India: Listing of Indian insurance companies: move to be "IPO ready"

Last Updated: 24 October 2017
Article by Celia Jenkins

Article by Celia Jenkins and Shubhangi Pathak

The last few years have seen several Indian insurance companies introducing public offers with the objective of being listed on Indian stock exchanges. Recent press reports indicate that there may be several more in the pipeline in the next couple of years.

In this regard it is interesting to note that §6AA of the Insurance Act 1938 (Insurance Act) initially provided for compulsory divestment of share capital by the promoters of an insurance company after a period of ten years from the date of commencement of the insurance business or any other period specified by the Central Government. One of the manners in which such divestment could have been implemented is by way of a public offer. However, this provision was deleted pursuant to the amendments introduced by the Insurance Laws (Amendment) Act 2015.

Post the 2015 amendment, the IRDAI issued IRDAI (Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business) Regulations 2015 (Life Insurance Listing Regulations) and IRDAI (Issuance of Capital by Indian Insurance Companies transacting other than Life Insurance Business) Regulations 2015 (Non-life Listing Regulations) which provided for the procedure to be followed for listing of both life and non-life insurance companies. It is pertinent to note that these regulations issued by the IRDAI have to be read together with the SEBI (Issue of Capital and Disclosure Requirements) 2009 (ICDR Regulations).

Thus far, no similar guidance has been issued for any insurance intermediaries that exclusively carry out distribution of insurance. In the absence of specific guidance, these entities will continue to be governed by SEBI norms for public offerings.

The Listing Regulations:

The Life Insurance Listing Regulations and the Non-life Listing Regulations do not provide for compulsory listing by any Life or Non-life Indian insurance company. In addition, various press reports suggest that Indian insurance companies will not be obligated to list on stock exchanges and this decision will be left with the Board and management of these companies.

Both the Life Insurance Listing Regulations and the Non-life Listing Regulations provide that prior written approval of the IRDAI is to be obtained before any Indian Life Insurance Company or any Non-life Insurance Company approaches the SEBI for public issue of shares and for any subsequent issue as well. Further, the Life Insurance Listing Regulations and the Non-life Listing Regulations provide the factors which will be considered by the IRDAI for grant of this approval. These factors inter alia include,

  • Applicant entity's overall financial position;
  • Period for which the applicant entity has been in business;
  • History of compliance with the regulatory requirements by the applicant entity;
  • Compliance with Corporate Governance Guidelines issued by the IRDAI;
  • Compliance with the prescribed regulatory solvency margin.

Being "IPO Ready":

With this background one of the key factors which is considered by the IRDAI is history of compliance with regulatory requirements by the applicant entity. Further, any gaps in regulatory compliance will also need to be disclosed at the time of preparation of the Draft Red Herring Prospects (DRHP) in accordance with the ICDR Regulations, which will in turn form part of the "Risk Factors" set out in the DRHP.

In view of the highly regulated nature of the Indian insurance sector compliance requirements are not only wide spread in nature, but are also stringent. A few illustrations of compliance requirements applicable to Indian insurance companies include: 

  • Maintaining the requisite solvency margin;
  • Compliance with social and rural sector obligations;
  • Undertaking investments only as per the specified regulations;
  • Compliance with various regulations regarding manner of solicitation and procurement of insurance business;
  • Limitations on payment which may be made to insurance intermediaries
  • Requirement to obtain prior approvals from the IRDAI upon occurrence of specific events such as appointment of Key Management Personnel and Directors on their Board, change in place of business and change in shareholding pattern;
  • Requirement to file periodic returns and notifications with the IRDAI on various aspects.

In addition to this, compliance with other norms which apply to all companies such as the compliance requirements set out under the Companies Act 2013 also needs to be maintained.

Given the vast nature of regulatory compliance requirements, Indian insurance companies may find it challenging to prepare for a public issue once the Board and management of such companies takes the decision to list the company on stock exchanges. One manner in which such challenges can be addressed is a prior review of the company being "IPO ready" in advance of the decision for listing being taken. Ideally this phase may commence up to 1 to 2 years prior to the time when the decision for listing could be taken and would entail conducting an audit on the various compliance levels and business operations of the company to identify the gaps and non-compliance issues, if any. This will provide adequate time to the legal and compliance teams to then propose the key issues which need to be addressed and the changes which need to be introduced in the business practices to ensure optimum level of compliance by the time that the company decides to proceed with listing.

In this regard IRDAI has already provided in the "Guidelines for Corporate Governance for insurers in India" of 18th May 2016 that the insurance companies, even if unlisted, shall initiate to take necessary steps to address the extant 'gaps' that are so identified, to facilitate the smooth transition at the time of their eventual listing.

Concluding Remarks:

As the Indian insurance market develops and matures further, not only Indian insurance companies but also insurance intermediaries (who are also highly regulated by the IRDAI) will aim to introduce public issues and list on recognised stock exchanges in order to, inter alia, raise more funds from the public and provide liquidity to their existing shareholders. In this process, the time and efforts dedicated towards getting the companies "IPO ready" should be focused on ensuring optimum regulatory compliance and rectifying any non-compliance issues that are identified. This will go a long way in simplifying the process of listing and will also contribute towards improved market valuation of such Indian insurance companies and insurance intermediaries.

For further information on this topic please contact Tuli & Co 

Tel T +91 11 4593 4000, fax F +91 11 4593 4001 or email

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions