ICICI Prudential Life to seek IRDAI nod for Prudential's reclassification as investor
ICICI Bank has entered into a Letter of Undertaking (LoU) with Prudential Corporation Holdings Ltd. outlining the governance framework for their joint venture, ICICI Prudential Life Insurance Company, as Prudential proceeds with its proposed acquisition of a controlling interest in Bharti Life Insurance Company, according to a regulatory filing.
The exchange filing dated July 5 said the agreement is aimed at managing any potential conflict of interest arising from Prudential's proposed purchase of a 75 percent stake in Bharti Life.
As part of the arrangement, ICICI Prudential Life will approach the Insurance Regulatory and Development Authority of India (IRDAI) to seek approval for changing Prudential's status from that of a promoter to an investor under the prevailing insurance regulations.
The LoU will remain effective from the date the reclassification request is filed with IRDAI until Prudential completes its acquisition of Bharti Life, or until any other date specified by the regulator.
While the undertaking is in force, Prudential has agreed not to vote on resolutions requiring shareholder approval through a special resolution, unless such matters have a direct bearing on its rights or interests in ICICI Prudential Life. In addition, Prudential will ensure that its nominee director steps down from the insurer's board after the board approves the reclassification proposal and will refrain from nominating a replacement until the undertaking ceases to be effective.
After the regulator approves the reclassification, ICICI Bank will support the appointment or replacement of one director nominated by Prudential on the board of ICICI Prudential Life. This will be subject to Prudential retaining a minimum 10 percent stake in the insurer and neither being classified as a promoter nor holding more than a 10 percent interest in any other life insurance company in India.
The filing further stated that if ICICI Prudential Life decides to drop the word "Prudential" from its corporate name following the reclassification, Prudential will facilitate the transition by coordinating the limited use of the Prudential brand and the iciciprulife.com domain during the changeover.
ICICI Bank clarified that the undertaking will not alter its management rights or control over the joint venture, adding that the agreed governance measures are applicable only to ICICI Prudential Life for the duration of the transition period.
