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: Two companies controlled by X will hold 30% and 25% of the issued equity shares of the proposed company.
Answer & Explanation:
(iv) As per the present law the maximum holding allowed to a foreign partner for insurance business is 49% (with up to 26% foreign investment being under the automatic route) hence the proposal of X company holding total 55% (30% and 25% by two companies of X) will not be permitted. Hence the proposal have to be revised and maximum 49% can be the company holding.
Topics: Insurance Law and Regulation
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