New Delhi, UK-based Prudential Corporation Holdings Ltd, one of the promoters of ICICI Prudential Life Insurance, will seek regulatory approval for its classification from promoter to investor in the insurance venture with ICICI Bank.
ICICI Bank has entered into a Letter of Undertaking on July 4, with Prudential Corporation Holdings Ltd (Prudential) (Undertaking) pertaining to non-exercise of certain rights by Prudential relating to subsidiary ICICI Prudential Life Insurance Company, subject to approval of the company's board and/or other statutory/regulatory approvals, ICICI Bank said in a regulatory filing.
The decision with regard to re-classification came in view of Prudential signing definitive agreements on May 17 with Bharti Life Ventures, 360 ONE group and Bharti Life Insurance, pursuant to which Prudential has agreed to acquire a 75 per cent stake in Bharti Life, subject to receipt of applicable regulatory approvals and the satisfaction of certain conditions.
In view of the proposed transaction, the company will be applying to the Insurance Regulatory and Development Authority of India (IRDAI) for reclassification of Prudential from 'promoter' to 'investor' under the laws, it said.
As per the current law, an entity cannot be a promoter in two insurance ventures. As a result, Prudential has to reduce its shareholding in ICICI Pru Life to under 10 per cent from around 22 per cent at present.
Until the change in status, Prudential will abstain from voting on any matters of the company that require a special resolution, so long as such matters do not adversely affect any right or interest of Pru in the company.
Prudential shall arrange for the resignation of its nominee director on board with effect from the date on which company approves the reclassification application, it said.
With effect from the date on which Prudential's reclassification from 'promoter' to 'investor' becomes effective, ICICI Bank shall vote in favour of the appointment/replacement of one director to be nominated by Prudential on the board of the company, it added.
