India: Overhaul of Insurance Share Transfer and Amalgamation Framework

India’s Insurance Regulatory and Development Authority (IRDAI) has introduced significant changes to the regulatory framework governing share transfers, ownership structures and amalgamations involving Indian insurance companies.

The IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) (Amendment) Regulations, 2026, which took effect on 30 July 2026, implement reforms introduced under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025. The changes follow the increase in the permitted foreign direct investment in Indian insurers from 74% to 100% and are intended to simplify investment and corporate restructuring within the sector.

Revised approval thresholds for share transfers

One of the most significant changes concerns when prior IRDAI approval is required for transfers of shares in an insurer.

Approval is now linked to specified ownership thresholds. It is required where a transferee crosses the 5% threshold for the first time, or where an existing shareholder subsequently crosses 10%, 25%, 50% or 75%. Approval is also required where a shareholder becomes the insurer’s single largest shareholder.

This replaces the previous requirement for approval for every additional 5% block of ownership and should reduce the regulatory burden associated with certain transactions.

The threshold based on the amount of shares transferred during a financial year has also increased from 1% to 5% of the insurer’s paid-up equity capital. Transfers between group entities are subject to the revised thresholds.

IRDAI nevertheless retains broad powers to investigate arrangements it considers may have been structured to circumvent the 5% threshold.

Another important change is the treatment of dilution. A reduction in an existing shareholder’s interest resulting from its failure to subscribe proportionately to a new equity issue can now be treated as a transfer of shares. This may create practical challenges for rights issues and other capital raisings, as companies may need to model the potential post-transaction holdings of existing shareholders before completing the transaction.

The separate provisions previously applicable to listed insurers have also been removed, meaning listed and unlisted insurers are now subject to the same approval framework.

For transactions involving transfers exceeding 50% of an insurer’s paid-up equity capital, the IRDAI application processing fee has been reduced from INR 5 million to INR 1 million.

New route for insurance-sector amalgamations

The reforms also introduce greater flexibility for corporate restructurings.

A non-insurance entity may now amalgamate into an insurer where it holds more than 50% of the insurer’s paid-up equity capital and has no other non-insurance business at the date of application.

This potentially provides insurance groups with a route to collapse a holding company into an operating insurer and simplify their corporate structure. However, consideration for such an amalgamation may only be provided in equity, preventing the use of cash, debt or other forms of consideration.

A flat, non-refundable processing fee of INR 1 million plus applicable taxes will apply per transacting entity, replacing the previous variable fee based on gross direct premiums written.

Naming requirements for insurers

The Amendment Regulations also introduce new requirements concerning corporate names.

Businesses that are not carrying on insurance activities in India may not use terms including “insurance”, “insurer”, “assurance”, “re-insurance” or “insurance company”, or derivatives of those terms, in their names.

Existing insurers whose corporate names do not currently contain one of the prescribed insurance-related terms must amend their names within 12 months of 30 July 2026, after obtaining a no-objection certificate from the IRDAI.

Permanent registration for corporate agents

Separately, the IRDAI has amended the regulatory framework for corporate insurance agents.

Corporate agent registrations will now be perpetual, provided the required annual fees are paid and ongoing regulatory obligations are met. Previously, registrations were subject to renewal every three years.

Existing corporate agents must transition to the new perpetual registration regime by 31 January 2027, or by 31 March 2027 subject to payment of a late fee, to avoid automatic cancellation.

From 1 January 2027, insurance policies must also be linked to the individual responsible for soliciting the policy, introducing an additional transparency requirement.

What this means for international businesses

The reforms represent another important step in the liberalisation of India’s insurance market following the move to permit up to 100% foreign investment.

For international insurers, investors and insurance groups, the revised share-transfer thresholds and new amalgamation provisions should provide greater flexibility when investing in, acquiring or restructuring Indian insurance businesses. The reduction in regulatory processing fees for larger share transfers may also make significant transactions more straightforward.

Some uncertainty remains, particularly around the treatment of passive shareholder dilution as a deemed transfer. Businesses considering rights issues, capital raisings, acquisitions or internal group restructurings should therefore consider the revised IRDAI approval requirements at an early stage of transaction planning.

For multinational organisations navigating insurance-sector investments, transactions or regulatory requirements across several jurisdictions, coordinated local advice can be particularly important in managing differing approval, ownership and compliance regimes.

By Majmudar & Partners, India, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact india@transatlanticlaw.com

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