IRDA issues draft IPO norms for general insurance cos

Written by Press Trust of India | New Delhi | Updated: Sep 20 2012, 07:53am hrs
General insurance companies planning to tap the capital market for funds should have a 10-year experience and will have to seek prior approval from the sector regulator, IRDA said in its draft guidelines.

"No general insurance company shall approach the SEBI for public issue of shares and for any subsequent issue ...without the specific previous written approval of the authority," IRDA said in the draft norms for initial public offering of non-life insurers.

The draft norms IRDA (Issuance of Capital by General Insurance Companies) Regulations, 2012 states that the regulator would take into account the insurer's financial position, its capital structure and regulatory record before permitting them to come out with the share sale.

Further, the IRDA has kept with it the powers to prescribe the extent to which the promoters shall dilute their respective shareholding and the shares that can be allotted to foreign investors.

Further, the IRDA would also prescribe the minimum lock-in period for the promoters after the share sale.

The IRDA would also look into the purpose for which the insurer is proposing to raise the funds from the market and the insurer's capital structure.

An applicant company proposing to raise share capital through a public issue may do so only on completion of 10 years from the date of commencement of business," the IRDA said, adding that the approval granted by the Authority shall have a validity period of one year.

The regulator has also prescribed additional information risk factors specific to insurance companies, an overview of the insurance industry and a glossary of terms used in the insurance sector in the offer document for companies to come out with share sale offer.