Indian promoters of insurance joint ventures with foreign partners will no longer be able to nominate a majority of the board members, as per the new rules notified under the Insurance Act. This follows the recent amendments to enhance the foreign direct investment (FDI) limit in the sector to 74% from 49%.
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However, a majority of board members, key management persons (KMP) need to be resident Indian citizens, as should at least one of the three top positions — the chairperson of the board, the MD and CEO.
This new norm will apply to all insurers, irrespective of the stake held by the foreign partner.
The Finance Ministry has also specified further conditions on the composition of the board for firms where foreign investors’ stake exceeds 49%.
