I

643TH10Q
INSURANCE REG
ULATORY AND
DEVELOPMENT
AUTHORI TY
IRDA/BRK/Misc/Cir/] a1(o.V2014Date: 1/5/2014
CIRCULAR
RE: CHANGES IN THE SHARE HOLDING PATTERN OF A BROKING ENTITY
Regulation 10of IRDA(Insurance Brokers) Regulations, 2013 lays down
the regulatory obligations tobe 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 the
shareholding pattern by the Broking Entities. Such frequent changes
are not viewed in good light by the Authority as they reflect financial
volatility of the Company. Since, it has always been the endeavor of
the Authority toensure 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 under
Section 14(1) of the Insurance Regulatory and Development Authority
Act, 1999 read with Regulation 50of 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 of
induction of capital)
where after the transfer, the total paidupequity
holding/contributionof thetransfereeis likely toexceed,fifty per
cent of theirpaidupcapital/contributionOR
wherethenominal valueof theshares intendedtobetransferred
by any individual, firrn, group, constituent of agroup, orabody
corporate under the same lnanaee)nen1, ^o ^ intly or severally
exceeds fifty percent of thepaid-upcapital orthecontribution
a. The applicant and the proposed shareholders would be subjected to
the Due-Diligence, as applicable for fresh applications for
InsuranceBroking Licences.
ft WT T, t;UU c M, , iI -500 004. ' lR
(0 : 91-040-
2338 1100
,1: 91-040-
6682 3334
J-1: irda@irda .gov.in :
www.irda . gov.in
Parisharam Bhavan, 3rd Floor, Basheer Bagh, Hyderabad-500004. India.
Ph.: 91-040-2338 1100, Fax: 91-040-668233341
E-mail : irda@irda.gov.in Web.: www.irda.gov.in
b. The broker has tosubmit the following:-
i. All documents, as specified in annexure VII of Regulation 10.
ii. Afresh Application form and necessary undertakings, as per
undertaking format in annexure III Cof the Broking
Regulations, 2013
iii. Fit &Proper undertakings (as per the format given in
annexure II Bof 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 the
conditions specified, shall grant its approval and send intimation
thereof tothe applicant. There would he a time limit of 60days,
from the date of communication of approval, within which such
transfer should be effected
e. There will be a lock-in period of 3 years, from the date of
concluding share transfer, during which norequest would be
entertained for any further changes in the shareholding pattern.
2) For changes inshareholdingpattern (includingarisingout of
inductionof capital)
where after the transfer, the total paid upequity
holding/contributionof the transferee is likelytoexceed five
percent but not fifty percent of their paidupcapital or
contributionOR
wherethe nominal valueof theshares intendedtobetransferred
by any individual, firm, group, constituent of agroup, or body
corporate under the same management, jointly or severally
exceeds fivepercent but not fifty percent of thepaid-upcapital
or the contribution
a. The broker tosubmit the following:-
i. All documents, as specified in annexure VII of Regulation 10
ii. Fit &Proper undertakings (as per the format given in
annexure II Bof IRDA(Insurance Brokers) Regulations,
20131, in respect of all the transferees/new shareholders, as
applicable.
b. The Authority, on being satisfied that the applicant fulfils all the
conditions specified, shall grant its approval and send
intimation
thereof tothe applicant. There would be a time limit of 30days,
from the date of communication of approval, within which such
transfer should be effected
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c. There will be a lock-in period of 1year, from the date of
concluding share transfer, during which norequest would be
entertained for any further changes in shareholding pattern.
3) For changes inshareholdingpattern(includingarisingout of
inductionof capital)
where after the transfer, the total paidupequity
holding/contributionof thetransfereeisnot likely toexceedfive
percent of theirpaidupcapital orcontributionOR
where thenominal valueoftheshares intendedtobetransferred
by any individual, firm, group, constituent of agroup, orabody
corporateunderthesamemanagement, jointly_or_sevYralli( (1o('s
not exceedfivepercent of thepaid-upcapital orthecontribution
a. The broker has tosubmit Fit &proper undertakings {as per the
format given in annexure II Bof IRDA(Insurance Brokers)
Regulations, 2013), in respect of all the transferees/new
shareholder as applicable.
b. Theinformationwouldbe takenon record by the Authority.
In all the scenarios explained above, the Authority reserves the right to
call for any additional document or clarification for disposal of the
application.
The Authority, in exceptional cases, may consider relaxing the
conditions laid down in clauses 1(e) &2(c ) pnd examine the same on
merits.
The Circular comes in toforce with immediate effect.
,A,,,,-__ _ t
D, MEMBER
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