IRDAI issues guidelines on repatriation of dividends by insurance intermediaries having majority by foreign investors

Jan 06, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Insurance Regulatory and Development Authority of India (IRDAI) on January 03, 2020, has issued guidelines on repatriation of dividends by the respective insurance intermediaries that have majority shareholding of foreign investors under the IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2019. 

The followings are the guidelines:-

1) An insurance intermediary that has majority shareholding of foreign investors seeking permission for repatriation of dividends, shall make an application to the Authority in Form RD-1.

2) The Authority shall take into consideration the following points while considering the request made by the insurance intermediary: 

a. The insurance intermediary has a net-worth of 1.5 times of the statutorily required minimum paid-up capital.

b. The insurance intermediary has not made any payments (other than dividends) beyond 1O% of the total expenses of the company in the financial year to related parties taken as a whole.

c. Latest technological, managerial and other skills brought by the insurance intermediary

d. The proposed dividend shall be payable out of the current year's profit. 

e. The Authority has not placed any restrictions on the insurance intermediary for declaration of dividends.

f. The insurance intermediary has complied with the provisions of the Insurance Act, 1938, IRDA Act, 1999, Rules, Regulations, guidelines, circulars, directions issued by the Authority.

g. Any other point which the Authority may consider relevant.

3) The dividend payout ratio shall not exceed 75% and dividend payout ratio shall be calculated as a percentage of “dividend payable in a year” to “profit after tax during the year”.

4) The time period for disposal of application is 30 days.

5) The chairperson of the Authority may issue appropriate clarifications from time to time order to remove any difficulties in respect of the application or interpretation of any of the provisions of these Guidelines.



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