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Thursday, September 24, 2015

IRDA seeks information from insurers like Bharti AXA & Max Bupa to verify

MUMBAI: The insurance regulator has asked companies such as Bharti AXA and Max Bupa to furnish further details on the composition of  their boards and shareholding pattern to ensure the control and ownership  structure remains with Indians even after an increase in foreign holding. "We  have asked for more information from companies like Bharti AXA and Max Bupa,"  said an Insurance Regulatory and Development Authority (Irda) official.

 "We want to ensure that board majority remains with Indians; that key   appointments and all key decisions are taken by the board and the foreign   promoter does not get a veto power in key management decisions."

The   Foreign  Investment Promotion Board (FIPB) has cleared an increase in FDI  in companies such as Edelweiss Tokio Marine, Bharti AXA  and Max Bupa. Max  Bupa, the standalone health insurance JV, was the first  insurance company  to announce an increase in FDI to 49% from 26%. However, these were cleared without looking  into the control and ownership structures. The regulator has cleared the   increase in FDI in Edelweiss Tokio Marine.
Irda seeks information from insurers like Bharti AXA & Max Bupa to verify Indian control of operations

"Irda is looking into the control and ownership issues," said a CEO of an insurer. "They are seeking more information in  terms of composition of the board and shareholding agreement."

Even  though the government has allowed higher FDI in the insurance sector, it wants  to make sure that ownership and control remain with Indians at all times. While  Indian ownership is defined as more than 50% of the equity share capital being  held by Indian residents, control would mean the rightto appoint majority directors on the board of a company or to control the  management or policy decisions, including shareholder agreements or voting  agreements.

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