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III

Sec. 4 ]

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W. f f t ^TRIAIUT, 3TK5T^T
[fa q tm III/4/161/12/aroi.]

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

NOTIFICATION
Hyderabad, the 7th February, 2013

Insurance Regulatory and Development Authority (Scheme of Amalgamation andTransfer of

Life Insurance Business ) Regulations, 2013
F. No. IRDA/Reg./8/66/2013. In exercise ofthe powers conferred by clause (zc) o f sub-section (2) o f Section
114Aofthe Insurance Act 1938 (4 o f 193 8) read with Section 6A, 35,36 and 37; and 14 and 26 ofthe Insurace Regulatory
and Development Authority Act, 1999 (41 o f 1999), the Authority, in consultation with the Insurance Advisory Committee,
hereby makes the following regulations namely :

1.

Short title and commencement

1.
2.
3.

2.

These regulations may be called the Insurance Regulatory and Development Authority (Scheme of
Amalgamation and Transfer o f Life Insurance Business) Regulations, 2013.
They shall come into force on the date o f their publication in the official Gazette.
These Regulations shall apply to all life insurance companies. However, the applicability o f these
Regulations to the Life Insurance Corporation o f India shall be subject to the provisions of Life
Insurance Corporation o f India Act, 1956.

Definitions
In these regulations, unless the context otherwise requires:
a. Act means the Insurance Act, 1938 (4 o f 1938);
b. Authority means Insurance Regulatory and Development Authority established under Section 3 o f
the Insurance Regulatory and Development Authority Act, 1999;
c. application means application submitted to the Authority along with proposed Scheme as defined
hereunder;
d. appointed date means the date appointed for purposes of giving effect to the scheme o f amalgamation
and transfer o f life insurance business;
e. merged entity means the resultant Indian Insurance Company consequent upon the implementation of
the Scheme;
f. Scheme means scheme o f amalgamation or transfer formulated under Section 35 o f the Insurance
Act, 1938 and not governed by Section 37A o f the Insurance Act 1938, whether or not preceded by any
agreement or deed;
g.
transacting parties means the transferor company and the transferee company both o f which are
Indian Insurance Company
as defined in Section 2(7) A o f the Insurance Act 1938;
h. transferor insurer means the company or companies, which would transfer the undertaking o f life
insurance business under the Scheme o f amalgamation and transfer;

THE GAZETTE OF INDIA : EXTRAORDINARY

8
i.

3.

[ P art

III S e c .

transferee insurer means the company, which would acquire the undertaking o f life insurance
business under the Scheme o f amalgamation and transfer.

Application to be submitted to the Authority

1. No Scheme shall be implemented without the proposal for implementation thereof being submitted by
the transacting parties to the Authority along with the draft proposed Scheme containing related
information as indicated in the Annexure to these Regulations.
2. Every Scheme under these regulations shall be implemented only after final approval o f the Authority:
Provided that no Scheme under these regulations shall be approved if in the opinion o f the Authority:
(i)
(ii)
(iii)
(iv)

4.

the available solvency margin o f the merged entity will be lower than the required minimum
regulatory level; or
the Scheme is not compliant with any applicable laws and regulations; or
the Scheme is not in the best interests of the policyholders; or
the Scheme is not conducive to the orderly growth o f the insurance sector.
t

Notice of Intention
1.

Every application for implementation o f the Scheme shall be preceded by a notice o f atleast two
months o f the intention to implement the Scheme, together with a statement o f the nature o f the
amalgamation and transfer, along with the reasons thereof to the Authority and certified copies, four
in number, o f each o f the following documents shall be furnished to the Authority:
(a)

a draft o f the agreement or deed or Scheme under which it is proposed to effect the
amalgamation and transfer;
(b) balance-sheets in respect o f the insurance business of each o f the insurers concerned in such
amalgamation and transfer, prepared in the form as indicated in the IRDA (Preparation of
Financial Statements and Auditors Report o f Insurance Companies) Regulations, 2002;
(c) Financial Condition Report; Appointed Actuaries Annual Report; and Solvency Statement
prepared in conformity with the requirements o f relevant regulations and Circulars issued by the
Authority, including Assets, Liabilities and Solvency Margin Regulations;
(d) a report on the proposed amalgamation and transfer, prepared by an independent actuary who
has not been professionally connected with any o f the parties concerned in the amalgamation
and transfer at any time in the five years preceding the date on which he signs his report;
(e) a synopsis / executive summary o f the proposed transaction, and the terms on which such
transaction has been contemplated;
(f) a report on the manner in which the interest o f the policyholders will be protected; and
(g) a report on compliance with the applicable laws, including but not limited to, the Competition
Act, 2002 and the employment laws.

5.

2.

The balance sheets, reports and abstracts referred to in clauses (b), (c) and (d) shall be prepared as at
the appointed date, on a pro-forma basis. These shall include (i) audited financial statements most
proximate to the appointed date and (ii) latest quarters unaudited financial statements.

3.

The aforesaid documents shall be kept open for the inspection o f the members and policyholders at
the principal and branch offices.

Notice of the Scheme:

The Authority may, by an order in writing, direct notice of the application to be sent to every person resident in
India, who is the holder o f a life policy o f any insurer concerned; and shall cause a statement of the nature and

4]

[*TFT III

4]

W T 5 T : 3Tf[TtrRnT

terms o f the amalgamation or transfer, as the case may be, to be published in such manner and such period as
the Authority may direct.
6.

Actuarial Valuation
1.

7.

The Authority may, at any time prior to granting final approval to the proposed Scheme, cause an
independent actuarial valuation o f the insurance business (encompassing the assets, liabilities and
solvency position) o f the transacting parties.

In-principle approval by the Authority

1.

The Authority, after hearing the directors and such policyholders, as may apply to be heard, and any
other persons whom it considers entitled to be heard, and on being satisfied that the proposed Scheme
is (i) in the interests o f the orderly growth o f the insurance sector, (ii) on confirmation o f compliance
with any requirements as the Authority may deem fit in the context o f its regulatory mandate; and (iii)
not subject to any reasonable objection from policyholders and in the context o f public interest, may
grant in-principle approval to the proposed Scheme subject to such conditions as it may consider
appropriate.
Provided that
(a) no part o f the deposit made under section 7 o f the Act, by any party to the amalgamation or
transfer shall be returned except where, after effect is given to the arrangement, the whole o f the
deposit to be made by the insurer carrying on the amalgamated business or the person to whom the
business is transferred is completed,
(b) only so much o f the deposit shall be returned as is no longer required to complete the deposit last
mentioned in clause (a), and
(c) while the deposit last mentioned in clause (a) remains uncompleted, no accession, resulting from
the arrangement, to the amount already deposited by the insurer carrying on the amalgamated
business or the person to whom the business is transferred shall be appropriated as payment or part
payment o f any installment o f deposit subsequently due from the insurer under section 7.
Provided further that
If the arrangement involves a reduction o f the amount o f the insurance and other contracts o f the
transferor insurer(s) concerned in the amalgamation, the Authority may approve the arrangement
reducing the amount o f such contracts upon such terms and subject to such conditions as the Authority
may think proper, and the reduction o f contracts as approved by the Authority shall be valid and
binding on all the parties concerned.

8.

2.

In granting such in-principle approval and during the period prior to the transacting parties receiving
the Court approval, the Authority may if so required, impose such requirements on the transacting
parties as it may consider necessary and appropriate: (a) to ensure protection o f the interests o f the
policyholders; and (b) to ring fence the assets o f the transacting entities including stipulations for filing
o f information/reports at such periodicities as it may deem fit.

3.

During the interim period, the parties to the Scheme shall ensure that the insurance operations are
carried out in compliance with all requirements o f the Insurance Act, 1938, the regulations framed
thereunder and the directions issued by the Authority.

Effect of grant of In-Principle approval

1.

Upon grant o f in-principle approval, the transacting parties shall cause copies o f the proposed
Scheme to be kept open for inspection by policyholders at the registered office and the main corporate
office o f the transacting parties, and simultaneously the same shall be uploaded on the website o f the
respective insurers. Such inspection and access to the documents referred to above shall be kept open
until the complete implementation o f the Scheme.

atft3'3

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THE GAZETTE OF INDIA : EXTRAORDINARY

[ P art

III S e c .

2. Upon grant o f in-principle approval to the Scheme and prior to the said Scheme being finally
approved by the Authority, the Authority shall cause a statement o f the nature and terms o f the Scheme
to be published in at least one National Daily and one vernacular newspaper, copies o f which shall be
filed with the Authority.

3.

9.

Upon receipt o f the 'in-principle' approval of the Authority, the transacting parties to the Scheme
would initiate steps to seek such other regulatory approvals as may be required including but not
limited to a.

Filing the scheme o f arrangement (along with the 'in-principle' approval o f the Authority) with the
relevant High Courts/Tribunal (for confirmation o f the scheme o f arrangement in terms o f sections
391 to 394 o f the Companies Act, 1956 and compliance with all requirements under the
Companies (Court) Rules, 1959).

b.

Filing applications with the Foreign Investment Promotion Board (FIPB) and the Reserve Bank of
India (RBI) seeking requisite approvals, if any;

c.

In cases where a foreign joint venture partner is also associated with the transaction, approval from
the regulator in the relevant jurisdiction, if such approval is required; and

d.

Seek such other approvals as may be necessary, including those from the Securities and Exchange
Board o f India (SEBI), Stock Exchange(s) and Competition Commission o f India (CCI).

Final approval from the Authority

On completion o f the various processes indicated in these regulations and upon receipt o f approvals from
various applicable regulatory authorities, as applicable, the transacting parties shall approach the Authority
for the final approval o f the Scheme.
The transacting parties shall ensure that the Scheme to be finally implemented is consistent not only with
conditions, if any, imposed by the Authority, but also with such requirements or stipulations as may be
imposed by the other competent authorities while according their regulatory approval.

10. Effect of final approval

1.

The amalgamation and transfer o f the life insurance business, as envisaged in the Scheme, shall be
effective from such date as shall be specified by the Authority while granting its final approval to the
Scheme.

2.

On and from the date o f the coming into operation o f the Scheme or any provision thereof, the Scheme
or such provision shall be binding on the transacting parties and also on all the shareholders,
policyholders and other creditors and employees o f each of the transacting parties, and on any other
person having any right or liability in relation to any of the transacting parties.

3.

On and from the date of the coming into operation o f the Scheme, the properties and assets of the
transferor insurer shall, by virtue of and to the extent provided in the Scheme, stand transferred to and
vest in, and the liabilities o f the transferor insurer shall, by virtue o f and to the extent provided in the
Scheme, stand transferred to and become the liabilities o f the transferee insurer.

4.

Publication o f Notice in the newspapers about completion o f the process (at least one national Daily
and one vernacular, copies o f which shall be filed with the Authority).

4]

[ TFT H I * 3 ^ 4 ]

*fiTcT

IT O

: SWTOK ut

11

5.

If any difficulty arises in giving effect to the provisions o f the Scheme, the Authority may by order
issue such directions which appear to it necessary or expedient for the purpose o f removing the
difficulty.

6.

The Authority may issue such directions as it deems fit, taking into account the facts and
circumstances o f each case, its regulatory objectives, the interests o f policyholders and orderly growth
o f the insurance sector, in relation to any sequencing o f measures involved in the Scheme being
approved by it.

11. Payment of fees for processing of the application

The fees for the processing o f the application for an in-principle approval shall be jointly remitted by the
parties to the transaction by a demand draft issued by a scheduled bank in favour o f the Insurance
Regulatory and Development Authority payable at Hyderabad. The fees shall be one-tenth o f one per cent
o f the total gross premium written direct in India by the transacting parties during the financial year
preceding the financial year in which the application is filed with the Authority which shall be subject to a
minimum o f fifty lakh rupees, but shall not be higher than five crore rupees.

12. Timing
The Authority shall process and pass appropriate orders on the application for amalgamation and transfer as
expeditiously as possible, and the transacting parties shall ensure prompt response to the queries and
requests for information from the Authority for processing the application.

13. Statements required after amalgamation and transfer

The transferee insurer carrying on the amalgamated business shall within three months from the date o f the
completion o f the amalgamation and transfer, furnish in duplicate to the Authority:
1. a certified copy o f the scheme, agreement or deed under which the amalgamation or transfer has been
effected, and
2. a declaration signed by the chairman and the principal officer that to the best o f their belief every
payment made or to be made to any person whatsoever on account o f the amalgamation and transfer is
therein fully set forth and that no other payments beyond those set forth have been made or are to be
made either in money, policies, bonds, valuable securities or other property by or with the knowledge
o f any parties to the amalgamation and transfer.

Annexure
Scheme of Amalgamation and Transfer
Information to form part of the Proposal Document

1.
2.

Structure o f the transacting parties. .

Board Resolution o f the transacting parties approving the steps to undertake transactions which would
result in change o f structure o f the respective transacting parties.

12

THE GAZETTE OF INDIA : EXTRAORDINARY

3.

4.
5.
6.
7.

8.
9.
10.
11.
12.
13.
14.
15.
16.
17.

[ P art

III

Sec. 4]

Submission o f confirmations by shareholders through a special resolution at a general body meeting/

extraordinary general meeting o f the transacting parties about their intent to pursue the transfer
contemplated in the Scheme.
Details as to protection o f interests o f policyholders, creditors and/or shareholders o f the transacting parties.
Composition o f Board o f directors o f the merged entity along with the role o f senior management.
Compliance with the Guidelines on Corporate Governance issued by the Authority.
Details o f other regulatory approvals in respect of the proposed scheme
(i)
applications submitted to the other Regulators in respect of to the proposed scheme as
and when they are filed with other Regulators
(ii)
approvals granted by the other Regulators in this regard
Share' Purchase/Subscription Agreement with respect to the transfer/acquisition of life insurance business
by the transacting parties.
Shareholders Agreement with respect to the management and governance arrangements, if any, for the
transferred business.
Actuarial Report(s) on valuation o f the insurance businesses o f the transacting parties encompassing the
assets, liabilities and solvency position.
Rationalization o f existing range o f products in accordance with the File & Use Guidelines.
Assessment o f impact on Distribution Channels/Intermediaries and Branch Network.
Details o f Reinsurance Strategies and Protection & Maintenance o f Reinsurance Assets.
Implication o f the Scheme on the Key Contracts.
Issues pertaining to the Information Technology.
Projected Financial Statements o f the merged entity, as at the appointed date of the scheme.
Such other information which the Authority may require from time to time till the grant Of fin^l approval to
the Scheme.

J. HARINARAYAN, Chairman
[ADVT. 111/4/161/12/Exty.]

P rin te d b y th e M an ag er, G o v e rn m e n t o f
an d

P u b lish e d

by

India

th e C o n tro lle r

P ress, R in g

R oad,

M ay a p u ri, N ew D e lh i-1 1 0 0 6 4

o f P u b lica tio n s, D e lh i-1 10054.