X is an individual, non-Indian, non-citizen and non-resident of India and controls a group of organizations engaged in the financial sector located outside India. He intends to set up a life insurance company in India an
CS Professional · Insurance - Law and Practice · PYQS · June 2018
X is an individual, non-Indian, non-citizen and non-resident of India and controls a group of organizations engaged in the financial sector located outside India. He intends to set up a life insurance company in India and after due diligence has decided to align himself with an Indian Company. The negotiated terms and conditions of the joint venture agreement are as under: The proposed insurance company will also issue 9 year secured debentures carrying an interest rate of 11% p.a. The issue will be of ₹25 crore, the whole of which will be subscribed to by the companies controlled by X.
Answer & Explanation:
(iii) As stated above the company has to have a cap of 25% of equity capital for preference capital and debentures. Thus the company needs to rework out the amounts of preference capital and debentures to meet the requirements as stipulated by the law. This it is not advisable to consider the proposal of issuing 11% Secured Debentures for 9 years of value of ₹25 crores to be held by group company of X.
Topics: Insurance Law and Regulation
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