As per the guidelines on ‘Indian owned and controlled’ insurance companies issued by the Insurance Regulatory and Development Authority of India (IRDAI), insurers will have to file an undertaking with the regulator confirming that the company is owned and controlled by Indians.
“Each undertaking shall be accompanied by a certified copy of resolution passed by the board of directors confirming compliance to the guidelines,” TS Vijayan, Chairman, IRDAI, said in a circular.
The control can be exercised by the Indian partners of the joint venture by way of shareholding, management rights, shareholder agreements, voting agreements, or any other means as per applicable laws, he said.
The guidelines assume significance in the wake of the recent Insurance Laws (Amendment) Act, 2015, which introduced many reforms in the insurance sector, including increasing the foreign investment cap in the insurance sector to 49 per cent from 26 per cent and permitting overseas reinsurers to open branches to carry out reinsurance business in India.
Over half a dozen foreign partners of insurance companies have so far expressed willingness to increase their stake.
The guidelines come into effect immediately. Existing Indian insurance companies will have to comply within three months.