Cardif stake sale in SBI Life gets post facto nod

Seller did not seek prior IRDAI approval

The Insurance Regulatory and Development Authority of India (IRDAI) has said that BNP Paribas Cardif S.A. violated certain provisions of the Insurance Act 1938 when it sold a portion of its stake in SBI Life Insurance earlier this year without seeking prior approval.

However, in view of Cardif’s request to the regulator to take a lenient view, IRDAI has granted post-facto approval for the transaction. According to the IRDAI order, passed by IRDAI chairman Subhash C. Khuntia, in March this year Cardif had sold 5,07,40,000 equity shares, constituting 5.069% of SBI Life’s total shareholding, without obtaining prior approval of the Authority.

Stating such approval has to be taken for such transactions, under the provisions of the Insurance Act and Transfer Regulations and Listed Insurance Companies Guidelines, IRDAI had issued a show-cause to Cardif in June. During a personal hearing in October, the regulator brought to the notice of Cardif representatives that SBI Life had on March 28 advised Cardif to obtain approval of IRDAI prior to the transaction date – March 29 – and also provide a copy of the approval received from the regulator.

“In spite of the advice from SBI Life, Cardif carried out the transaction without seeking prior approval of IRDAI in violation of the provisions of section 6A(4)(b)(iii) of the Act read with Reg.3(b) of Transfer Regulations and Listed Insurance Companies Guidelines,” the order said.

At the hearing, Cardif confirmed prior approval was not sought as its legal counsel advised them that such an approval was required for the acquirer and not the transferor. When provisions of the Act and Regulations were pointed out, the Cardif representatives requested IRDAI to condone the “unintentional’ mistake and submitted that in future the same would not be repeated and the provisions of law would be brought to the notice of the management of Cardif for compliance. Cardif further requested for grant of post-facto approval of IRDAI for the above said sale of shares.”

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Printable version | Feb 26, 2020 1:17:20 PM |

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