The Insurance Regulatory and Development Authority of India examined a broker’s change in shareholding and found non-compliance with Regulation 25(2) read with Schedule II (Form T) of the IRDAI (Insurance Brokers) Regulations, 2018. The broker had effected share allotments to promoters on 31 March 2023 and 30 September 2023, resulting in cumulative changes exceeding the 10% threshold that mandates prior regulatory approval. During scrutiny of an application intimating a shareholding change, the Authority noted that no prior approval had been sought. In response to a show cause notice, the broker admitted the lapse, attributing it to an accounting error arising from transactions routed through a joint account, and asserted that the breach was unintentional. The Authority accepted that approval was not obtained and held the violation established. Considering the nature of the lapse, submissions made, and corrective steps initiated, the Authority imposed a warning rather than a monetary penalty, directed the order to be placed before the broker’s board, required submission of board minutes evidencing corrective measures, and advised strict future compliance, with a right of appeal preserved.
Insurance Regulatory and Development Authority of India
Order No. IRDAI/INT/ORD/MISC/20/01/2026 Date: 29th January, 2026
Order of Insurance Regulatory and Development Authority of India in the matter of M/s Topspot Insurance Broking Pvt. Ltd.
Based on
1. Show Cause Notice (hereinafter referred to as “SCN”) with reference No. IRDAI/INT/BRK/DB 902/21/SCN dated 21st November, 2025, issued to M/s Topspot Insurance Broking Pvt. Ltd. (hereinafter referred to as “Broker”).
2. Response of Broker dated 1st December, 2025, to the SCN.
3. Response of the Broker dated 2nd December, 2025 declining personal hearing.
4. Further submissions by Broker dated 23rd December, 2025 and 31st December, 2025.
Background
5. The Insurance Regulatory and Development Authority of India (hereinafter referred to as “the Authority”) received an application bearing URN No. DB-14225-24 from the Broker, furnishing intimation to the Authority for change in its shareholding pattern.
6. During the scrutiny of the application and the material submitted therewith, it was observed that the Broker had allotted shares to its promoters without obtaining prior approval of the Authority.
7. Accordingly, the Authority engaged in several correspondences with the Broker seeking clarifications and additional information in respect of specific observation.
Show Cause Notice, Reply and Personal Hearing
8. After examination of the information and submissions made by the Broker, a Show Cause Notice dated 21st November, 2025 was issued to the Broker for the alleged violation of Regulation 25(2) read with Schedule II – Form T of the IRDAI (Insurance Brokers) Regulations, 2018 (hereinafter referred to as “Regulations”).
9. The Broker submitted its reply to the Show Cause Notice (SCN) on 1st December, 2025. Further, vide its submission dated 2nd December, 2025, the Broker declined to avail a personal hearing in the matter.
10. On the basis of the Broker’s reply to the Show Cause Notice (SCN), additional queries were raised on 22nd December, 2025 and 24th December, 2025. The Broker furnished its responses thereto vide submissions dated 23rd December, 2025 and 31st December, 2025, respectively.
11. The charges set out in the SCN dated 21st November, 2025, the Broker’s written reply dated 1st December, 2025 and the additional submissions furnished by the Broker on 23rd December, 2025 and 31st December, 2025 have been duly considered. The Authority’s findings and decision on the charge is detailed hereunder.
Charge – Violation of Regulation 25(2) read with Schedule II, Form T of the IRDAI (Insurance Brokers) Regulations, 2018
12. Regulation 25(2) read with Clause 1 of Schedule II, Form T, inter-alia, provides as follows:
“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
13. It is observed that the Broker effected changes in its shareholding on 31st March, 2023 and 30th September, 2023. The joint/cumulative change in the shareholding pattern on account of the said transactions were 12.15% and 10.75% respectively, which exceeded ten per cent of its paid-up capital. The Broker did not seek prior approval of the Authority as mandated under Regulation 25(2) read with Schedule II – Form T of the Regulations.
14. The shareholding pattern of the Broker at relevant points in time is summarised below:
| SN | Name of the shareholders | Shareholding Pattern as on 10th February, 2022 | Shareholding Pattern as on 31st March, 2023 | Shareholding Pattern as on 30th September, 2023 | Promoter /Investor | |||
| No. of shares held |
% of
capital |
No. of shares held |
% of capital | No. of shares held |
% of capital | |||
| 1 | Raja Gopal Reddy Kolagani | 6,53,932 | 50 | 12,78,932 | 62.15 | 12,78,932 | 51.4 | Promoter |
| 2 | Sudesh Kumari Kolagani | 6,53,932 | 50 | 7,78,932 | 37.85 | 12,08,932 | 48.6 | Promoter |
| Total | 13,07,864 | 100 | 20,57,864 | 100 | 24,87,864 | 100 | ||
Submission of the Broker (Verbatim)
15. Broker submitted that the oversight occurred due to an accounting error in recording the shareholding transactions. Specifically, the transactions were made through a joint account held by the Directors, Mr. K. Raja Gopal Reddy and Mrs. Sudesh Kumari and these transactions were not correctly reflected in company’s records. As a result, the company did not realize that the cumulative change in shareholding had crossed the 10% threshold, which required prior approval of the Authority. The non-compliance was unintentional. The company has put in place stronger internal processes to ensure accurate tracking of joint shareholding and compliance with IRDAI regulations going forward.
Decision
16. It is an admitted position that the Broker did not obtain prior approval of the Authority before effecting changes in its shareholding pattern on 31st March, 2023 and 30th September, 2023, which formed the basis of the charge in the SCN dated 21st November, 2025.
17. In view of the above facts and circumstances, it is evident that the Broker has violated Regulation 25(2) read with Schedule II – Form T of the Regulations. However, considering the nature of the lapse, the submissions made by the Broker, and the corrective steps initiated, 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.
18. This Order shall be placed before the Board of the Broker at its next immediate meeting for noting and for initiation of appropriate corrective and preventive measures. The Broker shall submit a copy of the minutes of the said Board meeting to the Authority.
19. If the Broker is aggrieved by this Order, an appeal may be preferred before the Securities Appellate Tribunal in accordance with the provisions of Section 110 of the Insurance Act, 1938.
(Satyajit Tripathy)
Member (Distribution)
(Deepak Sood)
Member (Non-Life)
Place: Hyderabad
Date: 29th January, 2026
