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643TH 10Q INSURANCE REG ULATORY ANDDEVELOPMENT AUTHORITY

IRDA/BRK/Misc/Cir/] a1(o.V2014 Date: 1/5/2014

CIRCULAR

RE: CHANGES IN THE SHARE HOLDING PATTERN OF A BROKING ENTITY

Regulation 10 of IRDA (Insurance Brokers) Regulations, 2013 lays downthe regulatory obligations to be complied with by a Broking Entity in

case of any change in its shareholding pattern.

The Authority has been receiving frequent requests for changes in theshareholding pattern by the Broking Entities. Such frequent changesare not viewed in good light by the Authority as they reflect financialvolatility of the Company. Since, it has always been the endeavor ofthe Authority to ensure presence of long term players in the market,the need for certain stipulations in this regard, is considered necessary.

The Authority, by virtue of the power vested in the Authority underSection 14 (1) of the Insurance Regulatory and Development AuthorityAct, 1999 read with Regulation 50 of IRDA (Insurance Brokers)Regulations, 2013, brings forth the following procedure, for compliance

by all brokers in case of share transfers:- c

1) For changes in shareholding pattern (including arising out ofinduction of capital)• where after the transfer, the total paid up equity

holding/contribution of the transferee is likely to exceed ,fifty percent of their paid up capital/contribution OR

• where the nominal value of the shares intended to be transferredby any individual, firrn, group, constituent of a group, or a bodycorporate under the same lnana ee)nen1, ^o intly or severallyexceeds fifty per cent of the paid-up capital or the contribution

a. The applicant and the proposed shareholders would be subjected tothe Due-Diligence, as applicable for fresh applications forInsurance Broking Licences.

ft WT T, t;UU c M, , iI -500 004. ' lR(0 : 91-040-2338 1100 ,1: 91-040-6682 3334J-1: irda@irda .gov.in : www.irda . gov.in

Parisharam Bhavan, 3rd Floor, Basheer Bagh, Hyderabad-500 004. India.

Ph.: 91-040-2338 1100, Fax: 91-040-6682 3334 1

E-mail : irda@irda.gov.in Web.: www.irda.gov.in

b. The broker has to submit the following:-i. All documents, as specified in annexure VII of Regulation 10.

ii. A fresh Application form and necessary undertakings, as per

undertaking format in annexure III C of the Broking

Regulations, 2013iii. Fit & Proper undertakings (as per the format given in

annexure II B of IRDA (Insurance Brokers) Regulations,20131, in respect of the Principal Officer, Directors, Partners/Promoters/ Shareholders & Kev Management Personnel

c. The new promoters would be called for a Personal presentation

d. The Authority, on being satisfied that the applicant fulfils all theconditions specified, shall grant its approval and send intimationthereof to the applicant. There would he a time limit of 60 days,

from the date of communication of approval, within which suchtransfer should be effected

e. There will be a lock-in period of 3 years, from the date ofconcluding share transfer, during which no request would be

entertained for any further changes in the shareholding pattern.

2) For changes in shareholding pattern ( including arising out ofinduction of capital)• where after the transfer, the total paid up equity

holding/contribution of the transferee is likely to exceed fivepercent but not fifty percent of their paid up capital orcontribution OR

• where the nominal value of the shares intended to be transferredby any individual , firm, group, constituent of a group, or bodycorporate under the same management, jointly or severallyexceeds five percent but not fifty per cent of the paid-up capitalor the contribution

a. The broker to submit the following:-i. All documents, as specified in annexure VII of Regulation 10ii. Fit & Proper undertakings (as per the format given in

annexure II B of IRDA (Insurance Brokers) Regulations,20131, in respect of all the transferees/new shareholders, asapplicable.

b. The Authority, on being satisfied that the applicant fulfils all theconditions specified, shall grant its approval and send intimationthereof to the applicant. There would be a time limit of 30 days,from the date of communication of approval, within which suchtransfer should be effected

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c. There will be a lock-in period of 1 year, from the date ofconcluding share transfer, during which no request would be

entertained for any further changes in shareholding pattern.

3) For changes in shareholding pattern (including arising out ofinduction of capital)• where after the transfer, the total paid up equity

holding/contribution of the transferee is not likely to exceed fiveper cent of their paid up capital or contribution OR

• where the nominal value of the shares intended to be transferredby any individual , firm, group, constituent of a group, or a bodycorporate under the same management, joint ly _or _sevYra ll i( (1o('s

not exceed five per cent of the paid-up capital or the contribution

a. The broker has to submit Fit & proper undertakings {as per the

format given in annexure II B of IRDA (Insurance Brokers)Regulations, 2013), in respect of all the transferees/newshareholder as applicable.

b. The information would be taken on record by the Authority.

In all the scenarios explained above, the Authority reserves the right tocall for any additional document or clarification for disposal of theapplication.

The Authority, in exceptional cases, may consider relaxing theconditions laid down in clauses 1 (e) & 2 (c ) pnd examine the same onmerits.

The Circular comes in to force with immediate effect.

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D, MEMBER

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