Registration Regulations Amended

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 is effective from 5 February 2026 (“Amendment Act”). To fully effectuate the amendments introduced in the Amendment Act, the Insurance Regulatory and Development Authority of India (“IRDAI”) has now notified amendments to the subordinate regulatory framework. This note summarises the key amendments notified to the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024 (“Registration Regulations”) pursuant to the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) (Amendment) Regulations, 2026 (“Amendment Regulations”), effective from 30 July 2026.

1. Approval threshold for share transfers

The Amendment Act increased the threshold for obtaining IRDAI approval for share transfers from 1% to 5%. The IRDAI has now categorized this under two broad heads, i.e., based on the shareholding of the transferee, and the percentage of shareholding proposed to be transferred. Accordingly, approval of the IRDAI is required only in the following situations:

	Before Transfer	After Transfer
Transferee	<5%	>5%
	>5%	>10%, >25%, >50% or >75%
	No threshold prescribed	Single largest shareholder
% Holding	Holding proposed to be transferred (jointly or severally) exceeds 5% or more in a financial year.

This change is expected to materially reduce transaction timelines for transfers of small holdings.

The Amendment Regulations clarify that approval is required even where the transfer is amongst group entities, or there is a dilution in shareholding. Further, the Amendment Regulations have deleted regulation 25 of the Registration Regulations. Regulation 25 specifically governed share transfers in listed insurance companies and provided for self-certification in respect of transfers below a specified percentage, with IRDAI approval being required only where shares in excess of a specified threshold were proposed to be transferred. With the deletion of this specific provision, effectively, the same regime and thresholds now apply for share transfer of both listed and unlisted insurance companies.

AMENDMENTS AT A GLANCE

Revised share transfer thresholds for IRDAI approval notified – increased from 1% to 5%, and thereafter depending on the transferee’s shareholding after the transfer or percentage of holding proposed to be transferred. Regime for mergers / amalgamations between insurers and non-insurance companies become expressly recognised and further refined. Recognized that other classes of insurance business may be notified by the IRDAI in consultation with the Central Government.

2. Merger of non-insurance business with insurance company

(i) The Amendment Act introduced an explicit legislative framework for the merger or amalgamation of an insurance company with a non-insurance entity, subject to IRDAI’s prior approval. Historically, IRDAI has rejected mergers between an insurance company and a non-insurer. The most prominent example was the proposed multi-stage merger under which Max Life Insurance was to merge with its non-insurance parent, Max Financial Services, and the combined entity was to then merge with HDFC Life Insurance. The IRDAI declined to approve the structure on the ground that there was no enabling provision under the Insurance Act, 1938 (“Insurance Act”). As per news reports, a panel set up by IRDAI in February 2025 also considered such mergers and advised against them on the basis that such mergers could pose a risk to policyholders. However, subsequently, in March 2025, the National Company Law Appellate Tribunal (“NCLAT”) in IRDAI v. Shriram General Insurance Company Limited, held that in the absence of a specific statutory prohibition, such mergers could be undertaken under the Companies Act, 2013 without prior approval from the IRDAI. This amendment accordingly takes the position confirmed by the NCLAT but clarified that the IRDAI would specify conditions for such mergers.

(ii) The Amendment Regulations have prescribed the following eligibility criteria for merger of non-insurance business with insurance business: (i) the transferor has to either be an insurer, or hold more than 50% of the paid up equity share capital of the insurer with which it proposes to amalgamate; (ii) the holding company should not have any other business other than insurance business when the scheme of amalgamation is filed; and (iii) the scheme of amalgamation must be prepared under section 35 of the Insurance Act. The eligibility criteria suggest that the purpose of this enabling regime is to facilitate unwinding of holding company structures in insurance companies, while ensuring that such a merger does not result in a breach of other fundamental requirements of insurance laws i.e., that an insurance company cannot undertake any business other than insurance. The IRDAI has also prescribed other conditions in this regard, including conditions for the amalgamation itself and conditions applicable following the amalgamation. All conditions are designed to protect policyholders’ interests. Notably, the transferee insurer is only permitted to issue equity shares to the shareholders of the transferor entity as consideration for the amalgamation, with no other form of consideration being permissible.

3. Other classes of insurance business

Indian insurance regulations recognise 4 broad categories of insurance business – life, general, health and reinsurance. The Amendment Act laid down the framework to recognise additional classes of insurance business. The Amendment Regulations now expressly state that in addition to the above categories of insurance, registration may be sought in such “other classes of insurance business” as may be notified by the Central Government in consultation with the IRDAI. There is no information on the classes of insurance business that the IRDAI could notify under this head. This clause was widely interpreted as the provision under which the IRDAI would recognise “composite insurance license” though there has been no indication from the IRDAI or Central Government that this is the intention or how imminent it is.

4. Lock-in on Shares

The Registration Regulations prescribed a lock-in period on shares depending on when the investment was made after grant of the R3 registration (i.e. at the time of grant, within 5, 10 or 15 years) and the category of the shareholder i.e., whether promoter or investor. The Amendment Regulations have removed the reference to the situation where investment is made after 15 years and instead specify that where there is a change in shareholding pattern where the investment is after 15 years post grant of the R3 registration and the investment relates to a promoter shareholder, a lock-in period of 1 year will apply. The Amendment Regulations recognise that amalgamation or reorganisation pursuant to change in applicable law of the insurer or any shareholder(s) is a situation where the IRDAI may waive the lock-in.

5. Issuance of shares at a premium

Insurance companies are required to ensure that they always meet the minimum solvency requirements, often requiring them to raise capital in the form of equity or debt. One of the structures that has been relied on by some companies is to issue shares at a premium. The Registration Regulations expressly addressed the same stating that before commencement of business, shares may be issued only at face value but may be issued at premium after that. The Amendment Regulations have clarified that shares may be issued at premium provided that IRDAI approval is obtained in accordance with section 6A of the Insurance Act and the Registration Regulations. As per these provisions, IRDAI approval is required only where there is a change in shareholding meeting the thresholds described in paragraph 1 above. Therefore, IRDAI approval is not required merely because shares are being issued at a premium if there is no change in shareholding.

6. Other clarificatory amendments

(i) Naming convention: The IRDAI has reiterated that only insurers must have the words ‘insurance’, ‘insurer’, ‘assurance’ ‘re-insurance’ ‘insurance company’ or any similar derivatives in their name. All insurers are obliged to ensure that their name has at least one of the above words (as applicable). This must be complied within 12 months or such other time prescribed by the IRDAI.

(ii) Eligibility to be a foreign promoter or a special purpose vehicle: In order to be a foreign promoter, a foreign investor has to be incorporated in any Financial Action Task Force (“FATF”) compliant jurisdiction. Additionally, the Amendment Regulations recognise an entity incorporated in a FATF-compliant jurisdiction for the purpose of making investments in an insurer in India, as a ‘special purpose vehicle’ for the purpose of the Registration Regulations and that such special purpose vehicles may, subject to certain prescribed conditions, act as the promoter of an insurer.

Authors; Deepa Christopher – Partner, Jasel Mundhra – Senior Associate and Aanchal Kabra – Associate 

Disclaimer: This alert only highlights key issues and is not intended to be comprehensive. The contents of this publication do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this publication should be considered an advertisement or solicitation of TT&A’s professional services.