Introduction

The Insurance Regulatory and Development Authority of India (“IRDAI”) has notified the IRDAI (Registration of Indian Insurance Companies) Regulations, 2022 (“2022 Regulations”), on December 8, 2022. The 2022 Regulations consolidate various prescriptions relating to registration of Indian insurance companies and the transfer of shares of such entities. Previously, such prescriptions were dispersed across multiple regulations, circulars, and guidelines such as the IRDAI (Listed Indian Insurance Companies) Guidelines, 2016, and the IRDAI (Investment by PE Funds in Indian Insurance Companies) Guidelines, 2017 (“2017 PE Guidelines”).

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AIF

Introduction

To enhance the standardisation of the application process, SEBI, on November 3, 2022, published ‘FAQs for grant of registration as alternative investment fund[1] (“FAQs”). The FAQs are guidelines for submission of the application for seeking registration as an Alternative Investment Fund (“AIF”). In addition to the information, documents and undertakings mandated under the First Schedule of the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), an applicant will now be required to submit information, documents and undertakings, as reproduced in this article. Thus, the application form will now constitute the following, (a) information as specified under the First Schedule of the AIF Regulations; and (b) other information as specified in the FAQs.

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New ODI Regime

Background

The Ministry of Finance (“MoF”) and Reserve Bank of India (“RBI”) notified the new overseas investment (“OI”) regime on August 22, 2022 (“New Regime”).

The New Regime inter alia comprises the OI Rules, 2022[1] notified by the MoF (“Rules”), the OI Regulations, 2022[2] notified by the RBI and the Master Directions issued by the RBI to authorised persons. It supersedes FEMA 120[3] and the circulars and directions issued thereunder (“Old Regime”).

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Insurance Linked Securities

Background and Introduction

Insurance linked securities (ILS) is an umbrella term covering instruments that are designed to transfer insurance risks to the financial market. The performance of ILS is typically also linked to the possible occurrence of such insurance risks. ILS, in global financial markets, is not a novel concept and the earliest known issuance of ILS by reinsurance companies was in the US in 1992, in the aftermath of Hurricane Andrew. In fact, ILS has been used multiple times by reinsurance companies in the US when their capacities were severely affected by the occurrence of natural disasters like earthquakes and hurricanes and even man-made disasters like the World Trade Center bombing.

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SEBI Updates Framework for Overseas Investments by Alternative Investment Funds and Venture Capital Funds

The Securities and Exchange Board of India (“SEBI”) has updated the regulatory framework applicable to AIFs/ VCFs, seeking to make portfolio investments in offshore companies vide SEBI Circular dated August 17, 2022, titled ‘Guidelines for overseas investment by Alternative Investment Funds (AIFs)/ Venture Capital Funds (VCFs)’ (“SEBI Circular”). AIFs/ VCFs are currently permitted to make portfolio investments in equity and equity linked instruments of offshore venture capital undertakings[1], subject to taking case by case approval of SEBI for each such investment. Such approval is granted by SEBI to AIFs/ VCFs on a ‘first come first serve basis’, within an overall limit of USD 1,500 million.

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FDI Liberalisation in Insurance Companies and Harmonisation of Insurance Regulations What Has Changed in the Year Gone By

The Union Budget 2021-22 announced the proposal to liberalise Foreign Direct Investment (“FDI”) in Indian insurance companies from the existing 49% to 74% with effect from August 2021. The aforesaid proposal was subsequently formalised by way of introduction of the Insurance (Amendment) Act, 2021 (“Amendment Act”), to amend the Insurance Act, 1938. Please click here to refer to our earlier blog for more details in this regard.

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REIT

The Securities and Exchange Board of India (SEBI) issued a circular in April this year (Circular), reducing timelines for REIT listings from 12 working days to six working days from the date of public issue closure. While this is a welcome move from the perspective of public investors and is yet another step towards ensuring parity between REIT and listco regimes, this could prove challenging for REITs and their advisors, given the intricacies of the REIT regulatory framework.

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Fund Management Regulations 2022

I. Introduction

A robust asset management industry along with a well-developed regulatory ecosystem is pivotal to the growth of capital markets, which are in turn critical to a developing economy such as India. The Government of India is taking considerable efforts for ‘onshoring the offshore’ financial services activities to enable India to compete with some of the more established jurisdictions in the world such as Singapore, Mauritius and Hong Kong.

Continue Reading IFSCA (Fund Management) Regulations, 2022: Inching closer to make India a Global Hub for Asset Management

SEBI Clarifies Applicability of Portfolio Managers Regulations to an Indian Manager of an Offshore Fund

In an interpretative letter sought under the SEBI (Informal Guidance) Scheme, 2003 (“Informal Guidance”), the markets regulator has clarified that the investment manager of an alternative investment fund (“AIF”) can provide investment management services to an offshore fund only as a SEBI-licensed  portfolio manager under the SEBI (Portfolio Managers) Regulations, 2012 (“PM Regulations”). SEBI also reiterated that the investment managers of AIFs are considered to be regulated by SEBI. In this post, we will explore the queries, SEBI’s responses, and implications for the industry.

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ESOP Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise

Employee stock options are frequently used as an employee incentivisation and retention tool, given the benefit accrued over time. An ESOP-wrapped compensation is attractive because the gains from the shares acquired on exercise of employee stock options are much higher than the exercise price paid for the options. While the maximum or minimum price payable on exercise of the options is not prescribed by the law – which only lays down the requirement for the price to be accounting-standard compliant –  the price typically ranges from the face value of the share to the fair market value of the share.

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