Employees and officers of Life Insurance Corporation of India may get stock options, but the corporation will not come out with differential voting right shares. These are parts of the new norms prescribed in the LIC General Regulations, 2021. which came into effect from Thursday.

The norms related with capital, shares, other securities and shareholders says: “The Corporation may from time to time increase its issued share capital, with the previous approval of the Central Government, by way of 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 policy holders of the Corporation.”

SEBI’s regulation for share-based employee benefits schemes covers employee stock option schemes, employee stock purchase schemes, stock appreciation rights schemes, general employee benefits schemes and retirement benefit schemes.

Norms also prescribe that the share capital of LIC will be of “such kinds as are provided for in respect of a company in Section 43 of the Companies Act.” However, there will not be any shares with differential voting rights. It will issue equity shares to the Central Government in consideration for the paid-up equity capital held by it.

“The Corporation shall pay dividend in proportion to the amount paid-up on each share,” the regulations say. As for any other company, the regulations say the chairperson and, in his/her absence, the senior-most wholetime director will call for meetings. Same will be applicable for meetings of any board committee.

IPO timeline

Earlier this month, the Cabinet Committee on Economic Affairs (CCEA) gave its approval to the IPO of LIC. The government said the IPO can be expected to be larger than any so far in Indian markets.

Although a timeline has not been set for the IPO, it is expected in the fourth quarter of FY22. The Government has already notified all amendments to the LIC Act, 1956 to facilitate the IPO.

Also, based on SEBI decisions, the Finance Ministry notified relaxed norms for large companies planning to enter the stock market. On December 31, the Government appointed Milliman Advisors LLP India as the Reporting Actuary for the Indian Embedded Value (IEV) of LIC.

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