[Act No. 31 of 1956] [18th June, 1956] An Act to
provide for the nationalisation of life insurance business in India by
transferring all such business to a Corporation established for the purpose and
to provide for the regulation and control of the business of the Corporation
and for matters connected therewith or incidental thereto. Be it
enacted by Parliament in the Seventh Year of the Republic of India as follows:- (1)
This Act may
be called the Life Insurance Corporation Act, 1956. (2)
It shall
come into force on such date [1]as
the Central Government may, by notifications in the Official Gazette, appoint. In this Act, unless the context otherwise requires,- (1)
"appointed
day' means the date on which the Corporation is established under section 3; [2][(1a) ?Audit Committee? means the
Committee constituted under section 19C; (1b) ?Board of Directors? or
?Board? means the collective body of the directors appointed or nominated or
deemed as such under section 4; (1c) ?Chairperson? means the
Chairperson referred to in clause (a) of sub-section (2) of section 4; (1d) ?Chief Executive? means,- (i)
during the
initial period, the Chairperson referred to in sub-clause (i) of clause (a) of
sub-section (2) of section 4; (ii)
after the
initial period, the Chief Executive Officer and Managing Director; (1e) ?Chief Executive Officer and
Managing Director? means the Chief Executive Officer and Managing Director
referred to in clause (b) of sub-section (2) of section 4; (1f) ?Companies Act? means the
Companies Act, 2013 (18 of 2013); (1g) ?court? means ?Court? as
defined in clause (29) of section 2 of the Companies Act, 2013 (18 of 2013);] (2)
"composite
insurer" means an insurer carrying on in addition to controlled business
any other kind of insurance business; (3)
"controlled
business" means- (i)
in the case
of any insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9)
of section 2 of the Insurance Act and carrying on life insurance
business- (a)
all his
business, if he carries on no other class of insurance business; (b)
all the
business appertaining to his life insurance business, if he carries on any
other class of insurance business also; (c)
all his business
if his certificate of registration under the Insurance Act in respect of
general insurance business stands wholly cancelled for a period of more than
six months on the 19th day of January, 1956; (ii)
in the case
of any other insurer specified in clause (9) of section 2 of the
Insurance Act and carrying on life insurance business- (a)
all his
business in India, if he carries on no other class of insurance business in
India; (b)
all the
business appertaining to his life insurance business in India, if he carries on
any other class of insurance business also in India;. (c)
all his
business in India if he certificate of registration under the Insurance Act in
respect of general insurance business in India stands wholly cancelled for a
period of more than six months on the 19th day of January, 1956. Explanation.- An insurer is said to carry on no class of insurance business other than
life insurance business, if in addition to life insurance business, he carries
on only capital redemption business or annuity certain business or both; and
the expression "business appertaining to his life insurance business"
in sub-clause (i) and (ii) shall be construed accordingly; (iii)
in the case
of a provident society, as defined in section 65 of the Insurance Act, all its
business; (iv)
in the case
of the Central Government or a State Government, all life insurance business
carried on by it, subject to the exceptions specified in section 44; (4)
"Corporation"
means the Life Insurance Corporation of India established under section 3; [3][(4a) ?director? means a director
appointed or nominated or deemed as such under section 4; (4b) ?financial statement?, in
relation to the Corporation, includes- (i)
a
balance-sheet as at the end of the financial year; (ii)
a profit and
loss account for the financial year; (iii)
cash flow
statement for the financial year; (iv)
a statement
of changes in equity, if applicable; and (v)
any
explanatory note annexed to, or forming part of, any document referred to in
sub-clause (i) to sub-clause (iv); (4c) ?fully diluted basis? shall
mean, in relation to the percentage holding of the Central Government on such
basis, the total number of shares held by the Central Government expressed as a
percentage of the total number of shares of the Corporation that would be
outstanding if all possible sources of conversion are exercised; (4d) ?independent director? means
an independent director referred to in clause (g) of sub-section (2) of section
4; (4e) ?initial period? means the
period of three years reckoned from the date on which the provisions of section
130 of the Finance Act, 2021 shall come into force;] (5)
"Insurance
Act" means the Insurance Act, 1938 (4 of 1938); (6)
"insurer"
means an insurer as defined in the Insurance Act who carries on life insurance
business in India and includes the Government and a provident society as
defined in section 65 of the Insurance Act; [4][(6a) ?Managing Director? means a
Managing Director referred to in clause (c) of sub-section (2) of section 4,] (7)
[5][?member? means every person
holding shares of the Corporation and whose name is entered in the register of
members maintained under clause (a) of sub-section (1) of section 5B; (7a) ?Nomination and Remuneration
Committee? means the Committee constituted under section 19B; (7b) ?notification? means a
notification published in the Official Gazette, and the expression ?notify?
shall be construed accordingly;?] (8)
"prescribed"
means prescribed by rules made under this Act; [6][(8a) ?special resolution? means
a resolution for which the intention to propose the same as a special resolution
has been duly specified in the notice given to members for calling a general
meeting, and the votes cast in favour of the resolution by members are not less
than three times the number of votes, if any, cast against the resolution;] (9)
"Tribunal"
means a Tribunal constituted under section 17 and having jurisdiction in
respect of any matter under the rules made under this Act; (10)
[7][unless there is anything
repugnant in the subject or context, all the words and expressions used herein
but not defined and defined in the Insurance Act, 1938 (4 of 1938) or in the
Companies Act, 2013 (18 of 2013) shall have the meanings respectively assigned
to them in the said Acts.] (1)
With effect
from such date [8]as the Central Government may, by
notification in the Official Gazette, appoint, there shall be established a
Corporation called the Life Insurance Corporation of India. (2)
The
Corporation shall be a body corporate having perpetual succession and a common
seal with power subject to the provisions of this Act, to acquire, hold and
dispose of property, and may by its name sue and be sued. [9][4. Board of Directors (1)
The general
superintendence and direction of the affairs and business of the Corporation
shall vest in its Board of Directors, which may exercise all such powers and do
all such acts and things as may be exercised or done by the Corporation and are
not by this Act expressly directed or required to be done by the Corporation in
general meeting. (2)
The Board of
Directors of the Corporation shall consist of the following directors, not
exceeding eighteen, of whom at least one shall be a woman, namely:- (a)
a
Chairperson of the Board, to be appointed by the Central Government, who shall,- (i)
during the
initial period, be a whole-time director of the Corporation; and (ii)
after the
initial period, be from amongst the non-executive directors nominated or to be
nominated by the Central Government; (b)
after the
initial period, a Chief Executive Officer and Managing Director, who shall be a
who-time director of the Corporation to be appointed by the Central Government: Provided that where no Chief Executive Officer and Managing Director is
appointed before expiry of the initial period, the individual holding office as
Chairperson shall be deemed to have been appointed as the Chief Executive
Officer and Managing Director on and from the date of such expiry; (c)
Managing
Directors, not exceeding four, to be appointed by the Central Government, who
shall be whole-time directors of the Corporation; (d)
an officer
of the Central Government not below the rank of a Joint Secretary to the
Government of India, to be nominated by the Central Government; (e)
an
individual to be nominated by the Central Government, who has special knowledge
or practical experience in actuarial science, business management, economics,
finance, human resources, information technology, insurance, law, risk
management, or any other field the special knowledge or practical experience of
which would be useful to the Corporation in the opinion of the Central
Government or who represent the interests of policyholders; (f)
where the
total holding of members other than the Central Government in the paid-up
equity capital of the Corporation is- (a)
not more
than ten per cent., one individual; (b)
more than
ten per cent., two individuals, who shall be elected by and from amongst such
members and in such manner as may be specified by regulations, to be appointed
by the Board; and (g)
such number
of independent directors, not exceeding nine, to be recommended by the
Nomination and Remuneration Committee and appointed by the Board. (3)
An
independent director of the Corporation shall, in relation to the Corporation,
meet the same criteria of independence as an independent director of a company
is required to meet in relation to the company under sub-section (6) of section
149 of the Companies Act: Provided that such a director shall also meet, in addition to the
aforesaid criteria, any criteria that the Nomination and Renumeration Committee
may formulate regarding qualifications, positive attributes and independence: Provided further that every such director shall at the first meeting of
the Board in which he participates as a director and thereafter at the first
meeting of the Board in every financial year or whenever there is any change in
the circumstances which may affect his status as an independent director, give
a declaration that he meets the criteria of independence under this sub-section
and that he is not aware of any circumstance or situation, which exist or may
reasonably be anticipated, that could impair or impact his ability to discharge
his duties with an objective independent judgment and without any external
influence. (4)
An individual
appointed by the Board as a director under clause (f) or clause (g) of
sub-section (2) shall hold office up to the date of the next annual general
meeting or the last date on which the annual general meeting should have been
held, whichever is earlier, and shall hold office beyond such date only if his
appointment is approved at the annual general meeting. (5)
Before an
individual is appointed or nominated as a director under sub-section (2), the
Central Government or the Nomination and Remuneration Committee, as the case
may be, shall satisfy itself that such an individual as a director shall have
no financial or other interest as is likely to affect prejudicially the
exercise or performance by him of the functions of a director: Provided that the Board shall satisfy itself from time to time with
respect to every director other than a director nominated under clause (d) of
sub-section (2) that he has no such interest: Provided further that, for the
purposes of this sub-section, any individual who is, or whose appointment or
nomination or election is proposed and who has consented to be a director,
shall furnish such information as the Central Government or the Nomination and
Remuneration Committee or the Board, as the case may be, may require. (6)
Notwithstanding
anything contained in sub-section (2), on and from the appointed date, an
individual appointed under section 4 who is eligible to be or remain a director
under section 4A and who, immediately before such appointed date, held the
office of a member of the Corporation- (i)
in the
capacity as the Chairman of the Corporation, shall be deemed to be a director
and the Chairperson under sub-clause (i) of clause (a) of sub-section (2); (ii)
in the
capacity as a Managing Director of the Corporation, shall be deemed to be a
director and a Managing Director under clause (c) of sub-section (2); (iii)
and is an
officer of the Central Government not below the rank of a Joint Secretary to
the Government of India in the Department of Financial Services, shall be
deemed to be a director nominated under clause (d) of sub-section (2); (iv)
and has been
in office for a duration which is the longest amongst members other than
members referred to in clauses (i), (ii) and (iii), shall be deemed to be a
director nominated under clause (e) of sub-section (2): Provided that every such individual shall hold office until expiry of
the term, if any, specified at the time of his appointment as a member of the
Corporation, or until a director appointed or nominated, as the case may be,
under sub-section (2) in place of such an individual assumes office: Provided further that any act or proceeding of the collective body of
members constituting the Corporation under section 4 before the appointed date,
shall be deemed to be an act or proceeding, as the case may be, of the Board. Explanation.-For the purposes of this sub-section,- (a)
notwithstanding
anything contained in clause (7) of section 2, the expression ?member? shall
mean a member appointed to the Corporation constituted under section 4 [as it
stood before the coming into force of section 130 of the Finance Act, 2021]; (b)
?appointed
date? means the date on which the provisions of section 130 of the Finance Act,
2021 shall come into force]] [10][4A. Disqualification to be
director.- An individual shall not be eligible to be or remain a director if,- (a)
he is of
unsound mind and stands so declared by a competent court; (b)
he is an
undischarged insolvent; (c)
he has
applied to be adjudicated as an insolvent and his application is pending; (d)
he has been
convicted by a court of any offence, whether involving moral turpitude or
otherwise, and sentenced in respect thereof to imprisonment for not less than
six months and a period of five years has not elapsed from the date of expiry
of the sentence: Provided that if an individual has been convicted of any offence and
sentenced in respect thereof to imprisonment for a period of seven years or
more, he shall not be eligible to be a director; (e)
an order
disqualifying him to be a director has been passed by a court or the National
Company Law Tribunal constituted under section 408 of the Companies Act, and
the order is in force; (f)
he has not
paid any calls in respect of any shares of the Corporation held by him, whether
alone or jointly with others, and six months have elapsed from the last day
fixed for the payment of such call; (g)
he attracts
any disqualification for being a director of a company under the provisions of
sub-section (2) of section 164 of the Companies Act, subject to such exceptions
thereto as the Central Government may, by notification, specify; (h)
he is a
salaried government official, other than an individual nominated director under
clause (d) of sub-section (2) of section 4; (i)
he is an
insurance agent or an intermediary or an insurance intermediary; (j)
he is an
employee of the Corporation, other than the Chief Executive or a Managing
Director, or of its subsidiary or associate company; (k)
he is a
director of a subsidiary or an associate company of the Corporation and is
other than the Chief Executive or a Managing Director; (l)
he is an
employee or a director or a promoter of any insurer carrying on life insurance
business anywhere in the world, other than the Corporation or its subsidiary or
associate company, or of any holding company, subsidiary or associate company
of such an insurer; (m)
he absents
himself from all the meetings of the Board held during a period of twelve
months, with or without seeking leave of absence of the Board: Provided that the disqualifications referred to in clauses (d) and (e)
shall continue to apply even if an appeal or petition has been filed against
the order of conviction or disqualification.] [11][4B. Disclosure of interest by
director and senior management (1)
Every
director shall at the first meeting of the Board in which he participates as a
director and thereafter at the first meeting of the Board in every financial
year, or whenever there is any change in the disclosures already made, then at
the first Board meeting held after such change, disclose his concern or
interest in any body corporate, which shall include shareholding, in such
manner as may be prescribed. (2)
Every
director who is in any way, whether directly or indirectly, concerned or
interested in a contract or arrangement or proposed contract or arrangement
entered into or to be entered into by the Corporation- (a)
with a body
corporate in which such director or such director in association with any other
director, holds more than two per cent. shareholding of that body corporate, or
is a promoter, manager, chief executive officer or trustee of that body
corporate, or (b)
with a firm
or other entity in which such director is a partner, owner or member, as the
case may be, shall not participate in any meeting of the Board or of its
Committee in which such contract or arrangement is deliberated upon, or in any
other deliberations or discussions regarding such contract or arrangement, and
shall, in the case of such deliberations in a meeting of the Board or its
Committee, disclose the nature of his concern or interest to the Board or the
Committee, as the case may be: Provided that where any director who is not so concerned or interested
at the time of entering into such contract or arrangement, he shall, if he
becomes concerned or interested after the contract or arrangement is entered
into, disclose his concern or interest forthwith when he becomes concerned or
interested, or at the first meeting of the Board held after he becomes so
concerned or interested. (3)
A contract
or arrangement entered into by the Corporation without disclosure under
sub-section (2) or with participation by a director who is concerned or
interested in any way, whether directly or indirectly, in such contract or
arrangement, shall be voidable at the option of the Corporation. (4)
Such
employees as the Board may specify as constituting the senior management of the
Corporation shall make disclosures to the Board relating to all material,
financial and commercial transactions, in which they have personal interest
that may have a potential conflict with the interest of the Corporation, and
the Board shall formulate a policy on such transactions, including any
materiality threshold therefor, and shall review such policy at least once
every three years. Explanation.-For the purposes of this sub-section, conflict of interest
relates to dealing in the shares of the Corporation or any of its subsidiaries
or associate companies, commercial dealings with bodies in which the senior
management individual or his relatives have shareholding, etc. (5)
If an
individual who is a director contravenes the provisions of sub-section (1) or
sub-section (2), or an employee referred to in sub-section (4), contravenes
such provisions, such an individual or employee shall be liable to pay penalty
of a sum of up to one lakh rupees. (6)
Without
prejudice to anything contained in sub-section (5), it shall be open to the
Corporation to proceed against a director or any other employee who had entered
into such contract or arrangement in contravention of the provisions of this
section for recovery of any loss sustained by it as a result of such contract
or arrangement. Explanation.-For the purposes of sections 4B and 4C, the expression
?body corporate? shall include a company, a body corporate as defined under
clause (11) of section 2 of the Companies Act, a firm, a financial institution
or a scheduled bank or a public sector enterprise established or constituted by
or under any Central Act or State Act, and any other incorporated association
of persons or body of individuals.] [12][4C. Related party transactions (1)
Except with
the consent of the Board and subject to such conditions as may be prescribed,
the Corporation shall not enter into any contract or arrangement with a related
party with respect to- (a)
sale,
purchase or supply of any goods or materials; (b)
selling or
otherwise disposing of, or buying, property of any kind; (c)
leasing of
property of any kind; (d)
availing or
rendering of any services; (e)
appointment
of any agent for purchase or sale of goods, materials, services or property; (f)
such related
party?s appointment to any office or place of profit in the Corporation, its
subsidiary or associate company; (g)
underwriting
the subscription of any securities, or derivatives thereof, of the Corporation: Provided that no contract or arrangement involving transactions
exceeding such sums as the Board may specify, shall be entered into except with
the prior approval in the general meeting: Provided further that no member shall vote in such general meeting
to approve any contract or arrangement which may be entered into by the
Corporation, if such member is a related party: Provided also that nothing in this sub-section shall apply to any
transactions entered into by the Corporation in its ordinary course of
business, other than transactions which are not on an arm?s length basis: Provided also that the requirement of approval under the first proviso
shall not be applicable for transactions entered into between the Corporation
and- (a)
its wholly
owned subsidiary, if any, whose financial statements are consolidated with the
Corporation and placed before the members at the general meeting for adoption; (b)
a Government
company, or the Central Government, or any State Government, or any combination
thereof, in respect of contract or arrangement entered into between them. Explanation.-In this sub-section,- (a)
the
expression ?office or place of profit? means any office or place- (i)
where such
office or place is held by a director, if the director holding it receives from
the Corporation anything by way of remuneration over and above the remuneration
to which he is entitled as director, by way of salary, fee, commission,
perquisites, any rent-free accommodation, or otherwise; (ii)
where such
office or place is held by an individual other than a director or by any firm,
private company or other body corporate, if the individual, firm, private
company or body corporate holding it receives from the Corporation anything by
way of remuneration, salary, fee, commission, perquisites, any rent-free
accommodation, or otherwise; (b)
the
expression ?arm?s length transaction? means a transaction between two related
parties that is conducted as if they were unrelated, so that there is no conflict
of interest. (2)
The Board
shall formulate a policy on materiality of related party transactions and on
dealing with related party transactions, including clear threshold limits, and
shall review and update such policy at least once in every three years. Explanation-For the removal of doubts, it is hereby clarified that a
transaction with a related party shall be considered material if the amount of
the transaction to be entered into, individually or taken together with
previous transactions during a financial year, exceeds such percentage of the
annual consolidated turnover of the Corporation as per its last audited
financial statements as may be specified in any regulation made by the
Securities and Exchange Board in this behalf. (3)
Every
contract or arrangement entered into under sub-section (1) shall be referred to
in a report made by the Board to the members, along with the justification for
entering into such contract or arrangement. (4)
Where any
contract or arrangement is entered into by a director or any other employee,
without obtaining the consent of the Board or approval by a resolution in the
general meeting under sub-section (1) and if it is not ratified by the Board
or, as the case may be, by the members at a meeting within three months from the
date on which such contract or arrangement was entered into, such contract or
arrangement shall be voidable at the option of the Board or, as the case may
be, of the members and if the contract or arrangement is with a related party
to any director, or is authorised by any other director, the directors
concerned shall indemnify the Corporation against any loss incurred by it. (5)
Without
prejudice to anything contained in sub-section (4), it shall be open to the
Corporation to proceed against a director or any other employee who had entered
into such contract or arrangement in contravention of the provisions of this
section for recovery of any loss sustained by it as a result of such contract
or arrangement. (6)
Any director
or any other employee of the Corporation who had entered into or authorised a
contract or arrangement in violation of the provisions of this section, shall
be liable to pay penalty of a sum of up to twenty-five lakh rupees.] [13][4D. Adjudication of penalties (1)
The Central
Government may, by an order published in the Official Gazette, appoint an
officer of the Central Government, not below the rank of Joint Secretary to the
Government of India or equivalent, as adjudicating officer for adjudging
penalties under the provisions of this Act. (2)
The
adjudicating officer may, on a complaint made in writing by a person authorised
by the Corporation, and after giving a reasonable opportunity of being heard,
by an order impose penalty on a director or employee liable to penalty under
any provision of this Act on account of any contravention or violation on his
part. (3)
The
adjudicating officer, for the purposes of discharging his functions under this
Act, shall have the same powers as are vested in a civil court under the Code
of Civil Procedure, 1908 (5 of 1908) while trying a suit, to summon and enforce
the attendance of any person and examine him on oath and to require the
discovery and production of documents or other electronic records, and shall be
deemed to be a civil court for purposes of Order XXI of the Civil Procedure
Code, 1908. (4)
A director
or employee aggrieved by any order made by the adjudicating officer may prefer
an appeal to such officer to the Central Government of a rank higher than that
of the adjudicating officer as the Central Government may appoint as appellate
authority, within thirty days from the date on which a copy of the order made
by the adjudicating officer is received by the aggrieved individual, and the
officer so appointed may, after giving the individual an opportunity of being
heard, pass such order as he may deem fit, confirming, modifying or setting
aside the order appealed against, or remanding the case to the adjudicating
officer for disposal, with such directions as he may deem fit. (5)
Where a
director or employee of the Corporation having already been subjected to
penalty under this Act for any contravention or violation of any provision of
this Act, again commits such contravention or violation within a period of
three years from the date of order imposing such penalty passed by the
adjudicating officer, he shall be liable for the second or subsequent
contravention or violation for twice the amount of penalty provided therefor.] [14][5. Capital of Corporation (1)
The
authorised share capital of the Corporation shall be twenty-five thousand crore
rupees, divided into two thousand and five hundred crore shares of ten rupees
each: Provided that the Central Government may, by notification, increase the
authorised share capital or reduce the authorised share capital to such amount
not less than the amount of the paid-up equity capital of the Corporation
immediately before the coming into force of section 131 of the
Finance Act, 2021, as it may deem fit: Provided further that the Corporation may, with the previous approval of
the Central Government, consolidate or reduce the nominal or face value of the
shares, divide the authorised share capital into equity share capital or a
combination of equity and preference share capital, and divide the nominal or
face value of shares into such denomination as the Corporation may decide. (2)
The
Corporation shall, with the previous approval of the Central Government, issue
equity shares to the Central Government in consideration for the paid-up equity
capital provided by the Central Government to the Corporation as it stood
before the coming into force of section 131 of the Finance Act, 2021. (3)
The share
capital of the Corporation shall consist of equity shares and preference
shares, which may be fully paid-up or partly paid-up: Provided that the Board may determine the terms of issue of partly
paid-up shares and payment of calls for such partly paid-up shares. (4)
The
Corporation may from time to time increase its issued share capital, with the
previous approval of the Central Government, whether by public issue or rights
issue or preferential allotment or private placement or issue of bonus shares
to existing members holding equity shares, or by issue of shares to employees pursuant
to share based employee benefits schemes, or by issue of shares to life
insurance policyholders of the Corporation, or otherwise: Provided that the Central Government shall, on a fully diluted basis
hold,- (a)
at all
times, not less than fifty-one per cent. of the issued equity share capital of
the Corporation; (b)
during a
period of five years from the date of first issue of shares to any person other
than the Central Government, not less than seventy-five per cent. of the issued
equity share capital of the Corporation: Provided further that no shares shall be issued other than by way of
rights issue unless authorised by a special resolution, except in the
circumstances where the provisions of the second and third provisos to
sub-section (1) of section 23A apply: Provided also that issue of shares to life insurance policyholders of
the Corporation shall not be by preferential allotment or private placement. (5)
Where the
Corporation issues shares at a premium, whether for cash or otherwise, a sum
equal to the aggregate amount of the premium received on those shares shall be
transferred to a share premium account, and the provisions of sub-sections (7)
and (8) shall, except as provided in sub-section (6), apply as if the share
premium account were the paid-up share capital of the Corporation. (6)
The share
premium account referred to in sub-section (5) may be applied by the
Corporation- (a)
towards the
issue of unissued shares of the Corporation to members as fully paid-up bonus
shares; (b)
in writing
off the expenses of, or the commission paid or discount allowed on, any issue
of shares or debentures of the Corporation; (c)
in providing
for the premium payable on the redemption of any redeemable preference shares
or of any debentures or of any securities of the Corporation; or (d)
for the
purchase of its own shares or other securities. (7)
The
Corporation may, by a special resolution, reduce its paid-up equity share
capital in the following manners, namely:- (a)
giving of
previous notice by the Corporation of the intended reduction to every member,
and to such class or classes of creditors as the Central Government may, by
notification, specify; (b)
constitution
of a committee which shall consist of a chairperson who has been a judge of a
High Court or the chairperson of a tribunal and such independent experts not
exceeding two as the Board may appoint, to consider representations, if any,
that may be made by members and creditors referred to in clause (a) in respect
of the intended reduction and to submit its recommendations to the Board; and (c)
after
consideration of the committee?s recommendations, making of recommendations by
the Board for reduction, either as given in the notice or with such
modifications as the Board may consider necessary, to the Central Government
for its approval. (8)
Without
prejudice to the generality of the power under sub-section (7), the Corporation
may reduce its paid-up equity share capital by- (a)
extinguishing
or reducing the liability on any of its equity shares in respect of share
capital not paid-up; or (b)
cancelling,
with or without extinguishing or reducing liability on any of its paid-up
equity shares, any paid-up equity share capital which is either lost or is
unrepresented by available assets; or (c)
paying off,
with or without extinguishing or reducing liability on any of its paid-up
equity shares, any paid-up equity share capital which is in excess of the wants
of the Corporation. (9)
Notwithstanding
anything contained in any other law for the time being in force- (a)
regarding
various categories of persons in favour of whom an issuer may make reservations
on a competitive basis, in relation to a public issue, the Corporation may, at
any time during the period of five years from the commencement of section
131 of the Finance Act, 2021, make a reservation on a competitive basis,
to an extent of up to ten per cent. out of the issue size, in favour of its
life insurance policyholders as one of the reserved categories for such public
issue: Provided that the value of the allotment of equity shares to such a
policyholder shall not exceed two lakh rupees, or such higher amount as the
Central Government may by notification specify: Provided further that, in the event of under-subscription in the
policyholder reservation portion, the unsubscribed portion may be allotted on a
proportionate basis, in excess of the value referred to in the first proviso,
subject to the total allotment to a policyholder not exceeding five lakh rupees
or such higher amount as the Central Government may by notification specify: Provided also that the policyholders in favour of whom reservation is
made under this sub-section may be offered shares at a price not lower than by
more than ten per cent. of the price at which net offer to public is made to
other categories of applicants; (b)
regarding
ineligibility for computation of minimum promoter?s contribution, in relation
to a public issue by way of an initial public offer, all equity shares of the
Corporation held by the Central Government, including all shares acquired
during the period of three years preceding the opening of such public offer,
resulting from a bonus issue or otherwise, shall be eligible for such
computation; (c)
requiring
the holding of paid-up equity shares by the sellers for a minimum holding
period as a condition for offering such shares for sale to the public, in
relation to a public issue by way of an initial public offer, all fully paid-up
equity shares of the Corporation held by the Central Government shall be
eligible for such an offer for sale: Provided that and subject to any regulation made by the Securities and
Exchange Board, no shares issued by the Corporation against revaluation of
assets or by utilisation of revaluation reserves or from unrealised profits
shall be eligible for computation of minimum promoter?s contribution and for
offer for sale in relation to a public issue by way of initial public offer. Explanation.-Words and expressions used in this sub-section but not
defined either in this Act or in the Insurance Act or in the Companies Act
shall have the meanings respectively assigned to them in regulations made by
the Securities and Exchange Board regarding issue of capital and disclosure
requirements, to the extent not repugnant with the provisions of this Act. (10)
The
Corporation may issue other securities, including bonds, debentures, notes,
commercial paper and other debt instruments, for the purpose of raising funds
to meet its business requirements.] [15][5A. Transferability of shares (1)
Save as
otherwise provided in sub-sections (2) and (3), the shares of the Corporation
shall be freely transferable: Provided that any arrangement between two or more persons in respect of
transfer of shares shall be enforceable as a contract. (2)
Nothing
contained in sub-section (1) shall entitle the Central Government to transfer
any shares held by it in the Corporation, if as a result of such transfer, the
shares held by it, on a fully diluted basis, shall reduce to less than
fifty-one per cent. of the issued equity share capital of the Corporation. (3)
No person,
other than the Central Government, acting individually or with persons acting
in concert with such person, or constituents of a group, shall hold equity
share in excess of five per cent. of issued equity share capital of the
Corporation, or such higher percentage as the Central Government may by
notification specify. Explanation.-For the purposes of this section,- (a)
the
expression ?group? shall have the meaning assigned to it in the Competition
Act, 2002 (12 of 2003); (b)
the
expression ?persons acting in concert? shall have the meaning assigned to it in
regulations made by the Securities and Exchange Board regarding substantial
acquisition of shares and takeovers.] [16][5B. Register of members, etc (1)
The
Corporation shall keep and maintain the following registers, in such form and
in such manner as may be specified by regulations, namely:- (a)
register of
members, indicating separately each class of equity and preference shares held
by each member residing in or outside India; (b)
register of
debenture-holders; and (c)
register of
any other security holders. (2)
Every
register maintained under sub-section (1) shall include an index of the names
included therein. (3)
The register
and index of beneficial owners maintained by a depository under section 11 of
the Depositories Act, 1996 (22 of 1996) shall be deemed to be the corresponding
register and index for the purposes of this Act. (4)
No notice of
any trust, whether express or implied or constructive, shall be entered on the
register of members or be receivable by the Corporation: Provided that nothing in this section shall apply to a depository in
respect of shares held by it as a registered owner on behalf of the beneficial
owners. Explanation.-For the purposes of this section and section 5C, the
expressions ?beneficial owner?, ?depository? and ?registered owner? shall have
the meanings respectively assigned to them in clauses (a), (e) and (j) of
sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).] [17][5C. Declaration in respect of
beneficial interest in shares (1)
Where the
name of a person is entered on the register of members of the Corporation as
the holder of shares in the Corporation but he does not hold beneficial
interest in such shares, such person shall make, within such time and in such
form as may be prescribed for a company under section 89 of the Companies Act,
a declaration to the Corporation specifying the name and other particulars of
the person who holds beneficial interest in such shares. (2)
Every person
who holds or acquires a beneficial interest in shares of the Corporation shall
make, within such time and in such form as may be prescribed for a company
under section 89 of the Companies Act, a declaration to the Corporation
specifying the nature of his interest, particulars of the person in whose name
the share stands registered in the books of the Corporation and such other
particulars as may be prescribed under the said section. (3)
Where any
change occurs in the beneficial interest in shares of the Corporation, the
person referred to in sub-section (1) and the beneficial owner specified in
sub-section (2) shall, within a period of thirty days from the date of such
change, make a declaration to the Corporation in such form and containing such
particulars as may be prescribed for a company under section 89 of the
Companies Act. (4)
No right in
relation to any share in respect of which a declaration is required to be made
under this section but has not been made by the beneficial owner, shall be
enforceable by him or by any person claiming through him. (5)
For the
purposes of this section, beneficial interest in a share includes, directly or
indirectly, through any contract, arrangement or otherwise, the right or
entitlement of a person alone or together with any other person to- (a)
exercise or
cause to be exercised any or all of the rights attached to such share; or (b)
receive or
participate in any dividend or other distribution in respect of such share. (6)
Every
individual who, acting alone or together or through one or more persons, holds
beneficial interests, of not less than twenty-five per cent. or such other
percentage as may be prescribed for a company under section 90 of the Companies
Act, in the shares of the Corporation or the right to exercise, or the actual
exercising of significant influence or control as defined in clause (27) of
section 2 of the Companies Act, over the Corporation (herein referred to as
?significant beneficial owner?), shall make a declaration to the Corporation,
specifying the nature of his interest and other particulars, in such manner and
within such period of acquisition of the beneficial interest or rights and any
change thereof, as may be prescribed for a company under section 90 of the
Companies Act. (7)
The
Corporation shall maintain a register of the interest declared by individuals
under sub-section (6) and changes therein, which shall include the name of
individual, his date of birth, address, details of ownership in the Corporation
and such other details as may be prescribed for a company under section 90 of
the Companies Act. [18][5D. Shares to be securities.- Notwithstanding anything contained in the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) or any other law for the time being in
force, the shares of the Corporation shall be deemed to be securities as
defined under the said Act.] [19][5E. Right of registered members
to nominate (1)
Every
individual registered member may, at any time, nominate, in such manner as may
be specified by regulations, an individual to whom all his rights in the shares
shall vest in the event of death of such member. (2)
Where the
shares are registered in the name of more than one individual jointly, the
joint holders may together nominate, in such manner as may be specified by
regulations, an individual to whom all their rights in the shares shall vest in
the event of the death of all such joint holders. (3)
Notwithstanding
anything contained in any other law for time being in force or in any
disposition, whether testamentary or otherwise, where a nomination in respect
of shares is made and which purports to confer on the nominee the right to vest
the shares, the nominee shall, on the death of the member or, as the case may
be, on the death of all the joint holders, become entitled to all the rights of
the member or, as the case may be, of all the joint holders, in relation to
such shares, and all other persons shall be excluded unless the nomination has
been varied or cancelled before death in such manner as may be specified by
regulations. (4)
Where the
nominee is a minor, it shall be lawful for the individual registered holder of
the shares to make nomination to appoint, in such manner as may be specified by
regulations, any person to become entitled to the shares in the event of his
death during the minority of the nominee.] (1)
Subject, to
the rules, if any, made by the Central Government in this behalf, it shall be
the general duty of the Corporation to carry on life insurance business,
whether in or outside India, and the Corporation shall so exercise its powers
under this Act as to secure that life insurance business is developed to the
best advantage of the community. (2)
Without
prejudice to the generality of the provisions contained in sub-section (1) but
subject to the other provisions contained in this Act, the Corporation shall
have power- (a)
to carry on
capital redemption business, annuity certain business or reinsurance business
in so far as such re insurance business appertains to life insurance business; (b)
subject to
the rules, if any, made by the Central Government in this behalf, to invest the
funds of the Corporation in such manner as the Corporation may think fit and to
take all such steps as may be necessary or expedient for the protection or
realisation of any investment; including the taking over of and administering
any property offered as security for the investment until a suitable
opportunity arises for its disposal; (c)
to acquire,
hold and dispose of any property for the purpose of its business; (d)
to transfer
the whole or any part of the life insurance business carried on outside India
to any other person or persons, if in the interest of the Corporation it is
expedient so to do; (e)
to advance
or lend money upon the security of any movable property or otherwise; (f)
to borrow or
raise any money in such manner and upon such security as the Corporation may
think fit; (g)
to carry on
either by itself or through any subsidiary any other business in any case where
such other business was being carried on by a subsidiary of an insurer whose
controlled business has been transferred to an vested in the Corporation under
this Act; (h)
to carry on
any other business which may seen to the Corporation to be capable of being
conveniently carried on in connection with its business and calculated directly
or indirectly to render profitable the business of the Corporation; (i)
to do all
such things as may be incidental or conducive to the proper exercise of any of
the powers of the Corporation. (3)
In the
discharge of any of its functions the Corporation shall act so far as may be on
business principles. [20][6A. Power to impose conditions,
etc. (1)
In entering
into any arrangement, under section 6, with any concern, the Corporation may
impose such conditions as it may think necessary or expedient for protecting
the interest of the Corporation and for securing that the accommodation granted
by it is put to the best use by the concern. (2)
Where any
arrangement entered into by the Corporation under section 6 with any concern
provides for the appointment by the Corporation of one or more directors of
such concern, such provision and any appointment of directors made in pursuance
thereof shall be valid and effective notwithstanding anything to the contrary
contained in the Companies Act, 1956 (1 of 1956), or in any other law for the
time being in force or in the memorandum, articles of association or any other
instrument relating to the concern, and any provision regarding share,
qualification, age limit, number of directorships, removal from office of
directors and such like conditions contained in any such law or instrument
aforesaid, shall not apply to any director appointed by the Corporation in
pursuance of the arrangement as aforesaid. (3)
Any director
appointed as aforesaid shall- (a)
hold office
during the pleasure of the Corporation any may be removed or substituted by any
person by order in writing by the Corporation; (b)
not incur
any obligation or liability by reason only of his being a director or for
anything done or omitted to be done in good faith in the discharge of his
duties as a director or anything in relation thereto; (c)
not be
liable to retirement by rotation and shall not be taken into account for
computing the number of directors liable to such retirement.] (1)
On the
appointed day [21]there shall be transferred to and
vested in the Corporation all the assets and liabilities appertaining to the
controlled business of all insurers. (2)
The assets
appertaining to the controlled business of an insurer shall be deemed to include
all rights and powers, and all property, whether movable or immovable,
appertaining to his controlled business, including, in particular, cash
balances, reserve funds, investments, deposits and all other interests and
rights in or arising out of such property as may be in the possession of the
insurer and all books of account or documents relating to the controlled
business of the insurer; and liabilities shall be deemed to include all debts,
liabilities and obligations of whatever kind then existing and appertaining to
the controlled business of the insurer. Explanation.-The expression "assets appertaining" to the
controlled business of an insurer"- (a)
in relation
to a composite insurer, includes that part of the paid-up capital of the
insurer or assets representing such part which has or have been allocated to
the controlled business of the insurer in accordance with the rules made in
this behalf; (b)
in relation
to a Government, means the amount lying to the credit of that business on the
appointed day. (3)
Where any
such assets are subject to any trust referred to in sub-section (6)
of section 27 of the Insurance Act or to any other trust for the
benefit of policy-holders, the assets shall be deemed to have vested in the
Corporation free from any such trust. (1)
Where an
insurer whose controlled business is to be transferred to and vested in the
Corporation under section 7, has established a provident or superannuation fund
or any other like fund for the benefit of his employees and constituted a trust
in respect thereof (hereinafter in this section referred to as an existing
trust), the moneys standing to the credit of any such fund on the appointed
day, together with any other assets belonging to such fund, shall, subject to
the provisions of sub-section (2) stand transferred to and vest in the
Corporation on the appointed day free from any such trust. (2)
Where all
the employees of any such insurer do not become employees of the Corporation
under section 11, the moneys and other assets belonging to any such fund as it
referred to in sub-section (1), shall be apportioned between the trustees of
the fund and the Corporation in the prescribed manner; and in case of any
dispute regarding such apportionment, the decision of the Central Government
thereon shall be final. (3)
The
Corporation shall, as soon as may be after the appointed day, constitute in
respect of the moneys and other assets which are transferred to and vested in
it under this section, one or more trusts having objects as similar to the
objects of the existing trusts as in the circumstances may be practicable. (4)
Where all
the moneys and other assets belonging to an existing trust are transferred to
and vested in the Corporation under this section, the trustees of such trust,
except as respects things done or omitted to be done before the appointed day. (1)
Unless
otherwise expressly provided by or under this Act, all contracts, agreements
and other instruments of whatever nature subsisting or having effect
immediately before the appointed day and to which an insurer whose controlled
business has been transferred to and vested in the Corporation is a party or
which are in favour of such insurer shall in so far as they relate to the
controlled business of the insurer be of as full force and affect against or in
favour of the Corporation, as the case may be, and may be enforced or acted
upon as fully and effectually as if, instead of the insurer, the Corporation
had been a party thereto or as if they had been entered into or issued in
favour of the Corporation. (2)
If on the
appointed day any suit, appeal or other legal proceeding of whatever nature is
pending by or against an insurer, then, in so far as it relates to his
controlled business, it shall not abate, be discontinued or be in any way
prejudicially affected by reason of the transfer to the Corporation of the
business of the insurer or anything done under this Act, but the suit, appeal
or other proceeding may be continued prosecuted and enforced by or against the
Corporation. (1)
For the
removal of doubts it is hereby declared that in any case where an insurer whose
controlled business has been transferred to an vested in the corporation under
this Act is a composite insurer, the provisions of the preceding sections shall
only apply to the extent to which any property appertains to his controlled
business and to rights and powers acquired, and to debts, liabilities and
obligations incurred, and to contracts, agreements and other instruments made
by the insurer for the purposes of his controlled business and to legal
proceedings relating to those purposes, and the provisions of those sections
shall be construed accordingly. (2)
The Central
Government may, by rules made in this behalf provide- (a)
for the
determination of the question whether any property appertains to his controlled
business or whether any rights, powers, debts, liabilities or obligations were
acquired or incurred or any contract, agreement or other instrument was made by
the insurer for the purposes of his controlled business or whether any
documents relate to those purposes; (b)
for the
allocation of the paid-up capital or assets representing such paid-up capital,
as the case may be, between the controlled business of the insurer and any
other business; (c)
for
substituting for any agreements entered into by any insurer partly for the
purposes of his controlled business and partly for other purposes separate
agreements in the requisite terms and for any apportionments and indemnities
consequent thereon; (d)
for the
severance of leases comprising property of which part only is transferred to
And vested in the Corporation by virtue of this Act and for apportionment
consequent on such severance; (e)
for the
apportionment and the making of financial adjustments with respects to any
debts, liabilities of obligations incurred by any such insurer partly for the
purposes of his controlled business and partly for other purposes and for any
necessary variation of mortgages and encumbrances relating to such debts,
liabilities or obligations; (f)
for the
apportionment of the moneys and other assets belonging to any provident or
superannuation fund or any other like fund to which the provisions of section 8
do not apply between persons employed in connection with the controlled
business of an insurer and other persons; (g)
for any
other matters supplementary to or consequential on the matters aforesaid for
which provision appears to be necessary or expedient. (3)
All rules
made under this section shall be laid for not less than thirty days before both
Houses of Parliament as soon as possible after they are made and shall be
subject to such modifications as Parliament may make during the session in
which they are so laid or the session immediately following. (4)
Where at any
time before the expiration of six months from the appointed day a question has
arisen under this section or under any rules made thereunder as to whether any
property is or was held or used by the insurer for the purposes of his
controlled business, the question shall be referred to the Tribunal for
decision. (1)
Every
whole-time employee of an insurer whose controlled business has been
transferred to and vested in the Corporation and who was employed by the
insurer wholly or mainly in connection with his controlled business immediately
before the appointed day shall, on and from the appointed day, become an
employee of the Corporation, and shall hold his office therein by the same
tenure, at the same remuneration and upon the same terms and conditions and
with the same rights and privileges as to pension and gratuity and other
matters as he would have held the same on the appointed day if this Act had not
been passed, and shall continue to do so unless and until his employment in the
Corporation is terminated or until his remuneration terms and conditions are
duly altered by the Corporation: Provided that nothing contained in this sub-section shall apply to any
such employee who has, by notice in writing given to the Central Government
prior to the appointed day, intimated his intention of not becoming an employee
of the Corporation (2)
[22][Where the Central Government is
satisfied that for the purpose of securing uniformity in the scales of
remuneration and the other terms and conditions of service applicable to
employees of insurers whose controlled business has been transferred to, and
vested in, the Corporation, it is necessary so to do, or that, in the interests
of the Corporation and its policy-holders, a reduction in the remuneration
payable, or a revision of the other terms and conditions of service applicable
to employees or any class of them is called for, the Central Government may,
notwithstanding anything contained in sub-section (1), or in the Industrial
Disputes Act, 1947 (14 of 1947), or in any other law for the time being in
force, or in any award, settlement or agreement for the time being in force,
alter (whether by way of reduction or otherwise) the remuneration and the other
terms and conditions of service to such manner as it thinks fit; and if the
alteration is not acceptable to any employee, the Corporation may terminate his
employment by giving him compensation equivalent to three months ' remuneration
unless the contract of service with such employee provides for a shorter notice
of termination. Explanation.-The compensation payable to an employee under this
sub-section shall be in addition to and shall not affect any pension, gratuity
provident fund money or any other benefit to which the employee may be entitled
under this contract of service.] (3)
If any
question arises as to whether any person was a whole time employee of an insurer
or as to whether any employee was employed wholly or mainly in connection with
the controlled business of an insurer immediately before the appointed day the
question shall be referred to the Central Government whose decision shall be
final. (4)
Notwithstanding
anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any
other law for the time being in force, the transfer of the services of any
employee of an insurer to the Corporation shall not entitle any such employee
to any compensation under that Act or other law, and to such claim shall be
entertained by any court, tribunal or other authority. Subject to such rules as the Central Government may make in this behalf,
every whole-time salaried employee of a chief agent of an insurer whose
controlled business has been transferred to and vested in the Corporation and,- (a)
who was
employed by the chief agent wholly or mainly in connection with the controlled
business of the insurer; (b)
whose salary
on the appointed day did not exceed five hundred rupees per mensem; and (c)
who was in
the employment of the chief agent for a continuous period of not less than one
year immediately before the appointed day; shall, on and from the appointed day, become, an employee of the
Corporation and the provisions of section 11 shall, so far as may be apply in
relation to such employee as they apply in relation to such employee as they
apply in relation to a whole-time employee of the insurer: Provided that this section shall not apply except in cases where the
chief agent of the insurer was required under the terms of his contract with
the insurer to render the prescribed services to policy holders of the insurer. Explanation.-In the case of a whole-time salaried employee of a chief
agent who has been retrenched by the chief agent on or after the 19th day of
January, 1956 the provisions of this section shall apply as if for the words
'the appointed day' the words and figures 'the 19th day of January, 1956' had
been substituted. (1)
Where any
property appertaining to the controlled business of an insurer has been transferred
to and vested in the Corporation under this Act, then,- (a)
every
person, in whose possession, custody or control any such property may be, shall
deliver the property to the corporation forthwith; (b)
any person
who, on the appointed day, has in his possession, custody or control any books,
documents or other papers relating to such controlled business shall be liable
to account for the said books, documents, and papers to the Corporation, and
shall deliver them to the Corporation or to such person as the Corporation may
direct. (2)
In
particular, all the assets of an insurer appertaining to life insurance
business held in deposit by the Reserve Bank of India under the Insurance Act
or by trustees in trust shall be delivered to the Corporation. (3)
Without
prejudice to the other provisions contained in this section, it shall be lawful
for the Corporation to take all necessary steps for securing possession of all
properties which have been transferred to and vested in it under this Act. The corporation may, having regard to the financial condition on the
appointed day of any insurer whose controlled business has been transferred to
an vested in the Corporation, reduce the amounts of insurance under contracts
of life insurance entered into by such insurer before the 19th day of January
1956, in such manner and subject to such conditions as it thinks fit: Provided that no such reduction shall be made except in accordance with
a scheme prepared by the Corporation in this behalf and approved by the Central
Government. (1)
Where an
insurer whose controlled business has been transferred to and vested in the
Corporation under this Act has, at any time within five years before the 19th
day of January, 1956.- (a)
made any
payment to any person without consideration; (b)
sold or
disposed of any property of the insurer without consideration or for an inadequate
consideration; (c)
acquired any
property or rights for an excessive consideration: (d)
entered into
or varied any agreement so as to require an excessive consideration to be paid
or given by the insurer; (e)
entered into
any other transaction of such an onerous nature as to cause a loss to, or
impose a liability on, the insurer exceeding any benefit accruing to the
insurer; (f)
if a
composite insurer, transferred any property from his life department to his
general department without consideration or for an inadequate consideration; and the payment, sale, disposal, acquisition, agreement or variation
thereof or other transaction or transfer was not reasonably necessary for the
purpose of the controlled business of the insurer or was made with an
unreasonable lack of prudence on the part of the insurer, regard being had in
either case to the circumstances at the time, the Corporation may apply for
relief to the Tribunal in respect of such transaction, and all parties to the
transaction shall, unless the Tribunal otherwise directs, be made parties to
the application. (2)
The Tribunal
may make such order against any of the parties to the application as it thinks
just having regard to the extent to which those parties were respectively
responsible for the transaction or benefited from it and all the circumstances
of the case. (3)
Where an
application is made to the Tribunal under this section is respect of any
transaction and the application is determined in favour of the Corporation, the
Tribunal shall have exclusive jurisdiction to determine any claims outstanding
in respect of the transaction. (1)
Where the
controlled business of an insurer has been transferred to and vested in the
Corporation under this Act, compensation shall be given by the Corporation to
that insurer in accordance with the principles contained in the First Schedule. (2)
The amount
of the compensation to be given in accordance with the aforesaid principles
shall be determined by the Corporation in the first instance, and if the amount
so determined is approved by the Central Government it shall be offered to the
insurer in full satisfaction of the compensation payable to him under this Act,
and if, on the other hand, the amount so offered is not acceptable to the
insurer he may within such time as may be prescribed for the purpose have the
matter referred to the Tribunal for decision. (1)
The Central
Government may for the purposes of this Act constitute one or more Tribunals
and each of the Tribunals shall consist of three members appointed by the
Central Government one of whom shall be a person who is, or has been, a Judge
of a High Court or has been a Judge of the Supreme Court, and he shall be the
Chairman thereof. (2)
A Tribunal
may choose one or more persons possessing special knowledge of any matter
relating to any case under inquiry to assist the Tribunal in determining any
question which has to be decided by it under this Act. (3)
Every
Tribunal shall have the powers of a civil court while trying a suit under the
Code of Civil Procedure, 1908 (5 of 1908), in respect of the following
matters:- (a)
summoning
and enforcing the attendance of any person and examining him on oath; (b)
requiring
the discovery and production of documents; (c)
receiving
evidence on affidavits; (d)
issuing
commissions for the examination of witnesses or documents. (4)
Every
Tribunal shall have power to regulate its own procedure and decide all matters
within its competence, and may review any of its decisions in the event of
there being a mistake on the face of the record or correct any arithmetic or
clerical error therein. (1)
The central
office of the Corporation shall be at such place as the Central Government may,
by notification in the Official Gazette, specify. (2)
The
Corporation shall establish a zonal office at each of the following places,
namely, Bombay, Calcutta, Delhi, Kanpur and Madras, and, subject to the
previous approval of the Central Government, may establish such other zonal
offices as it thinks fit. (3)
The
territorial limits of each zone shall be such as may be specified by the
Corporation. (4)
[23][There may be established as many
divisional offices and branches in each zone as may be decided by the Corporation
in accordance with the guidelines issued by the Insurance Regulatory and
Development Authority established under the Insurance Regulatory and
Development Authority Act, 1999 (41 of 1999) in this regard.] [24][19. Executive Committee (1)
The Board
may constitute an Executive Committee of the Board, consisting of- (i)
the Chief
Executive; (ii)
Managing
Directors; (iii)
the director
referred to in clause (d) of sub-section (2) of section 4; and (iv)
four
directors nominated by the Board from amongst the directors referred to in
clauses (e), (f) and (g) of sub-section (2) of section 4. (2)
The
Executive Committee of the Board shall exercise such powers as the Board may
entrust to it.] [25][19A. Investment Committee The Board
may, for such functions relating to investment of the funds of the Corporation
as the Board may entrust, constitute an Investment Committee of the Board,
consisting of the Chief Executive and not more than seven other directors, of
which a minimum two shall be directors other than directors appointed under
clause (a) or clause (b) of sub-section (2) of section 4: Provided
that the officers of the Corporation heading the functions dealing with
finance, risk, investment and law as well as its Appointed Actuary shall be
invited to every meeting of the Committee and shall have a right to be heard at
the meeting. Explanation.-For
the purposes of this section and section 24B, ?Appointed Actuary? means the
actuary appointed as such by the Corporation under the regulations made by the
Authority under the Insurance Act regarding appointed actuaries.] [26][19B. Nomination and Remuneration Committee (1)
The Board
shall constitute a Nomination and Remuneration Committee of the Board,
consisting of three or more directors from amongst directors other than those
appointed either under sub-clause (i) of clause (a) or under clause (b) or
under clause (c) of sub-section (2) of section 4, out of whom not less than
one-half shall be independent directors at any time when the number of
independent directors in office is sufficient to constitute such proportion of
the membership of the Committee: Provided
that the Chairperson may be appointed as a member of the Nomination and
Remuneration Committee but shall not chair the Committee: Provided
further that in the event of the Corporation applying to list its equity shares
under any regulation made by the Securities and Exchange Board in this behalf,
the Corporation shall ensure that the proportion of independent directors on
the Nomination and Remuneration Committee shall be in accordance with the
requirements as provided under those regulations. (2)
The
Nomination and Remuneration Committee shall- (i)
formulate
the criteria for determining qualifications, positive attributes and
independence of a director to be appointed under clause (e) or clause (f) or
clause (g) of sub-section (2) of section 4 and recommend the same to the Board; (ii)
in
accordance with the criteria referred to in clause (i), identify individuals
who are qualified to be appointed as such a director: Provided
that while identifying individuals, the Committee shall have due regard to the
requirements under the proviso to sub-section (1) of section 19C; (iii)
give its
recommendations to the Board regarding appointment and removal of such an
individual, and carry out evaluation of his performance; and (iv)
recommend to
the Board a policy relating to the sum payable as sitting fees to a director
nominated or appointed under clauses (e) or (f) or (g) of sub-section (2) of
section 4, subject to such fees not exceeding such limit as may apply in
respect of sitting fees payable to a director of a company under the Companies
Act.] [27][19C. Audit Committee (1)
The Board
shall constitute an Audit Committee of the Board, consisting of a minimum of
three directors with independent directors forming a majority when the number
of independent directors in office is sufficient to constitute such proportion
of the membership of the Audit Committee: Provided
that a majority of directors on the Audit Committee, including its chairperson,
shall be individuals with ability to read and understand financial statements
and at least one individual shall have accounting or related financial
management expertise: Provided
further that in the event of the Corporation applying to list its equity shares
under any regulation made by the Securities and Exchange Board in this behalf,
the Corporation shall ensure that the proportion of independent directors on
the Audit Committee shall be in accordance with the requirements as provided
under those regulations. (2)
The Audit
Committee shall act in accordance with the terms of reference specified by the
Board, which shall include, inter alia,- (a)
recommendations
for appointment, remuneration and terms of appointment of the auditors of the
Corporation; (b)
review and
monitoring of the independence and performance of the auditors, and the
effectiveness of the audit process; (c)
examination
of financial statements and auditor?s report thereon; (d)
prior
approval of transactions of the Corporation with related parties: Provided
that the Audit Committee may make omnibus approval for related party
transactions proposed to be entered into by the Corporation subject to the
conditions specified in sub-section (3): Provided
further that in case of transaction other than transactions referred to in
section 4C, and where the Audit Committee does not approve a transaction, it
shall make its recommendations to the Board: Provided
also that in case any transaction involving any amount not exceeding one crore
rupees is entered into by a director or an officer of the Corporation without
obtaining the approval of the Audit Committee and it is not ratified by the
Audit Committee within three months from the date of the transaction, such
transaction shall be voidable at the option of the Corporation with the
approval of the Audit Committee and if the transaction is with the related
party to any director or is authorised by any other director, the director
concerned shall indemnify the Corporation against any loss incurred by it; (e)
scrutiny of
inter-corporate loans and investments; (f)
valuation of
undertakings or assets of the Corporation, wherever it is necessary; (g)
evaluation
of internal financial controls and risk management systems; (h)
monitoring
the end use of funds raised through public offers, and related matters. (3)
The Audit
Committee may grant omnibus approval for related party transactions proposed to
be entered into by the Corporation, subject to the following conditions,
namely:- (a)
the Audit
Committee shall lay down the criteria for granting omnibus approval in line
with the policy referred to in sub-section (2) of section 4C including in
respect of transactions which are repetitive in nature; (b)
the Audit
Committee shall satisfy itself that omnibus approval is needed and that such
approval is in the interest of the Corporation; (c)
the omnibus
approval shall specify the following, namely:- (i)
the details regarding
the name of the related party and the nature, period and the maximum amount of
the transactions that shall be entered into; (ii)
the details
regarding indicative base price or current contracted price, along with the
formula, if any, for variation in the price; and (iii)
such other
conditions as the Audit Committee may deem fit: Provided
that where the need for related party transaction cannot be foreseen and the
said details are not available, the Audit Committee may grant omnibus approval
for such transactions subject to their value not exceeding one crore rupees per
transaction; (d)
the Audit
Committee shall review on a quarterly basis, the details of related party
transactions entered into by the Corporation pursuant to every omnibus approval
given; and (e)
omnibus
approval shall be valid for a period not exceeding one year and shall require
fresh approval after expiry of one year. (4)
The Audit
Committee may call for the comments of the auditors about internal control
systems, the scope of audit including the observations of the auditors, and
review of financial statements before their submission to the Board, and may
also discuss any related issues with the auditors and the management of the
Corporation. (5)
The Audit
Committee shall have authority to investigate any matter in relation to the
items specified in sub-section (2) or referred to it by the Board and, for this
purpose, shall have the power to obtain professional advice from external
sources and have full access to information contained in the records of the
Corporation. (6)
The auditors
of the Corporation and such key managerial personnel as the Board may specify
shall have a right to be heard in the meetings of the Audit Committee when it
considers the auditor?s report.] [28][19D. Other Committees.- The Board
may constitute such other Committees of the Board as it may deem fit, to render
advice to the Board on such matters as may be generally or specially referred
to them, and to perform such duties as the Board may entrust to them.] [29][20. Chief Executive and Managing Directors.- (1)
The Chief
Executive shall, subject to the superintendence, control and direction of the
Board, be entrusted with substantial powers of management in respect of the
whole of the affairs of the Corporation. (2)
The Chief
Executive shall also perform such other duties in relation to the affairs of
the Corporation as the Board may entrust to him from time to time and shall,
for this purpose, exercise such powers as may be conferred upon him by the
Board: Provided
that the Board may also empower the Chief Executive to entrust or delegate such
of his duties and powers, as it may deem fit. (3)
Every
Managing Director, subject to the general control of the Chief Executive, shall
perform such duties and exercise such powers as may be entrusted or delegated
to him by the Board or, under sub-section (2), by the Chief Executive.] In the
discharge of its functions under this Act, the Corporation shall be guided by
such directions in matters of policy involving public interest as the Central
Government may give to it in writing; and if any question arises whether a
direction relates to a matter of policy involving public interest the decision
of the Central Government thereon shall be final. (1)
The
Corporation may entrust the superintendence and direction of the affairs and
business of a zonal office to [30][an
employee of the Corporation other than a whole-time director], who shall be
known as the Zonal Manager and the Zonal Manager shall perform all such
functions of the Corporation as may be delegated to him with respect to the
area within the jurisdiction of the Zonal office. (2)
[31][***] (3)
The
Corporation shall constitute in the prescribed manner for each zonal office an
Employees and Agents Relations Committee consisting of such number of persons
as it thinks fir and every such Committee shall consist of representatives of
the Corporation and of its employees and agents, so however, that the number of
representatives of the employees of the employees and agents on the Committee
shall not be less than the number of representatives of the Corporation and
shall be duty of the Committee to advise the Zonal Manager on matters which
relate to the welfare of the employees and agents of the Corporation or which
are likely to promote and secure amity and good relations between them and the
Corporation. (1)
For the
purpose of enabling it to discharge its functions under this Act, the
Corporation may employ such number of persons as it thinks fit. (2)
Every person
employed by the Corporation or whose services have been transferred to the
Corporation under this Act, shall be liable to serve anywhere in India. [32][23A. Annual general meeting and other general meetings (1)
An annual general
meeting or other general meeting of members shall be held in each financial
year at such time as the Board may specify, at the central office of the
Corporation or at such other place in India as the Central Government may
permit on the recommendations of the Board: Provided
that not more than fifteen months shall elapse between the date of one annual
general meeting of the Corporation and that of the next: Provided
further that notwithstanding anything contained in this section, general
meeting shall be held only when the Corporation has members other than the
Central Government who are entitled to vote: Provided
also that until the first annual general meeting or other general meeting is
held, the Board shall perform all the functions required to be performed in
such meeting. (2)
The members
present at an annual general meeting shall be entitled to- (a)
discuss the
financial statements of the Corporation as referred to in section 24B and the
auditor?s report as referred to in section 25B, which shall be accompanied by
the report of the Board as referred to in section 24C, and to adopt the
financial statements, along with all the documents which are required to be
attached to such financial statements under this Act; (b)
discuss and
adopt the Annual Report prepared under section 27; (c)
approve a
declaration of dividend under sub-section (1) of section 28B; (d)
approve the
appointment of directors under sub-section (4) of section 4; (e)
approve the
appointment of auditors under sub-sections (1) and (4) of section 25 and fix
their remuneration under sub-section (7) of section 25. (3)
Every member
shall be entitled to attend a general meeting, whether in person or by proxy or
by duly authorised representative: Provided
that every director shall also be entitled to attend a general meeting, whether
in person or through electronic means: Provided
further that all notices of, and other communications relating to, any general
meeting shall be forwarded to the auditor appointed for the Corporation, and
such auditor shall, unless exempted by the Corporation, attend any general
meeting either in person or through authorised representative who is qualified
to be an auditor, and shall have the right to be heard at such meeting on any
part of the business which concerns him as the auditor. (4)
A member who
is entitled to vote may exercise his vote at a general meeting in person or by
proxy or by duly authorised representative. (5)
Persons
entitled to attend and to exercise vote at a general meeting may also do so
through electronic means, and the manner of attendance and exercise of vote
shall be such as may be prescribed. (6)
No business
other than that specified in sub-section (2) shall be transacted or discussed
at the annual general meeting, except with the consent of the Chairperson,
unless not less than six weeks? notice of the same has been given to the
Chairperson either by the Central Government or by at least hundred members who
have the right to vote at the meeting: Provided
that such a notice shall be in the form of a definite resolution to be put to
the meeting, and that such resolution shall be included in the notice of the
meeting. (7)
Save and
except with the consent of the Chairperson, no business other than that for
which a general meeting has been convened shall be transacted or discussed at
the meeting. (8)
No general
meeting shall be proceeded with and no business shall be transacted at any
general meeting unless members constitute such quorum as may be prescribed: Provided
that where a meeting could not be held for want of quorum, it may be adjourned
and held in such manner as may be prescribed. (9)
The
Corporation shall cause the minutes of all proceedings of general meetings to
be entered in books kept for that purpose.] [33][24. Funds of the Corporation (1)
The
Corporation shall have its own fund or funds, and all receipts of the
Corporation shall be credited thereto and all payments of the Corporation shall
be made therefrom: Provided
that the Board may, in relation to any of the funds of the Corporation or otherwise,
establish reserves which may or may not be allocated for a specific purpose,
and such sums as the Board may determine, may be transferred to or from such
reserves. (2)
The Board
shall, for every financial year after the financial year in which the provisions
of section 136 of the Finance Act, 2021 come into force, cause to be maintained- (a)
a
participating policyholders fund, to which all receipts from participating
policyholders shall be credited and from which all payments to such
policyholders shall be made; and (b)
a
non-participating policyholders fund, to which all receipts from
non-participating policyholders shall be credited and from which all payments
to such policyholders shall be made: Provided
that the members, by resolution in a general meeting, may exempt maintenance of
such funds for one financial year at a time up to two financial years.] [34][24A. Books of account, etc (1)
The
Corporation shall prepare and keep at its central office books of account and
other relevant books and records and financial statement for every financial
year which give a true and fair view of the state of its affairs, including
that of its zonal offices, and which explain the transactions effected both at
the central office and at its zonal offices. (2)
The
Corporation shall prepare and keep at each zonal office of the Corporation,
books of account and other relevant books and records and financial statement
for every financial year which give a true and fair view of the state of
affairs of every divisional office established in the zone corresponding to
such zonal office and which explain the transactions effected thereat. (3)
The
Corporation shall prepare and keep at each divisional office of the
Corporation, books of account and other relevant books and records and
financial statement for every financial year which give a true and fair view of
the state of affairs of every branch established under such divisional office
and which explain the transactions effected thereat. (4)
All or any
of the books of account and other relevant books and records referred to in
sub-section (1) or sub-section (2) or sub-section (3) may be kept at such other
place or places in India as the Board may decide. (5)
The
Corporation shall be deemed to have complied with the provisions of sub-section
(1) or sub-section (2) or sub-section (3), in respect of a zonal office or a
divisional office, other than the central office, or a branch of the
Corporation, whether within or outside India, if proper books of account relating
to the transactions effected at such office or branch, are kept thereat and
proper summarised returns are sent periodically to the central office or the
corresponding zonal office or the corresponding divisional office, or to the
other place referred to in sub-section (4). (6)
The books of
account and other relevant books and records referred to in sub-section (1) or
sub-section (2) or sub-section (3) may be kept in electronic form, in such
manner as the Board may determine. (7)
The books of
account of the Corporation relating to a period of not less than ten financial
years immediately preceding a financial year, together with the vouchers
relevant to any entry in such books of account, shall be kept in good order: Provided
that where the Central Government has appointed a special auditor under section
25D or is of the opinion that circumstances exist which render it necessary so
to do, it may direct the Corporation that the books of account be kept for such
longer period as the Central Government may specify.] [35][24B. Financial statements (1)
The
financial statements of the Corporation shall give a true and fair view of the
state of affairs of the Corporation and shall be in conformity with applicable
accounting requirements as may be applicable for such financial statements: Provided
that the financial statements shall not be treated as not disclosing a true and
fair view of the state of affairs of the Corporation, merely by reason of the
fact that they do not disclose any matters which are not required to be
disclosed by this Act or by the Insurance Act or by the Insurance Regulatory
and Development Authority Act, 1999 (42 of 1999) or by any other law for the
time being in force. (2)
At every
annual general meeting, the Board shall place before such meeting financial
statements for the preceding financial year. (3)
The
Corporation shall, in addition to financial statements provided under
sub-section (2), prepare a consolidated financial statement of the Corporation
in conformity with the requirements referred to in sub-section (1), and shall
place the same before the annual general meeting, along with the placing of its
financial statements under sub-section (2): Provided
that the Corporation shall also attach along with its financial statements, a
separate statement containing the salient features of the consolidated
financial statement. (4)
The
provisions of this Act applicable to financial statements under sub-section (1)
and under section 24C, the inquiry by the auditor into matters referred to in
and making of the auditor?s report on accounts under section 25B, and adoption
of financial statements under section 23A at the annual general meeting, shall,
mutatis mutandis, apply to the consolidated financial statement referred to in
sub-section (3). (5)
Without
prejudice to anything contained in sub-section (1) or sub-section (3), where
the financial statements are not in conformity with the standards applicable
thereto, the Corporation shall disclose in the financial statements the
deviation from applicable standards, the reasons therefor and the financial
effects, if any, arising out of such deviation. (6)
Financial
statements including consolidated financial statement, if any, shall be
approved by the Board before they are signed on behalf of the Board by two
whole-time directors, one director other than a whole-time director, the heads
of the finance and secretarial functions of the Corporation and its Appointed
Actuary, for submission to the auditor for his report thereon. (7)
The
auditor?s report shall be attached to every financial statement. (8)
A signed
copy of every financial statement, including consolidated financial statement,
if any, shall be issued, circulated or published, along with a copy each of- (a)
any notes
annexed to or forming part of such financial statement; (b)
the
auditor?s report; and (c)
the Board?s
report referred to in sub-section (1) of section 24C.] [36][24C. Board?s report (1)
There shall
be attached to financial statements placed before general meeting, a report by
the Board, which shall include- (a)
number of
meetings of the Board; (b)
a Directors?
Responsibility Statement; (c)
details in
respect of frauds reported by auditors; (d)
a statement
on declarations given by independent directors under the second proviso to sub-section
(3) of section 4; (e)
the
Corporation?s policy on directors? appointment, including the criteria for
determining qualifications, positive attributes and independence of a director,
which are referred to in section 19B; (f)
explanations
or comments by the Board on every qualification, reservation or adverse remark
or disclaimer made in the auditor?s report; (g)
particulars
in respect of investments in terms of the provisions of section 27A of the
Insurance Act as made applicable to the Corporation by notification issued
under sub-section (2) of section 43; (h)
particulars
of contracts or arrangements with related parties, referred to in sub-section
(1) of section 4C; (i)
the state of
the Corporation?s affairs; (j)
the amounts,
if any, which are carried to any reserves; (k)
the amount,
if any, which it recommends should be paid by way of dividend; (l)
material
changes and commitments, if any, affecting the financial position of the
Corporation, which have occurred between the end of the financial year to which
the financial statements relate and the date of the report; (m)
a statement
indicating the manner in which annual evaluation of the performance of
individual directors has been made under section 19B; (n)
such other
matters as may be prescribed: Provided
that where disclosures referred to in this sub-section have been included in
the financial statements, such disclosures may be referred to instead of being
repeated in the Board?s report: Provided
further that where the policy referred to in clause (e) is made available on
the Corporation?s website, it shall be sufficient compliance of the requirement
under the said clause if the salient features of the policy and any changes
therein are specified in brief in the Board?s report and the web-address at
which the policy is available is indicated therein. (2)
The
Directors? Responsibility Statement referred to in clause (b) of sub-section
(1) shall state that- (a)
in the
preparation of the annual accounts, the requirements referred to in section 24B
were followed, along with proper explanation relating to material departures; (b)
accounting
policies were selected and applied consistently and the judgments made and
estimates were reasonable and prudent, so as to give a true and fair view of
the state of affairs of the Corporation at the end of the financial year and of
the profit and loss of the Corporation for that period; (c)
proper and
sufficient care for the maintenance of adequate accounting records was taken in
accordance with the provisions of this Act for safeguarding the assets of the
Corporation and for preventing and detecting fraud and other irregularities; (d)
the annual
accounts were prepared on a going concern basis; (e)
the
vigilance administration referred to in clause (h) of sub-section (1) of
section 8 of the Central Vigilance Commission Act, 2003 (45 of 2003) was in
operation in the Corporation under the superintendence of the Central Vigilance
Commission, and in addition, internal financial controls to be followed by the
Corporation had been laid down and were operating effectively; and (f)
proper
systems were devised to ensure compliance with the provisions of applicable
laws and were operating effectively. Explanation.-For
the purposes of this sub-section, the expression ?internal financial controls?
means the policies and procedures adopted for ensuring the orderly and
efficient conduct of the Corporation?s business, including adherence to its
policies, safeguarding of its assets, prevention and detection of errors,
accuracy and completeness of accounting records, and timely preparation of
reliable financial information. (3)
The Board?s
report and any annexures thereto under sub-section (1) shall be signed on
behalf of the Board by two whole-time directors and one director other than a
whole-time director.] [37][24D. Penalties If the Chief
Executive or the Managing Director in charge of finance or the head of the
finance function of the Corporation or any other person of the Corporation
charged by the Board with the duty of complying with the provisions of section
24A or section 24B or section 24C contravenes any of the said provisions, such
Chief Executive or Managing Director or head of finance function or other
person shall, for each section whose provisions have been contravened, be
liable to pay penalty of a sum which shall not be less than fifty thousand
rupees but which may extend to five lakh rupees.] [38][25. Appointment of auditors (1)
The
Corporation shall, at its first annual general meeting, appoint as many
auditors (which may be individual or firm) as it deems fit, and such auditor
shall hold office from the conclusion of that meeting till the conclusion of
its sixth annual general meeting thereafter, and shall similarly appoint
auditor for subsequent periods of five years at a time, and the manner and
procedure of selection of auditors by the members at such a meeting shall be
such as may be prescribed: Provided
that before such appointment is made, the written consent of the auditor to
such appointment, and a certificate from the auditor that the appointment, if
made, shall be in accordance with such conditions as may be prescribed, shall
be obtained from the auditor: Provided
further that such certificate shall also declare that the auditor satisfies the
criteria provided for eligibility for appointment as an auditor of a company
under section 141 of the Companies Act. (2)
The
Corporation shall not appoint an auditor for more than one term of five
consecutive years: Provided
that an auditor who has completed the term of appointment shall not be eligible
for re-appointment or for fresh appointment as auditor for a period of five
years from such completion: Provided
further that no audit firm shall be appointed as auditor for a period of five
years which, if appointed, as on the date of its appointment, would have a
common partner or partners with the audit firm whose term as auditor in the
Corporation had expired in the financial year immediately preceding the
financial year in which fresh appointment is to be made, or which is associated
with the same network of audit firms as the audit firm whose term had expired
as aforesaid: Provided
also that nothing contained in this sub-section shall prejudice the right of
the Corporation to remove an auditor or the right of the auditor to resign from
such office of the Corporation. Explanation.-For
the purposes of this sub-section, the expression ?same network? includes firms
operating or functioning under a common brand name or trade name, or under
common control, or which are network firms as defined under any guidelines for
networking issued by the Institute of Chartered Accountants of India,
constituted under section 3 of the Chartered Accountants Act, 1949 (38 of
1949). (3)
Subject to
the provisions of this Act, the Corporation may resolve in a general meeting to
provide that- (a)
in the audit
firm appointed by it, the auditing partner and his team shall be rotated at
such intervals as may be resolved by members; (b)
the audit
shall be conducted by more than one auditor. (4)
Any casual
vacancy in the office of an auditor shall be filled by the Board within thirty
days, but if such casual vacancy is as a result of the resignation of an
auditor, such appointment shall also be approved by the Corporation in a
general meeting convened within three months of the Board making
recommendations in this behalf, and the auditor so appointed shall hold office
till the conclusion of the next annual general meeting. (5)
Where at any
annual general meeting, no auditor is appointed, the existing auditor shall
continue to be the auditor of the Corporation. (6)
All
appointments, including the filling of a casual vacancy of an auditor under
this section, shall be made after taking into account the recommendations of
the Audit Committee. (7)
The
remuneration of the auditor shall be fixed in the general meeting or in such
manner as may be determined therein. (8)
Until the
first annual general meeting is held, auditors duly qualified to act as
auditors of companies under the law for the time being in force relating to
companies shall be appointed by the Board with the previous approval of the
Central Government, and shall receive such remuneration from the Corporation as
the Central Government may fix. (9)
Notwithstanding
anything contained in sub-section (1), where an auditor has been appointed
previous to the first annual general meeting, either under section 25 [as it
stood before the coming into force of section 137 of the Finance Act, 2021] or
thereafter under sub-section (8), and the term specified for such auditor?s
appointment has not expired, and the auditor meets the criteria referred to in
sub-section (1), such auditor shall continue till the expiry of the term so
specified: Provided
that nothing contained in this sub-section or in section 25A shall prejudice
the right of the Corporation to remove such auditor or the right of the auditor
to resign from such office of the Corporation. (10)
An auditor
appointed under sub-section (1) or sub-section (8) or sub-section (9) shall
provide to the Corporation or its subsidiaries such other services as are
approved by the Board, but shall not include any of the services, whether
rendered directly or indirectly, that are enumerated in section 144 of the
Companies Act: Provided
that an auditor who has been performing any non-audit services on or before the
coming into force of section 137 of the Finance Act, 2021 shall comply with the
provisions of this sub-section before the close of the first financial year in
which the said section comes into force. Explanation.-For
the purposes of this section, the word ?firm? shall include a limited liability
partnership incorporated under the Limited Liability Partnership Act, 2008 (6
of 2009).] [39][25A. Removal and resignation of auditor (1)
The auditor
appointed under section 25 may be removed from office before expiry of the term
of appointment only by a special resolution: Provided
that before taking any action under this sub-section, an auditor proposed to be
removed shall be given a reasonable opportunity of being heard, which shall
include the right to represent in writing to the Corporation and, where the
auditor requests that such representation be notified to members, to have a
copy thereof sent to every member and in case a copy is not sent as aforesaid
because it was received too late, to have the representation read out at the
meeting, without prejudice to the right to be heard orally. (2)
The auditor
who has resigned from the Corporation shall file within a period of thirty days
from the date of resignation, a statement in the prescribed form with the
Corporation, indicating the reasons and other facts as may be relevant with
regard to the resignation. (3)
Without
prejudice to any action under this Act or any other law, if the Central
Government is satisfied, in consultation with the Comptroller and Auditor
General of India, that any change of auditor is required, it may make an order
that the auditor shall not function as such and may appoint another auditor in
place of such auditor.] [40][25B. Powers and duties of auditors and auditor?s report (1)
Every
auditor of the Corporation shall have a right of access at all times to the
books of account and vouchers of the Corporation, and shall be entitled to
require from the officers of the Corporation such information and explanation
as the auditor may consider necessary for the performance of his duties as
auditor, and shall, amongst other matters, inquire into the following matters,
namely:- (a)
whether
loans and advances made by the Corporation on the basis of security have been
properly secured; (b)
whether the
terms on which loans and advances have been made are prejudicial to the
interests of the Corporation or its members; (c)
whether
transactions of the Corporation which are represented merely by book entries
are prejudicial to its interests; (d)
whether so
much of the assets of the Corporation as consist of shares, debentures and
other securities have been sold at a price less than that at which they were
purchased; (e)
whether
loans and advances made by the Corporation have been shown as deposits; (f)
whether
personal expenses have been charged to revenue account; (g)
where it is
stated in the books and documents of the Corporation that any shares have been
allotted for cash, whether cash has actually been received in respect of such
allotment, and if no cash has actually been so received, whether the position
as stated in the account books and the balance-sheet is correct, regular and
not misleading: Provided
that the auditor shall also have the right of access to the records of all the
subsidiaries and associate companies of the Corporation, in so far as they
relate to consolidation of the Corporation?s financial statements with those of
such subsidiaries and associate companies. (2)
The auditor
shall make a report to the members on the accounts examined by the auditor and
on every financial statement which is required by or under law to be placed in
general meeting, and such report shall, after taking into account applicable
provisions of this Act and any other law for the time being in force, the
standards referred to in section 24B, and matters that are required to be
included in the audit report under the provisions of this Act or any other law
for the time being in force, and to the best of the information and knowledge
of the auditor, state that the said accounts and financial statements give a
true and fair view of the state of the Corporation?s affairs as at the end of
its financial year and profit or loss and cash flow for the year. (3)
The
auditor?s report shall also state- (a)
whether the
auditor has sought and obtained all the information and explanations which to
the best of the auditor?s knowledge and belief were necessary for the purpose
of audit and if not, the details thereof and the effect of such information on
the financial statements; (b)
whether, in
the auditor?s opinion, proper books of account as required by law have been
kept by the Corporation so far as appears from the auditor?s examination of those
books and proper returns adequate for the purposes of audit have been received
from branches not visited by the auditor; (c)
whether any
report referred to in the proviso to sub-section (6) has been sent to the
Corporation?s auditor, and the manner in which the Corporation?s auditor has
dealt with it in preparing the auditor?s report; (d)
whether the
Corporation?s balance-sheet and profit and loss account dealt within the report
are in agreement with the books of account and returns; (e)
whether, in
the auditor?s opinion, the financial statements comply with applicable
standards; (f)
the
observations or comments of the auditor on financial transactions and matters
which have any adverse effect on the functioning of the Corporation; (g)
whether any
director is disqualified to be or remain a director under clause (i) of section
4A; (h)
any
qualification, reservation or adverse remark relating to the maintenance of
accounts and matters connected therewith; (i)
whether the
Corporation has adequate internal financial controls with reference to
financial statements in place and the operating effectiveness of such controls; (j)
such other
matters as may be prescribed. (4)
Where any of
the matters required to be included in the audit report under this section is
answered in the negative or with a qualification, the report shall state the
reasons therefor. (5)
All
qualifications, observations or comments mentioned in there port of the auditor
appointed for the Corporation, in respect of financial transactions or matters
that have any adverse effect on the functioning of the Corporation, shall be
read out in general meeting and shall be open to inspection by any member. (6)
In respect
of a branch or an office of the Corporation, the accounts shall be audited
either by the auditor appointed for the Corporation (herein referred to as
Corporation?s auditor) in this section or by any other person qualified for
appointment as an auditor of the Corporation and appointed as such under
section 25, or where the branch or office is situated in a country outside
India, the accounts of the branch or office shall be audited either by the
Corporation?s auditor or by an accountant or by any other person duly qualified
to act as an auditor of the accounts of the branch or office in accordance with
the laws of that country, and the duties and powers of the Corporation?s
auditor with reference to the audit of the branch or office and the auditor
thereof, if any, shall be such as may be prescribed: Provided
that the auditor for a branch or office shall prepare a report on the accounts
of the branch or office, examined by such auditor and shall send it to the
Corporation?s auditor, who shall deal with it in the Corporation?s auditor?s
report in such manner as the Corporation?s auditor may consider necessary.] [41][25C. Internal auditor (1)
The Board
shall, on the recommendation of the Audit Committee, appoint an internal
auditor, who shall either be a chartered accountant or a cost accountant, or
such other professional as may be determined by the Board to conduct the
internal audit of the functions and activities of the Corporation. (2)
The Audit
Committee shall- (a)
recommend to
the Board for the appointment, remuneration and terms of appointment of the
internal auditor; (b)
in
consultation with the internal auditor, formulate the scope, functioning,
periodicity and methodology for conducting the internal audit; (c)
review and
monitor the internal auditor?s performance and effectiveness of audit process.] [42][25D. Special auditor Notwithstanding
anything contained in sections 19C, 23A, 25, 25A and 25B, the Central
Government may, at any time, appoint such auditor as it deems fit as a special
auditor to examine and report on the accounts of the Corporation, and such
auditor shall have the same rights of access to the books of account and
vouchers of the Corporation and entitlement to require information and
explanation from the officers of the Corporation as an auditor of the
Corporation has under section 25B.] [43][The Board] shall, [44][every
year] years, cause an investigation to be made by actuaries into the financial
conditions of the [45][life
insurance business of [46][the
Board], including a valuation of the liabilities of [47][the
Board] in respect thereto], and submit the report of the actuaries to the [48][Board]. The Corporation shall, as soon as may be, after the end of each
financial year, prepare and submit to the Central Government in such form as may
be prescribed a report giving an account of its activities during the previous
financial year, [49][***]. [50][28. Surplus from life insurance business, how to
be utilised.- (1)
If as a
result of any investigation undertaken by the Board under section 26, any
surplus emerges,- (a)
for every
financial year previous to the financial year for which the funds referred to
in sub-section (2) of section 24 are to be maintained, and for any subsequent
financial year for which members may exempt the maintenance of such funds,- (I)
ninety per
cent., or such higher percentage as the Board may approve, of such surplus
shall be allocated to or reserved for the life insurance policyholders of the
Corporation; and (II)
such
percentage of the remaining surplus as the Board may approve, shall be
allocated to or reserved for members and may either be credited to a separate
account maintained by the Corporation or be transferred to such reserve or
reserves as the Board may specify; (b)
for every
financial year other than that referred to in clause (a),- (I)
in respect
of participating policyholders,- (I)
ninety per
cent., or such higher percentage as the Board may approve, of surplus relating
to such policyholders, shall be transferred to the participating policyholders
fund, and shall be allocated to or reserved for the life insurance
participating policyholders of the Corporation; and (II)
such
percentage of the remaining surplus as the Board may approve, shall be
allocated to or reserved for members and may either be credited to a separate
account maintained by the Corporation or be transferred to such reserve or
reserves as the Board may specify; (III)
in respect
of non-participating policyholders, one hundred per cent. of surplus relating to
such policyholders shall be allocated to or reserved for members and may either
be credited to a separate account maintained by the Corporation or be
transferred to such reserve or reserves as the Board may specify. (2)
The
remaining surplus referred to in sub-clause (ii) of clause (a) of sub-section
(1) or in item (ii) of sub-clause (i) of clause (b) of sub-section (1), as the
case may be, and the surplus referred to in sub-clause (ii) of clause (b) of
sub-section (1), and the profits allocated to or reserved for the members under
section 28A, shall be utilised for such purposes as the Board may approve,
including for the purpose of declaration or payment of dividend, the issue of
fully paid-up bonus shares to members and crediting any of the reserves that the
Board may create for any purpose. (3)
The
Corporation shall, with the approval of the Board, publish on its website its
surplus distribution policy at least once in five years, or such shorter period
not less than three years as the Board may deem fit, and such policy shall
specify, among other things, the percentages referred to in sub-section (1)] "[28. Surplus from life insurance business how to be utilized.- If as a result of any investigation undertaken by the Corporation under
section 26 any surplus emerges, ninety-five per cent of such surplus or such
higher percentage thereof as the Central Government may approve shall be
allocated to or reserved for the life insurance policy-holders of the
Corporation and after meeting the liabilities of the Corporation, if any, which
may arise under section 9, the remainder shall be paid to the Central
Government or, if that Government so directs, be utilised for such purposes and
in such manner as that Government may determine.]" [51][28A. Profits from any business (other than life
insurance business) how to be utilized If for any financial year profits accrue from any business (other than
life insurance business) carried on by the Corporation, then, after making
provision for reserves and other matters for which provision is necessary or
expedient, the balance of such profits shall be [52][allocated to or reserved for the members].] [53][28B. Declaration of dividend (1)
No dividend
shall be declared or paid by the Corporation for any financial year except out
of the surpluses and profits referred to in sub-section (2) of section 28
(after excluding any amount representing unrealised gains, notional gains or
revaluation of assets and any change in carrying amount of an asset or of a
liability on measurement of the asset or the liability at fair value) for such
year arrived at after providing for depreciation, or for any previous financial
year or years arrived at after providing for depreciation and remaining
undistributed, or out of both the aforesaid surpluses and profits: Provided that no dividend shall be declared or paid by the Corporation
from its reserves other than free reserves: Provided further that no dividend shall be declared or paid by the
Corporation unless any losses carried over from previous years and any
depreciation not provided for in previous years are set off against the
surpluses and profits referred to in sub-section (2) of section 28 for the
financial year for which the dividend is proposed to be declared or paid. (2)
The Board
may, during any financial year or at any time during the period from the close
of a financial year till the holding of the annual general meeting for that
financial year, declare interim dividend out of the surpluses and profits
referred to in sub-section (2) of section 28 of the financial year for which
such interim dividend is sought to be declared, or out of the surpluses and
profits referred to in sub-section (2) generated in the current financial year
till the close of the quarter preceding the date of declaration of such interim
dividend: Provided that in case the Corporation has incurred loss during the
current financial year up to the close of the quarter immediately preceding the
date of declaration of interim dividend, such interim dividend shall not be
declared at a rate higher than the average of the dividends declared by the
Corporation during the immediately preceding three financial years. (3)
The amount
of the dividend, including interim dividend, shall be deposited in a scheduled
bank in a separate account within five days from the date of declaration of
such dividend. (4)
No dividend
shall be paid by the Corporation in respect of any share of the Corporation
except to the member in whose name such share is entered on the register of
members referred to in section 5C, or to his order, or to his banker, and shall
be payable in cash and not in stock or other form of value: Provided that nothing in this sub-section shall be deemed to prohibit
the capitalisation of the surpluses and profits referred to in sub-section (2)
of section 28 for the purpose of issuing fully paid-up bonus shares or paying
up any amount for the time being unpaid on any share held by members: Provided further that any dividend payable in cash may be paid by cheque
or warrant or in any electronic mode to the member entitled to such payment.] [54][28C. Unpaid Dividend Account (1)
Where a
dividend has been declared by the Corporation but has not been paid or claimed
within thirty days from the date of declaration to any member entitled to
payment thereof, the Corporation shall, within seven days from the expiry of
the said period of thirty days, transfer the total amount of dividend which
remains unpaid or unclaimed to a special account to be opened by the
Corporation in that behalf in any scheduled bank, to be called the Unpaid
Dividend Account. (2)
The
Corporation shall, within a period of ninety days of making any transfer of an
amount under sub-section (1) to the Unpaid Dividend Account, prepare a
statement containing the name and last known address of, and the amount of the
unpaid dividend payable to, each member entitled to such unpaid dividend, and
shall place such statement on its website and on any other website as the
Central Government may specify. (3)
If any
default is made in transferring the total amount referred to in sub-section (1)
or any part thereof to the Unpaid Dividend Account, the Corporation shall pay,
from the date of such default, interest on so much of the amount as has not
been transferred to the said account, at such rate as is specified
in section 124 of the Companies Act, and the interest accruing on
such amount shall ensure to the benefit of the members in proportion to the
amount remaining unpaid to them. (4)
Any person
claiming to be entitled to any money transferred under sub-section (1) to the
Unpaid Dividend Account may apply to the Corporation for payment of the money
claimed. (5)
The amount
remaining unclaimed and unpaid for a period of seven years from the date it
became due for payment in the Unpaid Dividend Account shall be transferred to
the Investor Education and Protection Fund established under sub-section (1)
of section 125 of the Companies Act and shall be deemed to be an
amount credited to the said Fund under sub-section (2) of the said section. (6)
All shares
in respect of which dividend has not been paid or claimed for seven consecutive
years or more shall be transferred by the Corporation in the name of the
Investor Education and Protection Fund along with a statement containing such
details as may be prescribed: Provided that every claimant of such shares shall be entitled to claim
the transfer thereof from the said Fund in accordance with such procedure and
on submission of such documents as may be prescribed. Explanation.-For the removal of doubts, it is hereby clarified that in
case any dividend is paid or claimed for any year during the said period of
seven consecutive years, the share shall not be transferred to the Investor
Education and Protection Fund.] The Central Government shall cause the report of the auditors under
section 25, the report of the actuaries under section 26 and the report giving
an account of the activities of the Corporation under section 27 to be laid
before both Houses of Parliament as soon as may be after each such report is
received by the Central Government. Except to the extent otherwise expressly provided in this Act, on and
from the appointed day the Corporation shall have the exclusive privilege of
carrying on life insurance business in India; and on and from the said day any
certificate to registration under the Insurance Act held by any insurer
immediately before the said day shall cease to have effect in so far as it
authorises him to carry on life insurance business in India. [55][30A. Exclusive privilege of Corporation to cease Notwithstanding anything contained in this Act, the exclusive privilege
of carrying on life insurance business in India by the Corporation shall cease
on and from the commencement of the Insurance Regulatory and Development
Authority Act, 1999 and the Corporation shall, thereafter, carry on life
insurance business in India in accordance with the provisions of the Insurance
Act, 1938.] (1)
Notwithstanding
anything contained in section 30 or in the Insurance Act, the Central
Government may, by order, permit person who has made an application in that
behalf, to carry on life insurance business in India, in respect of the lives
of persons ordinarily resident outside India, subject to such restrictions and
conditions as may be specified in the order and any such order shall be deemed
to have effect as if it were a certificate of registrations issued by the
Controller to such person under section 3 of the Insurance Act in
respect of that class of business. (2)
Nothing in
sub-section (1) shall authorise any person permitted to carry on life insurance
business of the nature referred to in that sub-section, to insure the life of
any person ordinarily resident outside India, during any period of his
temporary residence in India. The Corporation may have for use in any zonal office divisional office
or in any office outside India an official seal which shall be a facsimile of
the common seal of the Corporation, with the addition on its fact of the name
of the zonal office, divisional officer or other office where it is to be used,
and any such official seal may be affixed to any deed or document to which the
Corporation is a party. Where any property or rights appertaining to the controlled business of
an insurer are transferred to and vested in the Corporation under this Act or
would be so transferred and vested but for the fact that such transfer and
vesting are governed otherwise than by the law of India, the insurer shall comply
with such directions as may be given to him by the Corporation for the purpose
of securing that the ownership of the property or, as the case may be, that the
right is effectively transferred to the Corporation. Notwithstanding anything contained in the Insurance Act, all shares
which have vested in the Administrator General of any State under Sub-section
(8) of the section 6A of that Act and which have not been disposed of
in accordance with the provisions of that sub-section before the appointed day,
shall, in payment of the amount of expenditure, if any, incurred by the
Administrator General in relation to such shares by the persons who would have
been entitled to those shares if the said sub-section had not been enacted,
revest in such persons. (1)
Any insurer
incorporated outside India may, before the appointed day, make an application
to the Central Government stating that among the assets appertaining to the
controlled business of the insurer of building up his life insurance business
in India, which, notwithstanding anything contained in section 7, should not be
transferred to and vested in the Corporation. (2)
On receipt
of an application under sub-section (1), the Central Government shall determine
the value of the assets of the insurer appertaining to his controlled as at
that date in accordance with the provisions contained in paragraph 3 of Part B
of the First Schedule, and deduct therefrom the total amount of the liabilities
of the insurer appertaining to his controlled business in existence on the 31st
day of December 1955, computed as at that date in accordance with the provisions
contained in the Second Schedule; and if there is any excess, the Central
Government may, by order, direct that such assets equivalent in value to the
excess as may be specified in the order shall not be transferred to or vested
in the Corporation, or where the order is made after the appointed day, that
the Corporation shall be divested of the said assets. (3)
In the case
of any insurer incorporated outside India, the Central Government may also, by
order, direct that any such liabilities in respect of life insurance policies
expressed in any foreign currency issued on the lives of persons who are not
citizens of India as are specified in the order together with any such assets
necessary to meet the liabilities, as may be so specified, shall not be transferred
to or vested in the Corporation or, if the order is made after the appointed
day, that the Corporation shall be divested of such liabilities and assets as
aforesaid. (4)
The amount
of liabilities in respect of the policies referred to in an order made under
sub-section (3) shall be computed as at the 31st day of December, 1955,- (a)
in any case
where in respect of the insurer concerned an order has been made under
sub-section (2), in accordance with the provisions contained in clause (b) of
the Second schedule; and (b)
in any other
case, in accordance with method A specified in the Second Schedule. Explanation.-In computing the amount of liabilities in respect of the
policies referred to in this sub-section, allowances shall be made for receipts
and payments in respect of such policies from the 31st day of December, 1955,
up to the date of the order. (5)
Every order
made by the Central Government under this section shall be carried out by the
Corporation in such manner as the Central Government may direct. Notwithstanding anything contained in the Insurance Act or in any other
law for the time being in force every contract appertaining to controlled
business subsisting immediately before the appointed day,- (a)
between an
insurer and his chief agent or between an insurer and a special agent; or (b)
between the
chief agent of an insurer and a special agent; shall, as from the appointed day, cease to have effect and all rights
accruing to the chief agent or the special agent under any such contract shall
terminate on that day: Provided that in every such case compensation shall be given by the
Corporation to the chief agent or the special agent, as the case may be, in
accordance with the principles contained in the Third Schedule, and the
provisions of sub-section (2) of section 16 shall, so far as may be, apply in
every such case. The sums assured by all policies issued by the Corporation including any
bonuses declared in respect thereof and, subject to the provisions contained in
section 14 the amounts assured by all policies issued by any insurer the
liabilities under which have vested in the Corporation under this Act, and all
bonuses declared in respect thereof, whether before or after the appointed, day
shall be guaranteed as to payment in cash by the Central Government. [56][Provided that the Corporation shall endeavour that
its funds are invested in the attractive schemes formulated by it to ensure
increased bonus to policyholders while having least investment risk so as to
enable the Corporation to play a greater role in economic enrichment of the
masses while maintaining its position as a leading player in the market.] No provision of law relating to the winding up of companies or
corporations shall apply to the corporation established under this Act, and the
Corporation shall not be placed in liquidation save by order of the Central
Government and in such manner as that Government may direct. Where any insurer being a company (other than a composite insurer) whose
controlled business has been transferred to and vested in the Corporation under
this Act has in accordance with the provisions of this Act collected and
distributed any moneys paid to him by the Corporation by way of compensation or
otherwise and has also complied with any direction given to him by the
Corporation for the purpose of securing that the ownership of any property or
any right is effectively transferred to the Corporation, the Central Government
may on application being made to it in this behalf by such insurer grant a
certificate to the insurer that there is no reason for the continued existence
of the insurer and where such a certificate has been granted shall cause the
certificate to be published in the Official Gazette and upon the publication
thereof the insurer shall be dissolved. If any person willfully withholds or fails to deliver to the Corporation
as required by section 13, any property or any books, documents or other papers
which may be in his possession or unlawfully retains possession of any property
of an insurer which has been transferred to and vested in the Corporation under
this Act or willfully applies any such property to purpose other than those
expressed in or authorised by this Act, he shall, on the complaint of the
Corporation, be punishable with imprisonment which may extent to one year, or
with fine which may extend to one thousand rupees, or with both. No civil court shall have jurisdiction to entertain or adjudicate upon
any matter which a Tribunal is empowered to decide or determine under this Act. Any decision of a Tribunal may be enforced in any civil court within the
local limits of whose jurisdiction the person against whom the decision is to
be enforced actually and voluntarily resides or carries on business or
personally works for gain or owns any property, as if it were a decree passed
by that court. (1)
The
following section of the Insurance Act shall, so far as may be, apply to the
Corporation as they apply to any other insurer, namely:- Sections
2, 2B, 3, 18, 26, 33, 38, 39, 31, 45, 46, 47A, 50, 51, 52, 110A, 110B, 110C, 119, 121, 122 and 123. (2)
The Central
Government shall as soon as may be after the commencement of this Act, by
notification in the Official Gazette, direct that the following sections of the
Insurance Act shall apply to the Corporation subject to such conditions and
modifications as may be specified in the notification, namely:- Sections
2D, 10, 11, 13, 14, 15, 20, 21, 22, 23, 25, 27A,
28A, 35, 36, 37, 40, 40A, 43, 44, 102 to
106, 107 to 110, 111, 113, 114 and 116A. [57][(2A) Section 42 of the Insurance Act
shall have effect in relation to the issue to any individual of a licence to
act as an agent for the purpose of soliciting or procuring life insurance
business for the Corporation as if the reference to an officer authorised by
the Controller in this behalf in sub-section (1) thereof included a reference
to an officer of the Corporation authorised by the Controller in this behalf.] (3)
The Central
Government may, be notification in the Official Gazette, direct that all or any
of the Insurance Act other than those specified in sub-section (1) or
sub-section (2) shall apply to the Corporation subject to such conditions and
modifications as may be specified in the notification. (4)
Every
notification issued under sub-section (2) or sub-section (3) shall be laid for
not less than thirty days before both Houses of Parliament as soon as possible
after it is issued, and shall be subject to such modifications as Parliament
may make during the session in which it is so laid or the session immediately
following. (5)
Save as
provided in this section, nothing contained in the Insurance Act shall apply to
the Corporation. 43A. [58][***] Nothing contained in this Act shall apply in relation to- (a)
any insurer
whose business is being voluntarily would up or is being wound up under the
orders of the Court; (b)
any insurer
to whom the Insurance Act does not apply by reason of the provisions contained
in section 2E thereof; [59][Provided that nothing contained in this clause
shall apply on and from the date on which the provisions contained
in section 2E of the Insurance Act, 1938 (4 of 1938) shall cease to
operate.] (c)
any
composite insurer in respect of the management of whose affairs an
Administrator has been appointed under section 52A of the Insurance
Act; (d)
the scheme
run by the Central Government known as the Post Office Life Insurance Fund; (e)
any approved
superannuation fund as defined in clause (a) of Section 58N of the
Indian Income-tax Act, 1922 (11 of 1922), which is in existence on the
appointed day; (f)
any scheme
in existence on the appointed day or any scheme framed after the appointed day
with the approval of the Central Government whereby, in consideration of
certain compulsory deductions made by Government from the salaries of its
employees as part of the conditions of service, the payment of money is assured
by Government on the death of the employee concerned or on the happening of any
contingency dependent on his life. (g)
[60][any Family Pension Scheme Framed under the Coal
Mines Provident Fund, Family Pension and Bonus Schemes Act, 1948 (46 of
1948), or the Employees' Provident Funds and Family Pension Fund Act, 1952 (19
of 1952), for the purpose of providing family pension and life assurance
benefits to the employees covered by the said Scheme.] [61][45. Special provisions regarding certain composite
insurer Notwithstanding anything contained in clause (c) of section 44, the
Central Government may, by notification in the Official Gazette, direct that on
and with effect from such date as may be specified in the notification the
assets and liabilities appertaining to the controlled business of a composite
insurer in respect of the management of whose affairs an Administrator has been
appointed under section 52A of the Insurance Act shall be transferred
to the vested in the Corporation, and on the issue of such a notification the
provisions of this Act shall, so far as may be, apply in relation to such
insurer and to the transfer and vesting of the assets and liabilities of his
controlled business in the Corporation as they apply in relation to all other
insurers and to the transfer and vesting of assets and liabilities of their
controlled business in the Corporation, subject to the modification that
references in this Act to the appointed day shall be construed as references to
the day specified in the notification.] [62][46. Defects in constitution of Corporation or
Committees or in appointment or nomination of directors not to invalidate acts
or proceedings (1)
No act or
proceeding of the Corporation or of its Board or any Committee thereof shall be
called in question on the ground merely of the existence of any vacancy or
defect in the constitution of the Corporation or the Board or such Committee,
as the case may be. (2)
No act done
by an individual as a director shall be deemed to be invalid, notwithstanding
that it was subsequently noticed that his appointment or nomination, as the
case may be, was invalid by reason of any defect or disqualification or had
terminated by virtue of any provision contained in this Act: Provided that nothing in this sub-section shall be deemed to give
validity to any act done by such individual as director after his appointment
or nomination, as the case may be, has been noticed by the Corporation to be
invalid or to have terminated.] [63][47. Protection of action taken under this Act (1)
No suit,
prosecution or other legal proceeding shall lie against any director or
employee of the Corporation for anything which is in good faith done or
intended to be done in pursuance of this Act or of any rules or regulations
made thereunder. (2)
A director
who is not a whole-time director shall be held liable only in respect of such
acts of omission or commission of the Corporation which had occurred with his
knowledge, attributable through Board processes, and with his consent or
connivance or where he had not acted diligently. Explanation.-For the purposes of this sub-section, the reference to
?Board? shall include Committees of the Board.] (1)
The Central
Government may, by notification in the Official Gazette make rules to carry out
the purposes of this Act. (2)
In
particular, and without prejudice to the generality of the foregoing power,
such rules may provide for all or any of the following matters, namely:- (a)
the term of
office and the conditions of service of [64][directors]; [65][(aa) the manner of disclosure of interest by a
director under section 4B; (ab) the conditions subject to which the Board may
consent to related party transactions under section 4C; (ac) the securities and instruments which may be
issued under section 5; (ad) the manner of reservation in favour of life
insurance policyholders and allotment against such reservation, in relation to
a public issue, under clause (a) of sub-section (9) of section 5;] (b)
the manner
in which the moneys and other assets belonging to any such fund as is referred
to in section 8 shall be apportioned between the trustees of the fund and the
Corporation; (c)
the services
which the chief agent should have rendered for the purpose of the proviso to
section 12; [66][(cc) the terms and conditions of service of the
employees [67][***] of the Corporation, including those who
became employees [68][***] of the Corporation on the appointed day under
this Act;] (d)
the
jurisdiction of the Tribunals constituted under section 17; (e)
the manner
in which, and the persons to whom, any compensation under this Act may be paid; (f)
the time
within which any matter which may be referred to a Tribunal for decision under
this Act may be so referred; (g)
the manner
in which and the conditions subject to which investments may be made by the
Corporation; (h)
the manner
in which an Employees and Agents Relations Committee may be constituted for
each zonal office; [69][(ha) the manner in which general meetings shall be
held, and the business to be transacted and procedure to be followed thereat; (hb) the quorum for a general meeting, and the
manner of holding the meeting if it could not be held for want of quorum and
was adjourned under section 23A; (hc) the manner in which persons may attend a
general meeting and exercise their vote; (hd) the manner in which notices may be served on
behalf of the Corporation upon members or other persons; (he) the form and manner in which the financial
statements referred to in sub-section (8) of section 24B may be issued,
circulated or published; (hf) matters that may be prescribed under clause
(n) of sub-section (1) of section 24C; (hg) the manner and procedure of selection and
conditions of appointment of auditors under sub-section (1) of section 25; (hh) the form in which an auditor who has resigned
shall indicate the reasons and other facts relevant to the resignation under
sub-section (2) of section 25A; (hi) the matters to be prescribed under clause (j)
of sub-section (3) of section 25B; (hj) the duties and powers of the Corporation?s
auditor with reference to the audit of a branch or office of the Corporation
and the auditor thereof, under sub-section (6) of section 25B; (hk) the details, procedure and documents under
sub-section (6) of section 28C.] (i)
the form in
which the report giving an account of the activities of the Corporation shall
be prepared; (j)
the
conditions subject to which the Corporation may appoint employees; (k)
the fees
payable under this Act and the manner in which they are to be collected; (l)
any other
matter which has to be or may be prescribed; [70][(2A The regulation and other provisions as in
force immediately before the commencement of the Life Insurance Corporation
(Amendment) Act, 1981, with respect to the terms and conditions of service of
employees and agents of the Corporation including those who became employees
and agents of the Corporation on the appointed day under this Act, shall be
deemed to be rules made under clause (cc) of sub-section (2) and shall, subject
to the other provisions of this section, have effect accordingly. (2B) The power to make rules conferred by clause
(cc) of sub-section (2) shall include- (i)
the power to
give retrospective effect to such rules; and (ii)
the power to
amend by way of addition, variation or repeal, the regulations and other
provision refereed to in sub-section (2A), with retrospective effect, from a
date not earlier than the twentieth day of June, 1979. (2C) The provisions of clause (cc) of sub-section
(2) and sub-section (2B) and any rules made under the said clause (cc) shall
have effect, and any such rule made with retrospective effect from any date
shall also be deemed to have had effect from the date, notwithstanding any
judgement, decree or order of any court, tribunal or other authority and
notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of
1947), or any other law or any agreement, settlement, award or other instrument
for the time being in force.] (3)
[71][Every rule made by the Central Government under
this Act shall be laid, as soon as may be after it is made, before each House
of Parliament while it is in session, for a total period of thirty days which
may be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in
the rule or both Houses agree that the rule should not be made, the rule shall
thereafter have effect only in such modified form or be of no effect, as the
case may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything preciously done under that rule.] (1)
The [72][Board] may,
with the previous approval of the Central Government, by notification in the
Gazette of India, make regulations not inconsistent with this Act and the rules
made there under to provide for all matters for which provision is expedient
for the purpose of giving effect to the provisions of this Act. (2)
In
particular, and without prejudice to the generality of the foregoing power,
such regulations may provide for- (a)
the powers
and functions of the [73][Board]
which may be delegated to the Zonal Managers; (b)
[74][the method
of recruitment of employees and agents of the Corporation and the terms and
conditions of the agents;] (c)
[75][***] (d)
the
territorial limits of each zone established under this Act and the business to
be transacted in each Zone; (e)
the manner
in which the [76][fund or
funds] of the Corporation shall be maintained; (f)
[77][***] (g)
the
jurisdiction of each divisional office and the establishment of Councils
representative of policy-holders in each area served by a divisional office for
the purpose of advising the divisional office in respect of any matter which
may be referred to it; (h)
[78][the manner
in which meetings of the Board and its Committees shall be held, the business
to be transacted and procedure to be followed thereat, and the quorum
therefor;] (i)
[79][***] (j)
the form and
manner in which policies may because and contracts binding on the Corporation
may be executed; (k)
the
classification of policies, whether issued by the Corporation or by any insurer
whose controlled business has been transferred to and vested in the
Corporation, for the purposes of declaring differential bonuses, wherever
necessary; (l)
the manner
in which and the intervals within which the accounts of the various zonal
offices, divisional offices and branch offices may be inspected and their
accounts audited, (m)
the
conditions subject to which any payment may be made by the Corporation. (n)
[80][the manner
of election of directors under clause (f) of sub-section (2) of section 4; (o)
the form and
manner of registers to be kept and maintained under sub-section (1) of section
5B; (p)
the manner
of nomination by an individual registered member or joint holder of shares, the
manner of variation or cancellation of such nomination, and the manner of
nomination in favour of a minor, under section 5E; (q)
the manner
in which and the conditions subject to which shares, including partly paid-up
shares, may be issued, held, transferred and registered; (r)
the
maintenance and operation of the funds and reserves under section 24; (s)
the form and
manner in which the books and records referred to in section 24A may be kept;] [81][(2A) Any
reference in the regulations as in force immediately before the coming into
force of section 132 of the Finance Act, 2021 to ?Investment
Committee? shall be construed as a reference to the Investment Committee of the
Board referred to in section 19A.] (3)
[82][Every
regulation made under this section shall be laid, as soon as may be after it is
made, before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both Houses agree
in making any modification in the regulation or both Houses agree that the
regulation should not be made, the regulation shall thereafter have effect only
in such modified form or be of no effect, as the case may be; so, however, that
any such modification or annulment shall be without prejudice to the validity
of anything previously done under that regulation]. [83][50. Form, manner, etc., for companies to apply with modifications Where this
Act provides that the form or manner or period or details in respect of any
declaration to be made or the particulars to be included in any register to be
maintained shall be such as may be prescribed for a company under the Companies
Act, such prescribed form or manner or period or details or particulars, as the
case may be, shall apply subject to such modifications, exceptions and
conditions that the Central Government may, by notification, specify.] [84][51. Power to remove difficulties (1)
If any
difficulty arises in giving effect to the provisions of this Act as amended by
Part III of Chapter VI of the Finance Act, 2021, the Central Government may, by
order published in the Official Gazette, make such provisions, not inconsistent
with the provisions of this Act, as appear to it to be necessary or expedient
for removing the difficulty: Provided
that no such order shall be made after the expiry of a period of three years
from the date of commencement of Part III of Chapter VI of the Finance Act,
2021. (2)
Every order
made under this section shall, as soon as may be after it is made, be laid on
the table of each House of Parliament.] THE FIRST SCHEDULE (See section 16) PART A PRINCIPLES FOR DETERMINING COMPENSATION The
compensation to be given by the Corporation to an insurer having a share
capital on which dividend or bonus is payable, who has allocated as bonus to
policy-holders the whole or any part of the surplus as disclosed in the
abstracts prepared in accordance with Part II of the Fourth Schedule to the
Insurance Act in respect of the last actuarial investigation relating to his
controlled business as at a earlier than the 1st day of January, 1955, shall be
computed in accordance with the provisions contained in paragraph 1 or
paragraph 2, whichever is more advantageous to the insurer. Paragraph 1.- Twenty times
the annual average of the share of the surplus allocated to share-holders as
disclosed in the abstracts aforesaid in respect of the relevant actuarial
investigations multiplied by a figure which represents the proportion that the
average business in force during the calendar years 1950 to 1955 bears to the
average business in force during the calendar years comprised in the period
between the date as at which the actuarial investigation immediately preceding
the earliest of the relevant actuarial investigations was made and the date as
at which the last of such investigations was made. Paragraph 2.- Half the
amount payable under paragraph 1 plus the paid-up capital or assets equivalent
thereto, or, in the case of a composite insurer, that part of the paid-up
capital or assets equivalent thereto which has or been transferred to and
vested in the Corporation under this Act less the amount, if any of expenses or
losses or both capitalised by the insurer for the purposes of Form A in the
First Schedule to the Insurance Act. Explanation
1.-For the purposes of paragraph 1,- (a)
"relevant
actuarial investigations" means such minimum number of latest actuarial investigations
as at dates earlier than the 1st day of January, 1955 (not being less than two
in any case), as would leave the period intervening between the date as at
which the actuarial investigation immediately preceding the first of such
investigations was made and the date as at which the last of such
investigations was made and the date as at which the last of such
investigations was made, to be not less than four years; (b)
"average
business in force" means the average of total sums assured by the insurer
(including any bonus) in respect of his controlled business as on the 31st day
of December of each of the relevant calendar years. Explanation
2.-For the purposes of paragraph 2, where an insurer has allocated to
share-holders more than 5 per cent, of any such surplus as is referred to
therein, the insurer shall be deemed to have allocated only 5 per cent, of the
surplus and where an insurer has not allocated any such surplus to share-holders
or has allocated to share-holders less than 31/2 per cent, of any such surplus,
the insurer shall be deemed to have allocated 31/2 per cent, of the surplus. Explanation
3.-In the case of any insurer incorporated outside India, the annual average of
the share of the surplus allocated to share-holders for the purposes of
paragraph 1 shall be deemed to be the annual average of the surplus as
disclosed in the abstracts prepared in accordance with Part II of the Fourth
Schedule to the Insurance Act in respect of the relevant actuarial
investigations multiplied by a figure which is the average of the two figures
mentioned below:- (I)
a figure
representing the proportion which the share allocated to share-holders out of
the surplus in respect of the world business of the insurer (such share being
computed subject to the provisions of Explanation 2) bears to the whole of such
surplus as ascertained with reference to the last actuarial investigation
relating to such business as at a date earlier than the 1st day of January,
1955; and (II)
a figure
representing the proportion which the share allocated to share-holders out of
the surplus in respect of the world business of the insurer (such share being
computed subject to the provisions of Explanation 2) bears to the whole of such
surplus as ascertained with reference to the actuarial investigation relating
to such business immediately preceding the actuarial investigation referred to
in clause (i): Provided
that in the case of any such insurer in respect of whom an order has been made
under section 35 the amount computed as follows shall be deemed to be the
annual average of the surplus:- (a)
there shall
be deducted from the annual average of the surplus, interest at 31/2 per cent,
per annum for one year calculated on the assets specified in any order made
under sub-section (2) of section 35; (b)
with respect
to the balance arrived at under clause (a), there shall be computed an amount
that bears the same proportion to the said balance as the liability on policies
appertaining to the controlled business of the insurer, other than those
expressed in any foreign currency issued on the lives of persons who are
citizens of India, bears to the liability in respect of all policies
appertaining to such business, the liabilities on policies being computed as at
the 31st day of December, 1955, in accordance with the provisions contained in
clause (b) of the Second Schedule: Provided
further that- (a)
in any case
where the order made under section 35 is with reference to sub-section (2)
only, the preceding proviso shall have effect as if clause (b) had been omitted
therefrom; and (b)
in any case
where the order made under section 35 is with reference to sub-section (3)
only, the preceding proviso shall have effect as if - (i)
clause (a)
has been omitted; (ii)
in clause
(b), the words, brackets and letter "with respect to the balance arrived
at under clause (a)" had been omitted; for the words "the said
balance" the words "annual average of the surplus" had been
substituted; and for the words, brackets and letter "with the provisions
contained in clause (b) of", the words and letter "with method a
specified in" had been substituted. Explanation
4.-Where an insurer incorporated outside India whose paid-up capital is outside
India- (a)
the
provisions contained in paragraph 1 shall have effect as if the words
"less a sum equal to that part of the paid-up capital of the insurer as
may be determined by the Central Government to be allocable to the controlled
business of the insurer" were inserted at the end of that paragraph; and (b)
the
provisions contained in paragraph 2 shall have effect as if,- (i)
the words
"without making the deduction referred to in clause (a) of Explanation
4" had been inserted after the words "half the amount payable under
paragraph 1", and (ii)
the words
beginning with "plus the paid-up capital" and ending with "in
the First Schedule to the Insurance Act, had been omitted. PART B The
compensation to be given by the Corporation to an insurer having a share
capital on which dividend or bonus is payable who has not made any such
allocation as is referred to in Part A in respect of the last actuarial
investigation as at a date earlier than the 1st day of January, 1955, shall be
an amount equal to the value of the assets of the insurer appertaining to his
controlled business in existence, on the 19th day of January, 1956, computed as
at that date in accordance with the provisions of paragraph 3 less the amount
of liabilities of the insurer appertaining to such business in existence on the
19th day of January, 1956, computed as at that date in accordance with the
provisions of paragraph 4. Paragraph 3. Assets.- (a)
The market
value of any land or buildings. (b)
The market
value of any shares, securities or other investments held by the insurer. (c)
The total
amount of the premiums paid by the insurer in respect of all leasehold
properties reduced in the case of each such premium by an amount which bears to
such premium the same proportion as the expired term of the lease in respect of
which such premium shall have been paid bears to the total term of the lease. (d)
The amount
of debts due to the insurer, whether secured or unsecured, to the extent to
which they are reasonably considered to be recoverable. (e)
The amount
of premiums which have fallen due to the insurer on policies of life Insurance
but have not been paid and the days of grace for payment of which have not
expired. (f)
The amount
of cash held by the insurer whether in deposit with a bank or otherwise. (g)
The value of
all tangible assets other than those falling within any of the preceding
clauses. Paragraph 4. Liabilities.- (a)
The total
amount of liabilities of the insurer to holders of policies in respect of his
controlled business on account of matured claims on which payment has to be
made. (b)
The total
amount of liabilities of the insurer to holders of policies in respect of his
controlled business which have not matured for payment, the liabilities in
respect thereof being calculation on the following actuarial bases:- (i)
in respect
of whole-life assurances and endowment assurances, the mortality table to be
used shall be the Oriental (23-35) ultimate mortality table, and an interest
rate of 31/4 per cent, per annum shall be assumed and for expenses 20 per cent
of office premiums in the case of with-profit policies and 15 per cent of
office premiums in the case of non-profit policies shall be reserved; (ii)
in respect
of other policies such actuarial bases determined by the actuary making the
valuation as may be consistent with the basis specified in clause (i); and (iii)
in determining
the liabilities of insurers under clause (b) the actuary shall make all the
usual provisions and reserves as are ordinarily done in such cases. (c)
The total
amount of all other liabilities of the insurer. (d)
Where, as a
result of the actuarial valuation of policy liabilities made under clause, (b)
the life insurance fund is shown to be in surplus, a sum equal to 96 per cent
of such surplus shall be deemed to be a liability under this paragraph. Explanation.-For
the purposes of this Part, in the case of an insurer incorporated outside India
in respect whom an order under section 35 has been made, the assets or the
assets and liabilities as the case may be, specified in the order shall be
excluded. Paragraph 5.- If the
insurer to whom compensation is to be given under this part is a displaced
insurer, the compensation to be given shall be computed in accordance with
following provisions:- Firstly,
there shall be ascertained the losses incurred by the displaced insurer in
respect of claims arising by deaths established by the displaced insurer to
have been caused by the civil disturbances which took place on the occasion of
the setting up of the Dominions of India and Pakistan, the total loss being
taken as the difference between the amounts paid as claims in respect of such
deaths and the total amount of the actuarial reserve in respect of the relevant
policies; Secondly,
there shall be ascertained the difference between the market value as at the
15th day of August 1947, of any immovable property in West Pakistan belonging
to the displaced insurer and the market value thereof determined under
Paragraph 3 of this part, or, where any such immovable property has been sold
before the 19th day of January, 1956, the difference between the market value
thereof as at the 15th day of August 1947, and the sale price; Thirdly,
there shall be ascertained the amount of deposits held by the displaced insurer
in banks which could not be withdrawn on account of a moratorium declared under
any law for the time being in force, to the extent to which such deposits have
become losses; Fourthly,
there shall be ascertained the difference between the market value as at the
15th day of August, 1947, of any shares in any company now carrying on business
in West Pakistan held by the displaced insurer and which had been acquired
before the 15th day of August, 1947, and the market value of such shares as at
the 19th day of January, 1956. The amount
of compensation to be given to the displaced insurer under this part shall be- (a)
the amount
which would have to be given to him if this Paragraph had not been enacted,
plus (b)
an amount
which represents one-half of the difference between the compensation which
would have to be given to him if to the value of the assets referred to in
Paragraph 3 there had been added the sum of the four items referred to in this
Paragraph and with respect to the liabilities referred to in Paragraph 4, the
life insurance fund had been increased by a like sum, and the compensation
which would have to be given to him if this Paragraph had not been enacted. or one half of
the paid-up capital of the displaced insurer whichever is less. Explanation.-For
the purposes of this Paragraph "displaced insurer" means an insurance
company whose registered office during any part of the year 1947 was in any
area now forming part of West Pakistan and whose registered office is now in
India. PART C The
compensation to be given by the Corporation to an insurer:- (a)
having no
share capital; or (b)
having a
share capital on which a dividend or bonus is not payable; shall be in
the form of an addition at the rate of rupee one per thousand in respect of the
sun assured (excluding bonuses) under each with-profit policy, and in the case
of an insurer falling under clause (b), such compensation shall also include a
sun equivalent to the paid-up capital of the insurer to be paid to him. THE SECOND SCHEDULE (See section 35) PRINCIPLES FOR DETERMINING THE VALUE OF LIABILITIES IN CERTAIN CASES The total
amount of the liabilities of an insurer incorporated outside India for the
purposes of sub-section (2) of section 36 shall be the sum of the amounts
computed in accordance with the following provisions:- (a)
the total
amount of liabilities of the insurer to holders of policies in respect of his
controlled business on account of matured claims on which payment has to be
made: (b)
the total
amount of liabilities of the insurer to holders of policies in respect of his
controlled business which have not matured for payment, the liabilities in
respect thereof being the liabilities calculated in accordance with method B
below or the mean of the liabilities calculated in accordance with method A and
method B below, whichever is greater. Method A.- Actuarial
liability calculated on the same bases as adopted by the insurer at the last
actuarial investigation as at a date earlier than the 1st of January, 1955. Method B.- Actuarial
liability calculated on the methods knows as the modified net premium method of
valuation, the mortality table to be used being the Oriental (25-35) ultimate
mortality table, an interest rate of 21/2 per cent, per annum being assumed and
the allowance for first year expenses being Rs.40 per thousand rupees of the
sum assured by the policy. Explanation
1.-Before ascertaining the liability under method A and method B, there shall
be added to each with-profit policy in force on the 31st day of December, 1955
(unless such addition has already been made) bonus at the same rate as declared
at the said last actuarial investigation in respect of each year or part of a
year the policy had been in force since the date as at which the said last
actuarial investigation was made. Explanation
2.-In calculating the liabilities in accordance with method A or method B,- (i)
in respect
of policies other than whole-life assurance and endowment assurance, such
actuarial basis determined by the actuary making the valuation as may be
consistent with the basis specified in the method shall be employed; and (ii)
the actuary
shall make all the usual provisions and reserves as are ordinarily done in such
cases; (c)
the total
amount of all other liabilities of the insurer. THE THIRD SCHEDULE (See section 36) PRINCIPLES FOR DETERMINING COMPENSATION PAYABLE TO CHIEF AGENTS The
compensation payable to a chief agent shall consist of seventy-five per cent,
of the overriding commission specified in the contract relating to chief agency
with the insurer on the renewal premiums received by the Corporation during a
period of ten years from the appointed day in respect of the business procured
by the chief agent before the appointed day; and such compensation shall be
determined and paid annually for the said period. PRINCIPLES FOR DETERMINING COMPENSATION PAYABLE TO SPECIAL AGENTS The
compensation payable to a special agent shall consist of one eighth of his
annual average earnings during the period beginning on the 1st day of January,
1952, and ending on the 31st day of December, 1955, in the form of overriding
commissions in respect of business procured by him through insurance agents. STATEMENT OF OBJECTS AND REASONS To ensure
absolute security to the policy-holder in the matter of his life insurance
protection, to spread insurance much more widely and in particular to the rural
areas, and as a further step in the direction of more effective mobilisation of
public savings, Government have decided to nationalise life insurance business
in India. An Ordinance was promulgated in January, 1956, whereby pending the
passing of a Bill to nationalise such business, the management of the life
insurance business in India was vested in the Central Government. A Bill has
been separately introduced to replace that Ordinance and the present Bill lays
down the permanent arrangements for nationalisation. Under this Bill a Life
Insurance Corporation of India will be set up, with a share capital provided
entirely by the Central Government, which will undertake life insurance
business in India as a monopoly and into this Corporation will be integrated
all the Insurance Companies now engaged in life business, as also the organisations
functioning under the control of State Governments and conducting such business
for the benefit of the public. All the
contracts for assurance executed by the Corporation will be guaranteed by the
Central Government. The
Schedules to the Bill lay down the principles governing grant of compensation
to the Insurers whose business will be taken over by the Corporation. [1] Came into force on Ist July, 1956, see Gazette of India, 1956, Extra.
Pt. II, Sec. 3, p. 1531 [2] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [3] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [4] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [5] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(7) "member" means a member of the Corporation;" [6] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [7] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(10) all other words and expressions used herein but not defined
and defined in the Insurance Act shall have the meanings respectively assigned
to them in that Act." [8] Ist September, 1956, see Gazette of India, 1956, Extra. Pt. II, Section
3, pg. 1799. [9] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following;- "(1) The Corporation shall consist of such number of persons not
exceeding [sixteen] as the Central Government may think fit to appoint
thereto and one of them shall be appointed by the Central Government to be the
Chairman thereof. (2) Before appointing a person to be a member, the Central Government
shall satisfy itself that that person will have no such financial or other
interest as is likely to affect prejudicially the exercise or performance by
him of his functions as a member, and the Central Government shall also satisfy
itself from time to time with respect to every member that he has no such
interest; and any person who is, or whom the Central Government proposes to
appoint and who has consented to be, a member shall, whenever required by the
Central Government so to do, furnish to it such information as the Central
Government considers necessary for the performance of its duties under this
sub-section. (3) A member who is in any way directly or indirectly interested in a
contract made or proposed to be made by the Corporation shall as soon as
possible after the relevant circumstances have come to his knowledge, disclose
the nature of his interest to the Corporation and the member shall not take
part in any deliberation or discussion of the Corporation with respect to that
contact." [10] Inserted by the Finance Act, 2021. [11] Inserted by the Finance Act, 2021. [12] Inserted by the Finance Act, 2021. [13] Inserted by the Finance Act, 2021. [14] Substituted by by the Finance Act, 2021 w.e.f.
30.06.2021 vide Notification No. SO2616(E) dated 29.06.2021, for the
following:- [5. Capital of Corporation (1) The paid-up equity capital of the Corporation shall be one hundred
crore of rupees provided by the Central Government after due appropriation made
by Parliament by law for the purpose. (2) The Corporation may issue and sell bonds and debentures or such
other prescribed instruments carrying interest for the purpose of raising its
working capital to such amount as may be prescribed.] [15] Inserted by the Finance Act, 2021. [16] Inserted by the Finance Act, 2021. [17] Inserted by the Finance Act, 2021. [18] Inserted by the Finance Act, 2021. [19] Inserted by the Finance Act, 2021. [20] Inserted by Act 52 of 1975, Section 41. [21] Ist September, 1956 [22] Substituted by Act 17 of 1957, Section 2, for sub-section (2)
w.e.f. 6-6-1957. [23]Substituted by the Life Insurance Corporation (Amendment) Act,
2011 (Act No. 8 of 2012) for the following : - "(4) There may be established as many divisional offices and
branches in each zone as the Zonal Manager thinks fit." [24] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(1) The Corporation may entrust the general superintendence and
direction of its affairs and business to an Executive Committee consisting of
not more than five of its members and the Executive Committee may exercise all
powers and do all such acts and things as may be delegated to it by the
Corporation. (2) The Corporation may also constitute an investment Committed for the
purpose of advising it in matters relating to the investment of its funds, and
the Investment Committee shall consist of not more than [eight members of
whom not less than four] shall be members of the Corporation and the remaining
members shall be persons (whether members of the Corporation or not) who have
special knowledge and experience in financial matters, particularly, matters
relating to investment of funds. (3) The Corporation may constitute such other Committees as it may think
fir for the purpose of discharging such of its functions as may be delegated to
them." [25] Inserted by Finance Act, 2021. [26] Inserted by Finance Act, 2021. [27] Inserted by Finance Act, 2021. [28] Inserted by Finance Act, 2021. [29] Substituted by Finance Act, 2021 w.e.f.
30.06.2021 vide Notification No. SO2616(E) dated 29.06.2021, for the
following:- "The Corporation may appoint one or more persons to be the Managing
Director or Directors of the Corporation, and every Managing Director shall be
a whole-time officer of the Corporation and shall exercise such powers and
perform such duties as may be entrusted or delegated to him by the Executive Committee
or the Corporation." [30] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?a person whether a member or not? [31] Omitted by Finance Act 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(2) The Corporation may constitute for each zone a Board
consisting of such number of persons as it thinks fit to appoint thereto for
the purpose of advising the Zonal Manager in respect of such matters as are
referred to it under the regulations made by the Corporation." [32] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [33] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "The Corporation shall have its own fund and all receipts of the
Corporation shall be credited thereto and all payments of the Corporation shall
be made therefrom." [34] Inserted by Finance Act, 2021. [35] Inserted by Finance Act, 2021. [36] Inserted by Finance Act, 2021. [37] Inserted by Finance Act, 2021. [38] Substituted by Finance Act, 2021, Section 137 w.e.f.
30.06.2021 vide Notification No. SO2616(E) dated 29.06.2021, for the
following:- "25. Audit. (1) The accounts of the Corporation shall be audited by auditors duly
qualified to act as auditors of companies under the law for the time being in
force relating to companies, and the auditors shall be appointed by the
Corporation with the previous approval of the Central Government and shall
receive such remuneration from the Corporation as the Central Government may
fix. (2) Every auditor in the performance of his duties shall have at all
reasonable times access to the books, accounts and other documents of the
Corporation. (3) The auditors shall submit their report to the Corporation and shall
also forward a copy of their report to the Central Government." [39] Inserted by Finance Act, 2021. [40] Inserted by Finance Act, 2021. [41] Inserted by Finance Act, 2021. [42] Inserted by Finance Act, 2021, Section 137. [43] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?The Corporation? [44]Substituted by the Life Insurance Corporation (Amendment) Act,
2011 (Act No. 8 of 2012) for the following:- "once at least in every two years" [45] Substituted by Act 33 of 1965, Section 2, for "business of the
Corporation, including a valuation of the liabilities of the Corporation"
w.e.f. 29-9-1965. [46] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?The Corporation? [47] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?The Corporation? [48] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?Central Government? [49] Omitted by Finance Act 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "and the report shall also give an account of the activities, if
any, which are likely to be undertaken by the Corporation in the next financial
year" [50] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- [28. Surplus from life insurance business, how to be utilised. (1) If as a result of any investigation undertaken by the Corporation
under section 26, any surplus emerges,- (a) ninety per cent. or more such surplus, as the Central Government may
approve, shall be allocated to or reserved for the life insurance policyholders
of the Corporation; (b) such percentage of remaining surplus as the Central Government may
approve shall be credited to separate account maintained by the Corporation;
and (c) the remainder shall be paid as dividend. (2) The funds available in the account maintained by the Corporation
under clause (b) of sub-section (1) shall be utilised for such purpose and in
such manner as the Central Government may determine.] [51][51] Inserted by Act 33 of 1965, Section 4 w.e.f. 29-9-1965. [52][52] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?paid to the Central Government? [53] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [54] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [55] Inserted by Act 41 of 1999, Section 31 and Sch II. [56] Inserted by the Life Insurance Corporation (Amendment) Act,
2011 (Act No. 8 of 2012). [57] Inserted by Act 17 of 1957, Section 3 w.e.f. 6-6-1957. [58] Section 43A omitted by Finance Act, 2002, w.e.f. 1-6-2002. Prior to
its omission section 43A read as under: 43A. Deduction of income-tax not to be made on interest or dividend.- Notwithstanding anything contained in Section
193 or Section 194 of the Income-tax Act, 1961 (43 of
1961), no deduction of income-tax shall be made on any interest or dividend
payable to the Corporation in respect of any securities or shares owned by it
or in which it has full beneficial interest." [59] Inserted by the Life Insurance Corporation (Amendment) Act,
2011 (Act No. 8 of 2012). [60] Inserted by Act 16 of 1971, Section 31 w.e.f. 23-4-1971. [61] Substituted by Act 17 of 1957, Section 4, for section w.e.f.
6-6-1957 [62] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "No act or proceeding of the Corporation or of any Committee of the
Corporation shall be called in question on the ground merely of the existence
of any vacancy or defect in the constitution of the Corporation or Committee,
as the case may be." [63] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "No suit, prosecution or other legal proceeding shall lie against
any member or employee of the Corporation for anything which is in good faith
done for intended to be done under this Act." [64]
Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide Notification No.
SO2616(E) dated 29.06.2021, for the following:- ?members? [65]
Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide Notification No.
SO2616(E) dated 29.06.2021, for the following:- "4[(aa) the instruments which may be issued and the
amount of working capital under sub-section (2) of section 5;]" [66] Inserted
by Act 1 of 1981, section 2 w.e.f. 20-6-1979. [67] Omitted by
the Life Insurance Corporation (Amendment) Act, 2011 (Act No. 8 of 2012) for
the following :- "and agents" [68] Omitted by
the Life Insurance Corporation (Amendment) Act, 2011 (Act No. 8 of 2012) for
the following :- "and agents" [69] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [70] Inserted
by Act 1 of 1981, section 2 w.e.f. 31-1-1981. [71]
Substituted by Act 52 of 1975, section 43, for sub-section (3). [72] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?Corporation? [73] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?Corporation? [74] Omitted by the Life Insurance Corporation (Amendment) Act,
2011 (Act No. 8 of 2012) for the following : - "(b) the method of recruitment of employees and agents of the
Corporation [***]; [***]" [75] Omitted by Finance Act 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(c) the number, term of office and conditions of service of
members of Boards constituted under section 22;" [76] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- ?Fund? [77] Omitted by the Life Insurance Corporation (Amendment) Act,
2011 (Act No. 08 of 2012) for the following : - "(f) the maintenance of separate funds and accounts at each of the
zonal offices;" [78] Substituted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(h) the conduct of business at meetings of the Corporation;" [79] Omitted by Finance Act 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021, for the following:- "(i) the formation of Committees of the Corporation and the
delegation of powers and functions of the Corporation to such Committees, and
the conduct of business at meetings of such Committees;" [80]? Inserted
by Finance Act, 2021 w.e.f. 30.06.2021 vide Notification No.
SO2616(E) dated 29.06.2021. [81] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [82] Inserted by Act 1 of 1981, Section 3 w.e.f. 31-1-1981. [83] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021. [84] Inserted by Finance Act, 2021 w.e.f. 30.06.2021 vide
Notification No. SO2616(E) dated 29.06.2021.LIFE INSURANCE
CORPORATION ACT, 1956 (Amended Upto 2021)
PREAMBLE