Insurance FDI: Indian promoters to decide on directors, CEO

NEW DELHI: With 49 per cent FDI being allowed in insurance sector, regulator IRDAI today said Indian promoters will have control over appointment of majority of directors and that of key management persons, including CEOs.

However, foreign investors can nominate non-CEO key management persons provided such an appointment is approved by the board where majority of the directors, excluding independent members, are the nominees of Indian investors, IRDAI said while issuing its guidelines for "Indian owned and controlled" insurance companies.

Stating that "both direct and indirect holding in an Indian insurance company shall not exceed 49 per cent", the regulator said existing companies need to comply with these guidelines within three months.

However, an extension can be given by IRDAI "for valid reasons" for a further period of three months.

The insurance companies coming into existence post issuance of these guidelines would need to comply with these guidelines before grant of certificate of registration.

These guidelines, which have come into force with immediate effect, would apply to those companies that plan to hike their foreign investment from the existing level, as also to those that do not intend to increase their current foreign stake from the existing level.

The government has hiked the foreign investment limit in insurance sector to 49 per cent, from 26 per cent previously.

These guidelines were being keenly awaited by insurers seeking to increase foreign investment to bring into effect the higher limits that became a law earlier this year.

A number of foreign insurers have evinced interest in hiking their exposure to the Indian insurance sector.