Page 104 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 6: The Insurance Act, 1938

Explanation: For the purposes of this sub-clause, the expressions “group” and “same Notes
management” shall have the same meanings respectively assigned to them in the Monopolies
and Restrictive Trade Practices Act, 1969 (54 of 1969);

(5) Every person who has any interest in any share of a company referred to in sub-section (4)
which stands in the name of another person in the register of members of the company, shall,
within thirty days from the commencement of the Insurance (Amendment) Act, 1950 (47 of l950),
or from the date on which he acquires such interest, whichever is later, make a declaration in the
prescribed form (which shall be countersigned by the person in whose name the share is
registered) to the company declaring his interest in such share, and notwithstanding anything
contained in any other law or in any contract to the contrary, a person who fails to make a
declaration as aforesaid in respect of any share shall be deemed to have no right or title whatsoever
in that share:
Provided that nothing in this sub-section shall affect the right of a person who has an interest in
any such share to establish in a court his right thereto, if the person, in whose name the share is
registered, refuses to countersign the declaration as required by this sub-section:
Provided further that where any share, belonging to an individual who has made any such
declaration as is referred to in this sub-section, is held by a company in its name in pursuance of
any trust or for the purpose of safe custody or collection or realization of dividend, such
individual shall, notwithstanding anything contained in the Indian Companies Act, 1913 (7 of
1913), or in the memorandum or articles of association of the company which has issued the
share, be deemed to be the holder of the said share for the purpose of exercising any voting
rights under this section to the exclusion of any other person.
(6) If the total paid-up holding of any person in the shares of a company referred to in sub-
section (1) on the commencement of the Insurance (Amendment) Act 1950 (47 of 1950), exceeds
two and a half per cent of its paid-up capital where that person is a banking company or an
investment company, or five per cent of its paid-up capital in any other case, he shall not be
entitled to any vote as a shareholder of the company in respect of such excess holding of shares.
(7) Where the total paid-up holding of any person in the shares of a company referred to sub-
section (1) on the date of the commencement of the Insurance (Amendment) Act, 1950 (47 of
1950), exceeds five per cent of its paid-up capital where that person is a banking company or an
investment company, or ten per cent of its paid-up capital in any other case, he shall dispose of
the excess holding of shares within three years from such commencement or such further period
not exceeding two years as may be allowed to him by the Central Government.

(8) If, after the expiry of three years or of such further period as may be allowed to any person
under sub-section (7), the total paid up holding of any such person has not been reduced to the
limits specified in that sub-section, any shares in excess of the limits specified in that sub-section
shall vest in the Administrator-General of the State in which the registered office of the company
concerned is situate and the Administrator-General shall take such steps as may be necessary for
taking charge of any property which has so vested in him and shall dispose of the said shares and
the proceeds thereof in such manner as may be prescribed.
(9) Subject to the other provisions contained in this section, but notwithstanding anything
contained in the Indian Companies Act, 1913 (7 of 1913), or in the memorandum or articles of
association of any such company as is referred to in sub-section (1), no such company shall refuse
to register the transfer of any shares where the transfer is for the purpose of securing compliance
with the provisions of sub-sections (7) and (8).
(10) The Central Government may, subject to such restrictions as it may think fit to impose,
exempt from the operation of sub-sections (6), (7) and (8) any insurance company, in any case
where the total paid-up holding of such insurance company in the shares of any other insurance
company exceeds the limits specified in the said sub-sections, if the other insurance company is
or is to be made a subsidiary company of the insurance company.

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