IRDAI slashes insurer share transfer approval fee to ₹10 lakh, spells out IPO and merger filing norms
IRDAI has revised its regulatory framework for insurers, lowering share transfer approval costs and setting out clearer norms for IPO and merger-related applications.
IRDAI has reduced the approval fee for insurer share transfers to ₹10 lakh while clarifying filing requirements for IPOs, mergers and other corporate transactions.
NEW DELHI – The Insurance Regulatory and Development Authority of India (IRDAI) on Monday issued a Master Circular on registration, capital structure, transfer of shares and amalgamation of insurers, cutting the processing fee for certain share-transfer approvals from Rs 50 lakh to Rs 10 lakh.
The circular also lays down what insurers must file when they plan an initial public offering, when employees or directors exercise stock options, and when they merge. It applies to all insurers except foreign reinsurers’ branches, and to applicants seeking registration, from the date of issue. It repeals the 2024 Master Circular dated May 15, 2024, and the September 6, 2024 circular on subscribers to other forms of capital.
IRDAI: Fee cut and transitional rules
The Rs 10 lakh fee applies under the proviso to Regulation 22(4) of the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024. Under the 2024 text, every application for prior approval of a share transfer carries a non-refundable fee of Rs 5 lakh, which rises to Rs 50 lakh where the transfer exceeds 50 per cent of the insurer’s paid-up equity capital. The circular says the Registration (Amendment) Regulations, 2026 reduced the higher fee to Rs 10 lakh, and that fees paid before the amendment was notified will not be refunded.
The circular also deals with the new processing fee for applications for a No-Objection Certificate (NOC), the first step for anyone seeking to set up an insurer. NOC applications filed before the amendment regulations were notified are exempt from the fee under Regulation 6(1)(ba), while later applications must carry it.
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A fee for NOC applications had been proposed in IRDAI’s June exposure draft. On filing, the circular requires NOC applications to be emailed to the Registration Cell, with an authenticated hard copy sent to the Finance and Investment Department in Hyderabad. Applicants may also apply through the e-services section of the IRDAI website. The follow-on application at the next stage of registration must come on the applicant’s letterhead with its incorporation documents and board resolutions from both the applicant and its promoters.
IRDAI: What insurers must file for IPOs, ESOPs and mergers
For insurers planning to list, the circular asks for the board resolution approving the issue, certified by the company secretary. It also asks for the purpose and size of the IPO, split between fresh issuance and offer for sale by existing shareholders. Insurers must furnish existing and post-listing shareholding patterns, with separate details for shareholders holding more than 1 per cent of paid-up equity. When an insurer informs IRDAI that it will approach the financial sector regulator for listing, the MD/CEO must sign a declaration. It covers the accuracy of offer documents, the disclosure of regulatory actions, legal compliance and protection of policyholders’ interests.
On employee stock options, the circular states that exercise is subject to section 6A(4)(b) of the Insurance Act, 1938. This extends to shares issued to a trust set up by the insurer for ESOPs. If directors or key managerial personnel, alone or together, exercise options beyond the statutory threshold, they need IRDAI’s prior approval. The rule applies to listed insurers too, which must put in place mechanisms with stock exchanges, registrars and depository participants to ensure compliance.
For amalgamations and transfers of business, the notice of intention must include the draft scheme and agreements, audited and quarterly financial statements of each party, and pro-forma statements of the merged entity. It must also include a report on the impact on technical reserves, solvency, product pricing and financial condition. That report must come from an independent actuary with no professional link to any party in the preceding five years. Within 30 days of implementing a scheme, the transferee insurer must file proof of the newspaper notice, a CEO confirmation and a statutory auditor’s certificate.
Insurers issuing other forms of capital, such as preference shares and subordinated debt, must report allotment details and their solvency position before and after, within 15 days. The circular also lists three cases in which an insurer may voluntarily surrender its certificate of registration: a transfer of business on IRDAI’s order, a transfer or amalgamation approved by IRDAI, and an inability to start operations in the stipulated time.
IRDAI: Backdrop: the 2024 rulebook, 100% FDI and the July amendments
The 2024 regulations merged seven earlier sets of rules on registration, other forms of capital, issuance of capital, compensation on amalgamation and amalgamation schemes into one framework. The latest changes come after Parliament passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025. The law raised the foreign investment ceiling in insurance companies from 74 per cent to 100 per cent under the automatic route. The government notified February 5, 2026, as the date from which most provisions of the Act came into force. Foreign exchange rules operationalising the revised limit followed on May 2, 2026.
IRDAI released an exposure draft of the amendments to the registration framework for public comments, with a deadline of July 6, 2026. The Amendment Regulations were notified on July 30, 2026. Under them, prior approval is needed when a transferee’s holding crosses 5, 10, 25, 50 or 75 per cent, or when it would become the single largest shareholder. Approval is also needed when the shares transferred in a financial year exceed 5 per cent of paid-up equity, up from 1 per cent earlier.
A fall in a shareholder’s stake because it did not subscribe pro rata to a fresh issue is now treated as a transfer. The regulation on listed insurers’ share transfers has been omitted, so listed and unlisted insurers follow one approval route. The amendments also let a non-insurance holding company that owns more than 50 per cent of an insurer merge into it, with a flat Rs 10 lakh processing fee for each transacting entity. Insurers whose names lack terms such as “insurance” or “assurance” must change them within 12 months of July 30, 2026, after obtaining an NOC.
