Merger of insurers: Irdai releases draft norms on shareholder compensation

Says those whose rights against the acquiring insurer have been reduced, must be paid compensation based on the residual value of assets

The insurance regulator on Thursday released draft guidelines on determination of compensation to shareholders on the event of merger of an insurer. In it, the regulator has said that shareholders whose rights against the acquiring insurer have been reduced, must be paid compensation based on the residual value of the assets.

According to the regulator, residual value assets will be the amount equal to the value of the assets of the acquired insurer as on the day minus the total amount of liabilities. It has said, the compensation can either be paid in cash or kind.

The Irdai has further said, “Every