Section 27: Limitation on control of insurers

27. Limitation on control of insurers (1) No person shall, without the approval of the Commission, acquire or hold such number of shares in an insurer as to make him a significant shareholder in that insurer. (2) Approval under subsection (1) shall not be granted where— (a) the applicant or the significant shareholder is not fit and proper; (b) it would be contrary to the interests of the policy holders, or of the insurer; (c) it would be contrary to the public interest. (3) An approval given under subsection (1) may be given— (a) subject to the aggregate amount subscribed by the person concerned and his associates in respect of the stated capital of the insurer, not exceeding such percentage as may be determined by the Commission without further approval being required under this section; (b) subject to such other conditions as the Commission may deem fit. (4) Where the Commission is of the opinion that the retention of a particular shareholding by a particular significant shareholder is prejudicial to the insurer, the interests of the policy holders or the insurance industry, it may, by notice in writing— (a) require that shareholder to reduce, within a period set down by the Commission, his shareholding to a percentage of the stated capital of the insurer below that qualifying him as a significant shareholder; and (b) limit the voting rights that may be exercised by that shareholder to a percentage of the voting rights attached to all the amount subscribed in respect of the stated capital of the insurer below that qualifying him as a significant shareholder. (5) A person who fails to comply with— (a) subsection (1); I15 – 25 [Issue 1] Insurance Act (b) a notice issued under subsection (4), shall commit an offence and shall, on conviction, be liable to a fine not exceeding one million rupees and to imprisonment for a term not exceeding 3 years.