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Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Pooja can be reached at pooja.v@cyrilshroff.com.

IRDAI Regulatory Reform Series: Rural, Social Sector, and Motor Third-Party Obligations

The Insurance Act, 1938 (“Insurance Act”), includes special provisions obligating insurers to mandatorily source a part of their business from persons residing in rural areas; workers in the unorganised or informal sector, or from economically vulnerable or backward classes of the society.[1] Insurers are also required to underwrite a minimum percentage of insurance business for third-party motor insurance policies, both under the Insurance Act[2] as well as the Motor Vehicles Act, 1988 (“MV Act”).[3] These requirements were, until recently, implemented through two distinct regulations issued by the Insurance Regulatory and Development Authority of India (“IRDAI”) – the IRDAI (Obligation of Insurer to Rural and Social sector) Regulations, 2015 (“RSO Regulations”), and the IRDAI (Obligation of Insurer in Respect of Motor Third Party Insurance Business) Regulations, 2015 (“MTP Regulations”).Continue Reading IRDAI Regulatory Reform Series: Rural, Social Sector, and Motor Third-Party Obligations

Is the NCLT’s approach in the Philips India case too literal?

Introduction

The Kolkata Bench of the National Company Law Tribunal (“NCLT”), on September 19, 2024, dismissed an application filed under Section 66 of the Companies Act, 2013 (“Companies Act”), in Philips India Limited[1] (the “Order”), on the grounds that Section 66 of the Companies Act cannot be invoked for capital reduction when the circumstances mentioned in Section 66(a) or 66(b) of the Companies Act are not met. The NCLT held that Section 66, which provides for reduction of share capital, cannot be used merely to provide liquidity or exit to minority shareholders, or to save on administrative costs. The Order attempts to justify the same on the grounds that the proposed share capital reduction was only incidental to the main objective of buy-back of shares.[2] However, this observation is in stark contrast to a catena of NCLT and National Company Law Appellate Tribunal (“NCLAT”) orders, as well as decisions of various High Courts that have time and again noted that a company may reduce its share capital in any manner as it deems fit, and courts have limited role in such schemes of capital reduction.Continue Reading Is the NCLT’s approach in the Philips India case too literal?