Page 103 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes 6.6 Capital Requirements

You will find requirements as to capital structure and voting rights and maintenance of registers
of beneficial owners of shares given as below:

6A. (1) No public company limited by shares having its registered office in India, shall carry no
life insurance business, unless it satisfies all the following conditions, namely:
(i) That the capital of the company consists only of ordinary shares each of which have a
single face value;
(ii) That, except during any period not exceeding one year allowed by the company for payment
of calls on shares, the paid-up amount is the same for all shares, whether existing or new:

Notes Provided that the conditions specified in this sub-section shall not apply to a public
company which has, before the commencement of the Insurance (Amendment) Act, 1950
(47 of 1950), issued any shares other than ordinary shares each of which has a single face
value or any shares paid-up amount whereof is not the same for all of them for a period of
three years from such commencement.

(2) Notwithstanding anything to the contrary contained in any law for the time being in force or
in the memorandum or articles of association but subject to the other provisions contained in
this section the voting right of every shareholder of any public company as aforesaid shall in all
cases be strictly proportionate to the paid-up amount of the shares held by him.
(3) No public company as aforesaid which carries on life insurance business shall, after the
commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), issue any shares other than
ordinary shares of the nature specified in sub-section (l).
(4) A public company as aforesaid which carries on life insurance business–

(a) Shall maintain, in addition to the register of members to be maintained under the Indian
Companies Act, 1913 (7 of 1913 a register of shares in which shall be entered the name,
occupation and address of the beneficial owner of each share, and shall incorporate therein
any change of beneficial owner declared to it within fourteen days from the receipt of such
declaration;

(b) Shall not register any transfer of its shares
(i) Unless, in addition to compliance being made with the provisions of section 34 of
the Indian Companies Act, 1913 (7 of 1913), the transferee furnishes a declaration in
the prescribed form as to whether he proposes to hold the shares for his own benefit
or as a nominee, whether jointly or severally, on behalf of others and in the latter
case giving the name, occupation and address of the beneficial owner or owners,
and the extent of the beneficial interest of each;
(ii) Where, after the transfer, the total paid-up holding of the transferee in the shares of
the company is likely to exceed five per cent of its paid-up capital or where the
transferee is a banking or an investment company, is likely to exceed two and a half
per cent of such paid-up capital, unless the previous approval of the Authority has
been obtained to the transfer;
(iii) Where, the nominal value of the shares intended to be transferred by any individual,
firm, group, constituents of a group, or body corporate under the same management,
jointly or severally exceeds one per cent of the paid-up equity capital of the insurer,
unless the previous approval of the Authority has been obtained for the transfer.

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