The Insurance Regulatory and Development Authority of India (IRDAI) has directed Religare Enterprises subsidiary Care Health Insurance (CHIL), to buy back 7.57 million shares allotted to Rashmi Saluja, the non-executive director and chairperson of Religare Enterprises, and levied a penalty of Rs 1 crore for failing to obtain prior approval for such remuneration.
“The issuance of stock options of the company to Dr Rashmi Saluja in her capacity as the executive chairperson of Religare Enterprises is in violation of the Insurance Regulatory and Development Authority Act,” the order said on Tuesday.
CHIL has been ordered to repurchase the shares allotted to Saluja at Rs 45.32 each within 30 days from the date of the order and cancel any unexercised or unvested options within 15 days, the order said. Future grants of stock options to her have been prohibited.
The company has to pay the penalty within 45 days, charging it to shareholders’ accounts.
In 2019, IRDAI had permitted Saluja’s appointment for her common director role in Care Health and Religare Finvest Limited. However, in 2021, the insurer’s request to grant stock options to Saluja was rejected by the regulator.
Despite this, Care Health issued 22.7 million ESOPs, of which Saluja exercised 7.57 million shares by October 2023. Care Health had said that Saluja was granted ESOPs in her capacity as executive chairperson of Religare Enterprises Limited and not as non-executive director of Care Health. IRDAI did not accept this explanation, deeming it a defiance of the regulations.
The regulator also added that any decision by the board of the insurer, including remuneration, payment, perquisites, or any other benefit, monetary or otherwise, to any board member, managing director, and chief executive officer (MD & CEO) should only be implemented after prior approval from the insurance regulator.