IRDAI Approval for Share Transfer: What Every Insurance Broker Must Know
Any person who is desirous to acquire any stake in existing company holding insurance Broker license granted by the IRDAI ,Whether as Direct broker ,reinsurance broker and composite shall be require to comply with the provision as laid down under regulation 25 of IRDAI (Insurance brokers) Regulation 2018.
Regulation 25 read with schedule II of IRDAI (Insurance Broker) Regulation 2018, provides that the transferor Insurance Broker Company shall seek the prior approval of the IRDAI for transfer of share or issue of further equity capital.
However, this mandatory approval is not required in every case of transfer of share. There are two situation in which the Transferor insurance Broker Company is required to obtain the prior approval form IRDAI for transfer or issue of equity capital, as follows
- After the transfer of share , the total paid-up capital shareholding of the transferee in shares of the insurance broker is likely to exceed twenty percent of its paid up capital or
- The nominal value of the shares intended to be transferred by an individual or group, constituents of a group or body corporate under the same management jointly or severally exceeds 10% of the paid up capital of the insurance broker business.
Procedure for Obtaining Approval from IRDAI
The transferor insurance broker company is required to follow the following procedure:
- Prepare the application in the prescribed format as specified in Schedule II.
- Provide details of the shareholding at the time of grant of the Certificate of Registration.
- The application should be signed by the Principal Officer of the Insurance Broker.
- Enclose Form TB in the prescribed format.
Documents Required for Transfer Exceeding
20% of Total Paid-Up Capital
The following is an indicative list of documents required:
- - Copy of the Board Resolution,(if transferee is a corporate entity )
- - Copy of the proposed shareholding pattern duly certified by a CA/CS.
- - Details of the monetary consideration
- - The Audited accounts of the transferee for the past three years, along with certified copies of IT returns .
- - Detailed list and activities of the associate companies/concerns of the transferee.
- - Net worth certificate and Income Tax Returns for the last three financial years of the transferee, ( in case of individual acquire).
How AB & Associates Can Assist with Insurance Broker Share Transfer Compliance
1. How can AB & Associates assist in obtaining IRDAI approval for transfer of shares ?
AB & Associates assist in preparing and filing the application for prior IRDAI approval, along with the required documents and regulatory submissions.
2. Can AB & Associates assist with the proposed acquirer’s documentation?
Yes. AB & Associates assist in compiling KYC, financial, shareholding, source-of-funds and other documents required from the proposed acquirer.
3. Will AB & Associates handle IRDAI queries and follow-ups?
Yes. AB & Associates assist in preparing replies to IRDAI queries, submitting additional documents and coordinating with the Authority throughout the approval process..
4. Can AB & Associates assist with ROC/MCA compliances?
AB & Associates assist with Board/shareholder approvals, share-transfer documentation, statutory records and applicable ROC/MCA filings.
5. Can AB & Associates provide end-to-end assistance for the transaction?
Yes. AB & Associates provide complete assistance from initial assessment and IRDAI approval through share transfer and post-approval corporate compliances.
