The Insurance Regulatory and Development Authority of India has come out with draft regulations for determination of compensation to shareholders on merger of insurance companies, under which payment will be based on the residual value of assets.
“…compensation to the shareholders whose rights against the acquiring insurer has been reduced… shall be paid based on the residual value of the assets,” said the exposure draft on which the insurance regulator has invited comments from the stakeholders by Nov. 20.
The residual value, it said, will be equal to the value of assets of the acquired insurer as on the day immediately before the appointed day, less the total amount of liabilities.
Further, the compensation shall be “paid either in cash and/or in kind or partially in cash and partially in kind”, it said.
Under the Section 37A (4A) of the Insurance Act, 1938, shareholders and…
