Ndi Rules Amendment 2021

In its notice dated August 6, 2021, the Department of Finance published the Exchange Management (Non-Debt Instruments) Rules 2021 (Amendment) to further amend the Exchange Management (Other than Debt Instruments) Rules, 2019. General condition for foreign investment. All Indian foreign investment insurance companies must ensure compliance with the Foreign Investment Rules and other applicable rules and regulations of the Insurance Regulatory and Development Authority of India (IRDAI). These include new resident directors/SMPs, additional independent directors and solvency requirements. The amendment also removes all references to “Indian ownership/control” and similar terms from the NDI rules. The change to the NDI rules includes the following significant changes: This update incorporates the Exchange Management Rules (Non-Debt Instruments) (Fourth Amendment), 2021 dated 12. October 2021, which address the DEA`s amendment to the rules for non-debt instruments in the telecommunications sector. This amendment introduces an explanation in accordance with Rule 23(7)(i)(B). In June, Press Release 2 of 2021 was issued, which includes India`s exchange control framework for 74% of foreign investment in Indian insurance companies. As a result, the Indian Ownership and Control Guidelines of 19 October 2015 (IOC Guidelines) were withdrawn in July. The IOC guidelines contained a number of governance restrictions for foreign investors, so their withdrawal was a crucial part of the liberalization process. More details on the withdrawal of the IOC guidelines can be found in our Ergo of 3 August.

1. (1) These Rules may be referred to as the Exchange Management (Non-Debt Instruments) (Fourth Amendment) Rules 2021. The next important step was the amendment of the Indian Insurance Companies (Foreign Investment) Rules 2015 (Foreign Investment Rules) in May. This amendment introduced: (a) new requirements for “resident” directors and additional SMPs and independent directors; and (b) additional “credit check” requirements when foreign investment exceeded 49%. The February budget announcement already indicated that these requirements were predictable. More details on the change and new requirements can be found in our Ergo on May 24. (vii) S.O. 3411 (E), dated August 19, 2021 and Note: The most important rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (ii), under No. S.O.3732 (E), dated October 17, 2019 and subsequently amended: – MINISTRY OF FINANCE (Ministry of Economic Affairs) NOTIFICATION New Delhi, 12. October 2021 Explanation: An investment made by an Indian company owned and controlled by NRI(s) is not included in the calculation of indirect foreign investment. 1 Dr.

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Higher capital levels, greater economies of scale and improvements, as well as greater complexity in underwriting and other processes would also help drive growth and increase insurance penetration and density in the Indian market. This website uses Akismet to reduce spam. Find out how your comment data is handled. A brief overview of the liberalisation process to date is warranted: an increase in the sectoral ceiling from 49% to 74%. The industry cap for Indian insurance companies has now been revised from 49% to 74%. All other references to the sectoral ceiling in the NDI rules have also been updated accordingly. The budget announcement in February this year, which launched the liberalization process, said foreign ownership and control of Indian insurance companies would be allowed, but with “guarantees.” More details about the announcement can be found in our February 4th Ergo. Provided that no person resident in India other than an Indian entity may receive indirect foreign investment. Finally, in August, the NDI rules were changed (see changes below), resulting in an effective change in the law allowing 74% of foreign investment in Indian insurance companies. (A) another Indian company (IE) that has received foreign investment and (i) EI is not owned or controlled by resident Indian citizens or (ii) is owned or controlled by persons residing outside India; or Max Towers 7th & 8th Floor Sector 16B, Noida Gautam Buddh Nagar 201 301 India Now that the liberalization process is fully completed, foreign investors can finally hold majority stakes in Indian insurance companies without onerous governance restrictions.

Existing foreign investors can now exercise their call options and consolidate up to 74%. From an exchange control perspective, no prior regulatory approval is required, although IRDAI approval is required for primary and secondary transactions, and investors may also require competitive authorization or registration. 2. In the Exchange Management (Non-Debt Instruments) Rules 2019, in Annex I, in the table, “indirect foreign investment” means downstream investments received by an Indian company. Your email address will not be published. Required fields are marked with an *. Rule 23(7)(i) deals with downstream investments where indirect foreign investment has been defined as follows: We have updated our Privacy Policy, which provides details on how we process your personal data and apply security measures. We will continue to communicate with you based on the information we have. You can unsubscribe from our communications at any time by clicking here. Save my name, email address, and website in this browser for the next time I comment. Ocean Financial Centre #37-02 10 Collyer 37th Floor Quay Raffles Place 049315, Singapore (a) in column 2, under the heading `Sector/activity`, the entry is replaced by the following:.