IRDAI regulations on ‘other forms of capital’ notified

The Insurance Regulatory Development Authority of India (IRDAI) has notified the IRDAI (Other Forms of Capital) Regulations, 2015, permitting the issuance of “other forms of capital” such as preference share capital or subordinated debt by insurance companies, subject to the following conditions:

1. The instruments must be issued and fully paid up in cash.
2. The seniority of the claims shall be governed by the following order: (a) the claims of preference shareholders shall be superior to the claims of investors holding equity share capital, but shall be subordinate to the claims of policyholders and all other creditors; (b) the claims of holders of subordinated debt shall be superior to the claims of preference and equity shareholders in that order, but shall be subordinate to the claims of policyholders and all other creditors.

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   The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bangalore, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.