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In a circular issued on Monday, Irdai asked insurers to track not only direct share allotments to employees but also shares issued through ESOP trusts to ensure regulatory ownership limits aren't breached.
Where an investor holding 5% or less is likely to cross the 5% threshold after a transfer, prior approval is required. For an investor already holding more than 5%, approval is required if the transaction takes the holding beyond 10%, 25%, 50% or 75%.
Transfers exceeding 5% of paid-up equity capital in a financial year by an individual, group or entities under the same management will also require regulatory approval. The regulator has also extended the requirement to listed insurance companies, directing them to put systems in place to monitor shareholding changes through stock exchanges and other market intermediaries. "The insurer shall put in place necessary mechanism to ensure compliance with the said Regulations including necessary communication with stock exchange(s) and capital market intermediaries such as Registrar and Transfer Agent or Depository Participant. It shall be a duty of the concerned…