IRDA introduces lock-in period in shareholding of insurance brokers

India Infoline News Service | Mumbai |

IRDA has made it mandatory for insurance brokers to take its approval before executing any change in share-holding pattern

The Insurance Regulatory and Development Authority (IRDA) has mandated a lock-in period of three years for executing a transfer of over 50% shares in any insurance broking firm.
The IRDA has said for insurance brokerages, any change in the shareholding pattern through which the paid-up equity holding of the individual/group becomes less than 5% will require its approval. Also, the broker will have to provide ‘fit-&-proper’ undertakings for the new shareholder.
No lock-in period is applicable for executing a transfer of less than 5% shares.
The regulator said, “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 to ensure presence of long term players in the market, the need for certain stipulations in this regard, is considered necessary.”
The IRDA has also tightened its vigilance on share-holding pattern of insurance brokers. Now, IRDA has made it mandatory for insurance brokers to take its approval before executing any change in share-holding pattern. Even for executing a mere transfer of 5% shares, insurance brokers are required to take IRDA’s approval.
 

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