Life Insurance Corporation of India was set up in 1956 under a special Act of Parliament to carry on Life Insurance business in India. On the formation of IRDAI, LIC was brought under the regulatory control and guidance

Life Insurance Corporation of India, a conglomeration of all private insurers in the country in 1956 was formed under a special act of parliament as a corporation. IRDAI Act was passed in 1999 and became operational from 2000 states that insurance business can be carried on in India only by an Indian insurer defined to be a company set up under the Companies Act. Exceptions were covered out in the act to allow existing organisations like LIC to carry on their business but these pre-existing corporations have also to be subjected to rules and regulation of IRDAI. Hence LIC which had a share capital of ₹5 Crores had to fall in line with IRDAI's direction to enhance its capital to ₹100 Crores. Insurance regulator IRDA has cleared the initial public offering of the Life Insurance Corporation of India (LIC), paving the way for the public sector behemoth's listing. The report on embedded value (EV) prepared by actuarial firm Milliman will be part of the offer document. The pricing of a life insurance company's shares is usually done as a multiple of their EV. The final tally would be determined at the end of a book-building process. According to sources, LIC EV is at over ₹5.4 lakh crore. Even considering a conservative multiple of 2.5 times, the value of the corporation would be around ₹13.5 lakh crore. At this valuation, a 5% dilution would raise ₹67,000 crore. The proposed IPO will be the largest in the country. Currently, Paytm's ₹18,300-crore IPO in November 2021 holds the record for the largest IPO. Conversion of LIC into a unit where public will hold a share necessitates its being converted into a company under the Companies Act. Hence LIC has to fall in line with stipulations in both the enactments IRDAI Act / Companies Act. Class of capital - equity shares to enable it to be quoted in the stock exchange, minimum public holding to be gone through. LIC will have to constitute committees under the Companies Act i.e. Audit committee, Nomination and Remuneration committees, shareholder's grievances committee etc. Though they may exist in some form or other now, the committees to be created under the Act will have statutory recognition and accountability. One more thing to be done in the new set up, as against the regulatory norm of 90-10% of valuation surplus being shared between the policy holders and the ownership interest, LIC follows the pattern of 95% and 5%. The feature is that out of the owner's share of 5%, LIC remits the whole of it to the government retaining nothing in its books as reserve etc. This aspect has to be looked into or else LIC will continue to function as it is doing now but open to greater public scrutiny and accountability. LIC also represents the ethos of insurance in India. It represents the sentiments and confidence of the people.