Key takeaways

• The increase in foreign equity ownership from 26% to 49% in Indian insurance firms was confirmed as law in India earlier this year. One of the key requirements of the new law was that “ownership” and “control” of the jointly held company must remain with resident Indian citizens or Indian companies owned and controlled by resident Indian citizens.
• The Indian insurance regulator has recently issued long-awaited guidelines to clarify the concept of “control” since there was a lack of clarity on what was meant by “Indian control”. These guidelines essentially require Indian parties to be able to demonstrate control through their boards of directors. Existing companies have been given until 18 January 2016 to comply with these guidelines while new companies are required to be in compliance from inception.
• While these guidelines are a step in the right direction to bring some much needed clarity around what constitutes “Indian control”, it seems likely that the Indian insurance regulator will review each transaction on a case-by-case basis and the first few approvals will shed further light on how foreign insurers will be able to structure customary minority protections and veto rights without running afoul of the new “Indian control” requirements.