New Delhi, Dec 24 () Insurance regulator Irdai has cautioned the foreign promoter of SBI Life Insurance (SBI Life) against selling part of its stake in the company in March 2019 without seeking a prior approval from the sectoral watchdog.
On March 30, SBI Life had informed the Insurance Regulatory and Development Authority of India (Irdai) regarding sale of 5,07,40,000 equity shares held by Cardif constituting 5.069 per cent of SBI Life's total shareholding, by way of on-market transaction on March 29, 2019.
However, a show-cause notice was sent to BNP Paribas Cardif SA (Cardif) by Irdai on June 12, 2019 followed by a reply given by Cardif in July and personal hearing in October.
"The documents filed by SBI Life were examined and it was observed that Cardif carried out the said sale of shares to multiple parties without seeking prior approval of Irdai as required under section 6A (4) (b) (iii) of the Insurance Act, 1938...of Irdai (Transfer of Equity Shares of Insurance Companies) Regulations, 2015 and Irdai (Listed Insurance Companies) guidelines, 2016," Irdai said in an order dated December 24, 2019.
Irdai said it has sought clarification from SBI Life and Cardif for not seeking prior approval for the said transaction and said as to "why appropriate action should not be initiated in terms of the relevant provisions of the Insurance Act".
During the personal hearing, Cardif confirmed that prior approval was not sought as their legal counsel advised them that prior approval was required by the acquirer and not the transferor, Irdai said.
In response, Cardif representatives Frederic Devilliers, Head of Legal Affairs and Jonathan Bezulowsky, Head of Corporate Legal Affairs said that they "genuinely believed" that prior nod of Irdai was not required for such sale by the transferor and requested the regulator to condone the "unintentional mistake".
Cardif also ensured Irdai that in future the same would not be repeated and that the provisions of law would be brought to the notice of the management of Cardif for compliance.
Cardif further requested Irdai for grant of post-facto approval of Irdai for the said sale of shares.
"The Authority notes that the transaction executed by Cardif for transfer of 5,07,40,000 equity shares constituting 5.069 per cent of the share holding of SBI Life carried out through the stock exchange on 29, March, 2019 is violation of...Transfer Regulations and Listed Insurance Companies Guidelines.
"In view of the submissions made by Cardif during the personal hearing and their request for taking a lenient view, the Authority hereby grants post facto approval to the said transaction of transfer," Irdai said in its order regarding the decision taken by it in the matter.
Irdai also said that the compliance with the law was solely Cardif's responsibility and asked it to exercise "due caution" to ensure adherence to all legal and regulatory stipulations in future.
"If Cardif feels aggrieved by this order, an appeal may be preferred to the Securities Appellate Tribunal," Irdai said.
SBI Life Insurance Co Ltd is promoted by India's largest bank SBI and France based global insurer Cardif. As on September 30, 2019, SBI held 57.60 per cent in SBI Life, while Cardif had 5.20 per cent stake, according to data on BSE. KPM MKJ
Next Story
A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single 
2 states where home prices are falling because there are too many houses and not enough buyers
"To sit and talk in the box...!" Kohli's message to critics as RCB wrecks GT in IPL Match 45
7 Nutritious and flavourful tiffin ideas to pack for school
India's e-commerce market set to skyrocket as the country's digital economy surges to USD 1 Trillion by 2030
Top 5 places to visit near Rishikesh
Indian economy remains in bright spot: Ministry of Finance
