Listing of Insurers’ Shares: IRDAI Proposes to Dispense with Prior Approval

The Insurance Regulatory and Development Authority of India (IRDAI) has put forward a proposal to do away with the requirement of obtaining prior approval of the Authority for the listing of shares of insurers on stock exchanges. The same would be subject to compliance with the prescribed conditions.

Public feedback on the draft IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Indian Insurance Companies) Regulations, 2024, has been sought by February 23, 2024.

The draft regulations intend to “promote growth of insurance sector by simplifying the process of registration of insurer, transfer of shareholding, other forms of capital, amalgamation of insurers, listing of shares of insurers on stock exchange and to promote ease of doing business”.

As per the existing regulations[1], Indian insurance companies transacting life or other than life insurance business are required to obtain the previous approval of the Authority before approaching the Securities and Exchange Board of India (SEBI) for the public issue of shares and for any subsequent issue under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Regulation 28 of the draft regulations states that an insurer may approach any financial sector regulator for the listing of its equity shares (through divestment of equity shares by existing shareholders or fresh issue of shares or both) on stock exchanges subject to certain conditions. For instance, in case the threshold limits stipulated under Section 6A of the Insurance Act, 1938, and Regulation 19 of the draft regulations, are crossed, prior approval of the Authority would be necessary for the transfer of shares for offer for sale (OFS) and/ or fresh issuance of shares.

[1] IRDAI (Issuance of Capital by Indian Insurance Companies transacting Life Insurance business) Regulations, 2015, and IRDAI (Issuance of Capital by Indian Insurance Companies transacting other than Life Insurance business) Regulations, 2015.