Irda seeks information from insurers like Bharti AXA & Max Bupa to verify Indian control of operations

MUMBAI: The insurance regulator has asked companies such as Bharti AXA and Max Bupa to furnish further details on the composition of their boards and shareholding pattern to ensure the control and ownership structure remains with Indians even after an increase in foreign holding. “We have asked for more information from companies like Bharti AXA and Max Bupa,” said an Insurance Regulatory and Development Authority (Irda) official.

“We want to ensure that board majority remains with Indians; that key appointments and all key decisions are taken by the board and the foreign promoter does not get a veto power in key management decisions.”

The Foreign Investment Promotion Board (FIPB) has cleared an increase in FDI in companies such as Edelweiss Tokio Marine, Bharti AXA and Max Bupa. Max Bupa, the standalone health insurance JV, was the first insurance company to announce an increase in FDI to 49% from 26%. However, these were cleared without looking into the control and ownership structures. The regulator has cleared the increase in FDI in Edelweiss Tokio Marine.



“Irda is looking into the control and ownership issues,” said a CEO of an insurer. “They are seeking more information in terms of composition of the board and shareholding agreement.”

Even though the government has allowed higher FDI in the insurance sector, it wants to make sure that ownership and control remain with Indians at all times. While Indian ownership is defined as more than 50% of the equity share capital being held by Indian residents, control would mean the right to appoint majority directors on the board of a company or to control the management or policy decisions, including shareholder agreements or voting agreements.