The Insurance Regulatory and Development Authority (IRDAI) has released draft regulations for investments in insurance and reinsurance companies. The regulator has mentioned different proposals for promoters and investors. It has also proposed exit rules.
Draft proposal for promoters
According to this, 5-year lock-in will be available for promoters intending to start a business. They will not be able to promote more than one life, general insurer, health insurer and reinsurance company. The minimum shareholding of promoter shall be maintained above 50 percent of paid-up equity capital, the regulator proposed.
It must be noted that anyone with more than 10 percent is classified as a promoter.
Draft proposal for investors
Investment will be restricted to not more than 2 life, general, health and reinsurer company.
Draft proposal conditions for investments by private equity
As per the proposal, they should have completed 10 years of operation. The funds raised by the PE should be $500mn or more and investible funds available with the PE fund should not be under $100 mn.
They should have invested in financial sector in India or in other jurisdictions. There should be no mention of mandatory SPV route for PE investment in insurance companies.
On annual fee, the draft said an insurer who has been granted a Certificate of Registration under relevant sections of the Act shall pay, an annual fee for every financial year to the Authority before January 31 of the preceding financial year.