IPO bound LIC’s Chairman post removed, replaced by CEO and Managing Director

Changes have been made to certain provisions under the LIC Act, 1956 including the Life Insurance Corporation of India(Employees) Pension(Amendment) Rules

In a new set of amendments, the government of India has now removed the Chairman’s position in the state-owned Life Insurance Corporation of India(LIC). The Chairman will now be replaced by a Chief Executive Officer and a Managing Director. The changes are being made in line with the government’s intention to get the insurance giant listed on the stock market. The LIC’s Initial Public Offering(IPO) is likely to be released in the current fiscal year.

For this purpose, changes have been made to certain provisions under the LIC Act, 1956 including the Life Insurance Corporation of India(Employees) Pension(Amendment) Rules. A gazette notification issued on Wednesday stated that “Chief Executive and Managing Director means the Chief Executive Officer and Managing Director appointed by the Central Government under section 4 of the Act (LIC Act 1956)”.

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Of late, several amendments have been made by the finance ministry under FM Nirmala Sitharaman with regards to LIC. Recently, the ministry gave its approval to the LIC to raise its authorised share capital to Rs 25,000 crore. The Department of Economic Affairs has also bought amendments to the Securities Contracts(Regulation) Rules, allowing companies having a market cap. of greater than 1 lakh crore to sell only five per cent of their shares. However, these companies will be required to sell 10 per cent and 25 per cent of their shares in the stock market in two and five years respectively.

Established as an insurance firm by the government of India in 1956, the Life Insurance Corporation of India(LIC) enjoys a whopping 60.77% market share in the Indian insurance sector as of March 2021. The Modi government had announced disinvestment of the LIC in its 2021-22 budget.