The regulator said, "Where the transfer of shares by the transferor, cumulative with his relatives, associate enterprises and persons acting in concert will/is likely to exceed 5 per cent of the paid-up share capital, such transferor shall seek the prior approval of the IRDAI.
The application for transfer of shares, it added, should be filed through the insurance company concerned.
Similarly, it added that any proposal for acquisition, whereby the transferee's holding is likely to exceed 5 per cent of the insurance company's paid-up share capital, also has to be submitted for prior approval to the IRDAI
through the insurance company concerned.
The regulator also clarified that the provisions related to transfer of shares "shall apply mutatis-mutandis to the creation of pledge or any other kind of encumbrance over shares of an insurance company, by its promoters".
The regulator further said that in case of transactions without the prior approval of the IRDAI, the transferee will not have any voting rights in any of the meetings of the insurance company. Also, the transferee will be required to promptly dispose of the excess shares acquired, beyond the specified threshold limits.
IRDAI said any transfer of shares beyond the stipulated threshold limits without the prior approval of the authority will attract appropriate regulatory and legal action.