The Centre has now enabled IPO-bound Life Insurance Corporation (LIC) to hold virtual general meetings of its shareholders, preparing the ground for the insurance behemoth’s journey as a publicly listed entity.

LIC Act amendment

In the run up to its IPO and listing, the Centre has over the last two years taken several initiatives including bringing amendments to the LIC Act so as to make the insurer adhere to various norms of a corporate under Companies Act including having a Board structure and related committees, having outstanding equity shares with limited liability that could be traded in stock exchanges and creation of post of a chief financial officer and company secretary for its functioning as a corporate entity.

The government is looking to offload a 5 per cent stake in the PSU insurer and raise at least ₹65,000 crore. However, given the black swan event of Russia-Ukraine war, indications are that the government will “reassess” the timing of the IPO and may take a call to defer it until market conditions improve.

The Department of Financial Services in the Finance Ministry — administrative department overseeing LIC — has now amended the Life Insurance Corporation of India General Rules 1956 to allow persons entitled to attend and vote at general meetings to also do so through audio-visual means. Also, the LIC as a corporation has been specifically allowed to adopt such procedure as a company may adopt for holding such meetings under the framework laid down by the Ministry of Corporate Affairs (MCA).

The amended Life Insurance Corporation of India General Rules 1956 now provides that audio-visual means would include video conferencing and such other means of audio-visual electronic communication which would enable all persons participating in a meeting for concurrent communication with each other without an intermediary. 

Put simply, this facility would pave the way for LIC to hold virtual Annual General Meetings and all other shareholder meetings through audio-visual means.

Now that the Centre has brought this facility of holding virtual General meetings into the Rules, it can only be expected this will be extended to other corporates for all times to come by bringing changes to the rules. 

Hitherto, the MCA has been allowing this only through circulars issued from time to time as was done in the recent pandemic times. Going forward, this may come under the Rules for all corporates, giving a statutory backing for all times to come for holding virtual meetings, company law experts said.

The latest LIC Rules amendment may well be a prelude for allowing such facility for all companies under the Rules itself, a practising company secretary said. In the aftermath of the pandemic induced lockdowns, there has been a big shift to digital medium for holding of corporate meetings. Digital service providers around the world have benefited from the increasing trend of digitisation and digitalisation in economies.

LIC gets a CFO

Meanwhile, LIC has appointed Sunil Agrawal as its Chief Financial Officer (CFO) for a period of three years. Prior to this, Shubangi Sanjay Soman, Executive Director at LIC, was holding charge as CFO of the insurance behemoth.

This is the first time LIC has appointed an outsider as a CFO. The CFO post is contractual and LIC had invited applications for this post in September last year. 

Before joining LIC, Agrawal was the CFO at Reliance Nippon Life Insurance for over 12 years. He was also earlier associated with ICICI Prudential Life Insurance for five years.