Dilute stake equally in IPO-bound cos: IRDA

By SiliconIndia   |   Wednesday, September 29, 2010   |    5 Comments
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Mumbai: To ensure the control of life insurance companies in the hands of Indian shareholders, Insurance Regulatory and Development Authority (IRDA) has said that shareholders should sell stake equally in an initial public offering by an insurance company. On the occasion of CII's 13th insurance summit, Irda Chairman J Harinarayan said that when dilution occurs, it should be equal between domestic and international shareholders. Present insurance laws limit the total foreign shareholding to 26 percent. Apart from this, there is also a bill pending in Parliament that proposes to increase foreign shareholding in life insurance companies to 49 percent. At present, with foreign shareholding at 26 percent, there was no dichotomy between listing and foreign shareholding norms. If the insurance bill is passed, increasing its stake to 49 percent, a dichotomy may arise, but at the moment there is none, according to Harinarayan. After the equal dilution occurs, no joint venture will be able to go public without the foreign partner losing its veto power in the joint venture. The regulator also indicated that companies would be allowed to outsource functions that were not core to the business of insurance.
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