Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021 have been issued to amend the Indian Insurance Companies (Foreign Investment) Rules, 2015. Briefly, the major changes are as follows :
- The limit on aggregate holdings by way of total foreign investment in equity shares of Indian Insurance Company by Foreign Investors, including portfolio investors, has been increased from 49% to 74% of the paid up equity capital of such Indian Insurance Company.
- The proposal of foreign investment upto 74% will be allowed under the automatic route.
- Indian Insurance Companies having foreign investment will now need to ensure that: (i) A majority of their directors; (ii) A majority of their key management persons (KMPs); and (iii) At least one of the board chairperson, the managing director and the CEO, are “resident Indian citizens”.
In an Indian Insurance Company having Foreign Investment Exceeding Forty-Nine Percent :
- for a financial year for which dividend is paid on equity shares and for which at any time the solvency margin is less than 1.2 times the control level of solvency, not less than fifty per cent of the net profit for the financial year shall be retained in general reserve; and not less than fifty per cent of its directors shall be independent directors, unless the chairperson of its Board is an independent director, in which case at least one- third of its Board shall comprise of independent directors.