The financial year in which the said Certificate of Registration is granted, and

2. The financial year succeeding the financial year referred in sub-clause 1 above, in case the Certificate of Registration is granted on or after 31st day of January of the financial year. Further, it is clarified that in case the Certificate of Registration is granted before 31st day of January of the financial year, the annual fee shall be remitted in accordance with Regulation 56.

F.1 With respect to Regulation 58(1)(a) of Registration Regulations, 2024: The insurer may voluntarily surrender the Certificate of Registration granted to it and may request the Authority to cancel the same in the following cases:

1. The business or a class of the business of the insurer has been transferred to any person pursuant to the Order of the Authority to this effect.

2. The business or a class of the business of the insurer has been transferred to or amalgamated with the business of any other insurer after obtaining approval of the Authority.

3. The insurer is not in the position to commence its operations, subsequent to grant of Certificate of Registration, within the stipulated time.

G.1

S. No. Particulars Clarification
A) Pertaining to Transfer of Shares and Lock-in Period
1 Processing fee for application seeking approval for
transfer of shares [Refer Regulation 22(4) of Registration Regulations, 2024]
The application seeking approval for transfer of shares filed before the date of notification of the Registration Regulations,2024 shall not be subject to increased processing fee as per Regulation 22(4).

However, all applications filed subsequent to the said date are required to be accompanied by the processing fees as per Regulation 22(4) of Registration Regulations, 2024.

2 Lock-in period in case of approvals granted prior to notification of
Registration Regulations 2024 [Refer Regulation 8 of Registration Regulations, 2024]
1. In case of shareholder(s) that is/are promoter(s) of the insurer: For the transactions completed before notification of Registration Regulations, the lock-in period shall be in accordance Regulation 8 of Registration Regulations, 2024.

2. In case of shareholder that is/are investor(s) of the insurer:

a. Lock-in period as per Regulation 8 of Registration Regulations, 2024 shall not be applicable for the transactions completed till the notification of the IRDAI (Registration of Indian Insurance Companies) Regulations, 2022 i.e. 05.12.2022.

b. For the transactions completed after the date referred in 2(a) above but before notification of Regulations, the lock-in period shall be in accordance Regulation 8 of Registration Regulations, 2024.

3. Equity shares allotted or transferred pursuant to Initial Public Offer (IPO): The lock-in as specified in Regulation 8 shall not be applicable for equity shares allotted or transferred in accordance with offer documents filed with appropriate financial sector regulator in connection with the IPO.

H.1 Submission of Returns under Regulation 27(1) of Registration Regulations, 2024: The shareholding pattern and the ‘fit and proper’ declaration shall be submitted as per the formats and periodicity as specified in the Master Circular on Submission of Returns.

I.1 Pertaining to Directorship [Refer to Regulation 16 of Registration Regulations, 2024]

Existing Board Position which are not in compliance with Regulation 16 shall be vacated on or before 31st March, 2025.

Schedule I List of Repealed Circulars

The following Circulars shall stand repealed consequent to issuance of this Master Circular:

a. Master Circular on Registration of Indian Insurance Companies dated 24.04.2023.

b. Circular on Exercise of ESOPs – Applicability of provision of section 6A(4)(b) of the Insurance Act, 1938, dated 11.05.2021.

c. Circular on Creation of Debenture Redemption Reserve no. IRDA/F&A/OFC/01/2014-15/115 dt. 04.08.2017

Schedule I, Annexure – 1, 2, 3, 4

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