Comments
The Centre will hold at least 75 per cent stake in state-owned Life Insurance Corporation of India for the next five years and will continue to hold at least 51 per cent in the life insurer after that period.
The Amendments to the Life Insurance Act, 1956, which was tabled along with the Finance Bill, also proposes to increase the authorised share capital of the corporation to ₹25,000 crore divided into 2,500 crore shares of ₹10 each.
Finance Minister Nirmala Sitharaman had, in the Budget, said that the government would like to take ahead the initial public offering of LIC in the coming fiscal.
“In 2021-22 we would also bring the IPO of LIC, for which I am bringing the requisite amendments in this Session itself,” she had said as part of the Budget speech.
The other amendments to the Life Insurance Act include introduction of provisions on corporate governance in line with SEBI norms to enable listing of LIC on stock exchanges.
“It is further proposed to substitute section 4 of the LIC Act to provide for the vesting of the general superintendence and direction of the affairs and business of the LIC in its Board of Directors...,” said the Notes on Clauses of the Finance Bill.
Other amendments propose to include new sections for constitution and composition of an executive committee to provide for an annual general meeting, appointment of auditors and declaration of dividend.
A key amendment is also regarding the utilisation of surplus from life insurance business under which it pays 5 per cent of the surplus to the government.
The government will also likely to continue with its guarantee on LIC policies.
The amendments further propose to enable issue of shares to the Central Government against paid-up capital invested by it in LIC as well as issue of bonus shares to it, which could be offered for sale by way by IPO, with resultant receipt of money into the Consolidated Fund of India.
Stiff opposition
LIC’s employees unions are, however, not happy with the move to go ahead with the IPO and are planning to oppose it.
“Over the course of the next few days, employees will be deciding on their strategy to oppose it,” said a union leader.
In a statement, the Bhartiya Mazdoor Sangh had also said that aggressive disinvestment programme and bringing IPO of LIC will reduce the charm of Atmanirbhar Bharath and benefits of some good proposals in the Budget.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.