After the collective ₹5 crore penalty imposed on Axis Bank and Max Financial Services over the transfer of shares, the two companies signed a revised agreement on January 9, with respect to the transfer of the remaining 7 per cent stake in Max Life Insurance.

“Axis Entities have entered into revised agreements with Max Financial on January 9, 2023, agreeing that the valuation for the right to acquire the balance 7.00% equity stake of Max Life would be at Fair Market Value using Discounted Cash Flows instead of valuation as per Rule 11UA of the Income Tax Rules, 1962,” the bank notified the exchanges.

“This revision has been done consequent to the guidance received by Max Life from IRDAI,” it added.

In October 2022, IRDAI had imposed a penalty of ₹3 crore on Max Life Insurance and of ₹2 crore on Axis Bank. It said that there was no uniform basis for determination of price transfer of shares, which led to Axis Bank, a corporate agent of Max Life Insurance, receiving significant undue monetary gains from the trade of shares.

“Promoters of the insurer have been engaging in transfer of shares of the insurer to Axis Bank at a price, which is substantially lower than the fair market value , and subsequently buying the same shares from Axis Bank at a substantially higher price,” IRDAI had then said.

In 2021, Axis Bank and its two subsidiaries — Axis Securities and Axis Capital — had sold 0.998 per cent stake in at ₹166 per share, with the fair value based on certificate of Chartered Accountant. Later, the bank and group companies bought 12.002 per cent stake within 22 days at ₹31.51-32.12 per share, based on valuation envisaged under the Income Tax rules.

They together held 12.99 per cent stake in Max Life Insurance as of April 2021.