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Indian Insurance Companies (Foreign Investment) Amend. Rules, 2019

Ministry of Finance (Department of Financial Services) Notification dated the 2nd September, 2019 (Date of publication in the Official Gazette: 2nd September, 2019).—

G.S.R. 619(E).—In exercise of the powers conferred by clause (aaa) of sub-section (2) of section 114 of the Insurance Act, 1938 (4 of 1938) read with clause (b) of sub-section (7A) of section 2 of the said Act and section 24 of the Insurance Regulatory and Development Authority Act,1999(41 of 1999), the Central Government hereby makes the following rules further to amend the Indian Insurance Companies (Foreign Investment) Rules, 2015, namely:-

1. (1) These rules may be called Indian Insurance Companies (Foreign Investment) Amendment Rules, 2019.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Indian Insurance Companies (Foreign Investment) Rules, 2015,-

(a) in rule 2, after clause (l), the following clause shall be inserted, namely:-
 (la)"intermediary or insurance intermediary" shall have the meaning assigned to it in clause (f) of sub-section (1) of section 2 of the Insurance Regulatory and Development Authority Act, 1999;”;

(b) for rule 9, the following rule shall be substituted, namely:-
“9. (1) There shall be no cap to foreign equity investment for intermediaries or insurance intermediaries.
(2) The foreign direct investment proposals under this rule shall be allowed under the automatic route subject to verification by the Authority and the foreign investment in intermediaries or insurance intermediaries shall be governed by the same terms as provided under rules 7 and 8:
 Provided that where an entity like a Bank, whose primary business is outside the insurance area, is allowed by the Authority to function as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of such entities from the primary (non-insurance related) business must remain above 50 per cent. of their total revenues in any financial year.
(3) The insurance intermediary that has majority shareholding of foreign investors shall undertake the following:
 (i) be incorporated as a limited company under the provisions of the Companies Act, 2013;
 (ii) at least one from among the Chairman of the Board of Directors or the Chief Executive Officer or Principal Officer or Managing Director of the insurance intermediary shall be a resident Indian citizen;
 (iii) shall take prior permission of the Authority for repatriating dividend;
 (iv) shall bring in the latest technological, managerial and other skills;
 (v) shall not make payments to the foreign group or promoter or subsidiary or interconnected or associate entities beyond what is necessary or permitted by the Authority;
 (vi) shall make disclosures in the formats to be specified by the Authority of all payments made to its group or promoter or subsidiary or interconnected or associate entities;
 (vii) composition of the Board of Directors and key management persons shall be as specified by the concerned regulators;

(c) in rule 10, after the words “Indian Insurance Company,”, the words ‘intermediary and insurance intermediary’ shall be inserted.

Note: The principal rules were published in the Gazette of India, Extraordinary, vide notification number G.S.R. 115(E), dated the 19th February, 2015 and subsequently amended by notifications number G.S.R. 534(E), dated the 3rd July, 2015 and G.S.R. 314(E), dated the 16th March, 2016.

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