The IRDAI (Registration of Insurers, Capital Structure, Transfer of Shares and Amalgamation) (Amendment) Regulations, 2026, which were published in the Gazette on July 30, amend the 2024 regulations that govern insurer registration, capital structure, share transfers, amalgamation, and investor eligibility.
These amendments took effect immediately upon their publication.
Among the significant modifications, IRDAI has revamped the process for obtaining prior approval for share transfers.
Regulatory consent will now be necessary when a shareholder’s ownership exceeds specified thresholds of 5%, 10%, 25%, 50%, and 75%, or when an investor becomes the largest single shareholder.
The regulations also mandate consent for transfers within promoter groups and authorize the regulator to scrutinize structures that might be employed to bypass the established thresholds.
Additionally, the amendments clarify that a dilution of an existing shareholder’s stake due to a new equity issue, where the shareholder does not proportionately participate, will be regarded as a transfer event.
IRDAI has expanded the situations in which lock-in conditions for shareholding may be loosened. These now encompass listings of insurers on Indian stock exchanges, financial difficulties, and mergers or restructurings resulting from legal changes. A new framework has been introduced to facilitate mergers involving insurers and qualified holding companies. Subject to regulatory conditions, a holding company that owns more than 50% of an insurer may merge with that insurer. The regulations ensure that policyholders’ interests are safeguarded, solvency levels remain above the required control level, and the merged entity continues to operate solely in the insurance sector.
The amendments also modify the regulations concerning special purpose vehicles (SPVs), permitting them to function as promoters under conditions specified by the regulator, replacing the earlier, more rigid framework.
Moreover, the regulations enhance the “fit and proper” assessment criteria for promoters and investors by broadening disclosure requirements related to ownership, financial stability, source of funds, regulatory history, and governance, while updating the application formats for insurer registration.
Ramkumar Subramanian, Partner at Financial Services Risk, Grant Thornton Bharat LLP, a professional services firm in India, stated that these amendments are primarily enabling and oriented towards market development. He anticipates that the revised framework will aid new entrants and strategic investments, simplify group structures, and assist insurers in preparing for public listings, all while maintaining safeguards through tighter fit-and-proper mandates for promoters and investors.
He further noted that these changes complement broader reforms in the insurance sector following the allowance of up to 100% foreign direct investment, although such investments will still be governed by relevant foreign investment regulations.
First Published: Jul 31, 2026 1:44 PM IST
