LIC Act 5Chapter · Establishment of Life Insurance Cororation of India
Section 5 · Capital of Corporation
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1[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 committees 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 promoters 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 promoters 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.
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 committees 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 promoters 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 promoters 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.
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