insurance company legislation
The amounts of purchases said IDRs to indirect investments in foreign companies
Insurance regulator Irda has prohibited Indian Insurers to invest in Indian Depository Receipts (IDR), saying the insurance law does not permit the investment of funds directly or indirectly insured abroad.
In an IDR issue, foreign companies are allowed to mobilize funds from the India's markets to offer its equity shares in the form of revenue denominated in rupees. They are listed on stock exchanges in India and are freely transferable. These receipts are issued investors in India against underlying equity shares of the issuing company, based in India.
A investment in IDR by insurance companies amount to indirect investments made outside the country. This will not be in accordance with existing rules insurance law that prevents insurance companies from investing the funds of insured abroad, Irda said in a communication to the directors executive officers (CEOs) of insurance companies. "In light of existing legal restrictions on investments abroad, it would end insurers to invest in-depth review ", Irda, said.
Section 27C of the Insurance Act bars the investment of insurance funds outside India.
Insurance Irda said the move would not affect them much, but stock analysts said the decision to reduce the attractiveness of the market IDR. Reliance Life Insurance Director Malay Garcia said: "As we have many possibilities of other investment, will not have much impact .
However, SMC Capital Equity head Jagannadham Thunuguntla said the ability to obtain in-depth reviews will be reduced to some extent and could affect the size problem.
Courtesy: – ET DT: – 02-07-09
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Raja Kaushar from real estate
Article Source: ArticlesBase.com – IRDA BARS INSURANCE COMPANIES FROM INVESTING IN IDRS
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