Earlier norms required the promoter to hold on to 50% stake. Now the promoters may dilute their stake in the insurer to below 50% but not below 26%, provided the company meets capital requirements and the shares are listed.
The other changes pertain to the fit-and-proper criteria, limits of investment in insurance companies, the lock-in period for investments in insurance companies and enabling investment by private equity funds.
The proposed regulations say that for an investor who has put in money at the time or before the grant of registration by the regulator there would be a lock-in period of five years.
Any investment made by the promoter or an investor in an insurance company five years after the grant of registration, which results in a change in the shareholding pattern, will have a lock-in of either five years or eight years from the date of registration.
Investments made by an investor between five and 10 years after the registration, which result in a change in shareholding, will have a lock-in of either two years or 11 years from the date of registration, whichever is earlier. If the promoter makes the investment the lock-in would be either 3 years or twelve years from the date of registration.
Investments made after ten years will have a lock-in of two years in the case of promoters and one year for investors.