IRDA clarifies on the applicability of pricing guidelines on insurance companies

Insurance Regulatory and Development Authority (“IRDA”) has, vide a press release dated June 16, 2010, clarified that the pricing guidelines notified by the Reserve Bank of India (“RBI”) for transfer and issue of equity shares (and other equity linked instruments) of an Indian company to persons resident outside India will not apply to insurance companies.[1] It may be noted that RBI had recently notified amendments to the pricing guidelines[2] for transfer and issue of equity shares and other equity linked instruments (such as compulsorily convertible preference shares and compulsorily convertible debentures) to be issued / transferred to a resident outside India. The guidelines are intended to apply to companies other than those in the financial services sector. The guidelines, therefore, do not apply to insurance, which is considered as financial services sector.

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[1] The IRDA’s press release may be accessed at http://www.irdaindia.org/press_release/press_release_foreign_170610.htm.

[2] The circular may be accessed at http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5647&Mode=0.