March 11, 2015
The following Gibson Dunn alert, which originally was distributed on March 9, has been updated to reflect recent developments announced by the Indian Government.
The Government of India had recently promulgated the Insurance Laws (Amendment) Ordinance, 2014, dated December 26, 2014 ("Ordinance"), which substantially amended the existing Insurance Act, 1938, including in relation to foreign investment in Indian insurance companies. The Indian Insurance Companies (Foreign Investment) Rules 2015, dated February 19, 2015 ("Rules") issued pursuant to the Ordinance further provided for the modalities of foreign investment in Indian insurance companies. Accordingly, pursuant to the Ordinance and the Rules, the foreign direct investment policy of the Government of India ("FDI Policy") has now been amended by Press Note 3, dated March 2, 2015 ("PN3"), to permit increased foreign investment in Indian insurance companies and to make the FDI Policy consistent with the Ordinance and the Rules.
Prior to the Ordinance, the Insurance Act, 1938 imposed an aggregate ceiling of 26% on foreign investment ownership in an Indian insurance company.
The following are the key amendments promulgated by the Ordinance, Rules and PN3, in relation to foreign investment ownership in Indian insurance companies:
In order to remain legally binding and effective, the Ordinance must be approved by both houses of the Indian Parliament within six weeks of the assembly of the Indian Parliament (i.e., the first week of April 2015), failing which the Ordinance will lapse. Any action taken prior to the lapsing of the Ordinance will remain valid. We note that the Indian Government has recently introduced a bill (substantially similar to the Ordinance) in the Indian Parliament to replace the Ordinance. While this bill has been passed by the Lok Sabha — the lower house of the Indian Parliament, the bill is currently pending before the Rajya Sabha — the upper house of the Indian Parliament.
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. For further details, please contact the Gibson Dunn lawyer with whom you usually work or the following lawyers in the firm’s Singapore office:
Jai S. Pathak (+65 6507 3683, firstname.lastname@example.org)
Priya Mehra (+65 6507 3671, email@example.com)
Bharat Bahadur (+65 6507 3634, firstname.lastname@example.org)
Karthik Ashwin Thiagarajan (+65 6507 3636, email@example.com)
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