IRDA fines two Bharti Axa insurance companies
By IANSThursday, August 26, 2010
CHENNAI - The Insurance Regulatory and Development Authority (IRDA) Thursday fined the life and non-life insurance companies promoted by Bharti Axa combine for violation licensing norms after changes in the ownership pattern of the promoting companies.
The insurers - Bharti Axa Life Insurance Company and Bharti Axa General Insurance Company - have been fined Rs.1 million each by IRDA.
Both the insurers are 74:26 joint venture between India’s Bharti group and French insurance group Axa.
Forty percent of the Indian group’s stakes in the life and non life insurance companies is held by Bharti Ventures Ltd which in turn was owned by a partnership firm Bharti Enterprises.
The remaining 34 percent in both the insurance companies are held by other group outfits.
In January 2010, the partnership firm Bharti Enterprises was converted into a private limited company under Companies Act with the name Bharti Enterprises (Holding) Private Ltd.
The newly incorporated Bharti Enterprises (Holding) held 97.57 percent shares in Bharti Ventures thereby making the latter a subsidiary of the former.
According to IRDA’s Registration Regulations of insurance companies, no Indian company which is a subsidiary of another corporate entity can promote an insurance company.
The status change of Bharti Enterprises from a partnership firm to a private limited company which in turn violated insurance regulations and the non-intimation of the IRDA by the two insurers invited the wrath of the insurance regulator.
Both the insurers were served with show cause notices by IRDA for not furnishing the change in ownership pattern of the promoter entity.
On receipt of the notice Bharti Axa Life and Bharti Axa General confirmed to IRDA about the change in the incorporated status of Bharti Enterprises owing to group restructuring initiative.
Both the insurers requested IRDA for additional time to examine the options for restructuring Bharti Ventures Ltd’s shareholding so that it confirms to the regulations.
However, they did not offer reasons for the violation. During the personal hearing held Aug 16 both the insurers submitted to IRDA that the non-compliance was inadvertent and may be condoned.
Not agreeing with the pleading of ‘inadvertent omission’ the insurance regulator has ordered payment of fine Rs.10 lakh each within 15 days from the date of receipt of the order.
–Indo Asian News Service
