The Insurance Regulatory and Development Authority of India (IRDAI) has instructed Go Digit General Insurance Limited to take remedial actions to address regulatory concerns.
The insurance regulator has also imposed a fine of Rs 1 crore on the insurer for failing to disclose a change in conversion ratio of compulsorily convertible preference shares (CCPS).
The IRDAI has instructed the insurance company to deposit the penalty amount within 45 days of the order and charge it to its shareholders’ account.
In its order, the regulator said Go Digit had violated Section 26 of the Insurance Act by failing to provide full details of the revision, even though the company had amended the JV agreement on August 11, 2023, and disclosed it in its DHRP filing.
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The IRDAI notice further stated, “There has been an inordinate delay in filing the particulars of the JV Amendment Agreement, which includes details such as the change in conversion ratio and the total number of CCPS, now at 78,00,000 instead of the authorized 63,00,000 CCPS as per the order dated May 2, 2024.”
Previously, IRDAI denied converting CCPS into shares because it would have led GDISPL, Digit Insurance’s holding company, to become a subsidiary of the Fairfax group, which is not permitted by regulations.
Also Read: Can you improve your chances of getting an IPO allocation?
The Securities and Exchange Board of India (SEBI) granted Go Digit General Insurer final permission in March to launch an initial public offering (IPO) to raise funds totaling Rs 1,250 crore.
The IPO will serve to enhance the capital base of the business, preserve levels of solvency, and accomplish other corporate goals.
According to the latest General Insurance Council statistics, the company’s gross written premium (GWP) in the financial year 2023-24 was Rs. 7,941.1 crore, up 28.91 percent year on year (Y-o-Y) from Rs. 6,160.08 crore in the previous year.
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Disclaimer: The above content is for informational purposes only. The 1% News recommends consulting a SEBI-registered investment advisor before making any investment decision.
