The Insurance Regulatory and Development Authority (IRDA) paved the way for stake purchase by Reliance Industries (promoted by Mukesh Ambani) in Bharti Axa (life and general) and stake sale by Reliance Life Insurance (promoted by Anil Ambani) to Nippon Life as it came out with a new circular stating that transfer of shares beyond certain limits in the industry would be registered after they seek prior approval of the authority through an application in Form ‘A’.

With this, Punjab National Bank’s 30 per cent stake purchase in Metlife will also have to go through the same process.

Section 6A (4) of the Insurance Act, 1938 clearly says that prior approval of the authority would be required through an application in Form ‘A’ in share transfer case where the total paid up holding of the transferee exceeds 5 per cent of the paid up capital or the nominal value of the shares transferred exceed 1 per cent of the paid up equity capital of the insurer.

The circular added that any change in the shareholding pattern of the insurance company which exceeds 1 per cent, should have the explicit previous approval of the authority which means that any issue of shares that would result in change in shareholding pattern by over 1 per cent would need previous written approval of the authority.

The regulator has said that it will expedite the process of granting approvals. “The authority shall process and grant approval on the application as expeditiously as possible,” said the circular.

Within the circular the regulator has said that the authority stipulate the minimum lock-in period, bringing in additional capital in proportion to its shareholding etc.