Section 116: Insurer Many Acquire Another Insurer

1) Any insurer may acquire another insurer performing the same kind of insurance business.

2) If an insurer desires to acquire another insurer pursuant to Sub-section (1), both insurers shall pass a special resolution in relation to the same from their respective General meeting and shall
submit joint application to the Authority for obtaining theoretical approval (approval in principle).

3) In accordance with sub-section (2), investigating upon the application, if it seems reasonable to grant theoretical approval, the Authority may grant theoretical approval on the following grounds:

(a) If it seems reasonable to acquire the targeted insurer by another insurer due to the reason that the targeted insurer being failure to fulfil its short-term or long-term liabilities,

(b) If it is reasonable to acquire the targeted insurer by another insurer due to the targeted Insurer’s failure to maintain paid-up capital pursuant to Section 36 or failure to maintain capital funds to be maintained under this Act,

(c) If the targeted insurer is unable to fail, issue shares with the general public within the prescribed period.

4) Notwithstanding anything contained in sub-section (3), the Authority shall not grant approval to the insurer for acquisition as if acquiring one insurer by another insurer, it seems possible to cause detriment or loss to the insured, increase unhealthy competition in the insurance business or establishment of monopoly or controlled practice of any insurer.

5) The insurer who has received theoretical approval from the Authority pursuant to sub-section (3) shall appoint a valuator possessing qualifications for being an auditor of an insurer to submit a report performing an assessment on the following matters:

(a) Overall financial position of the acquiring insurer and targeted insurer, including the valuation of assets, liabilities and business,

(b) General anticipation of the possible effect on insurance system if targeted insurer is acquired by the acquiring insurer and the business plan of acquirer insurer,

(c) Management of employees of targeted insurer after acquisition,

(d) Management of short-term and long-term liabilities of the targeted insurer after acquisition,

(e) Other particulars as prescribed.

6) The valuator appointed pursuant to sub-section (5) shall submit one copy of the study report prepared by him to the Authority and one copy to the acquiring insurer as well.

7) If it seems appropriate to acquire targeted insurer from the report pursuant to sub-section (6) the Authority shall grant final approval for making acquisition of such insurer.

8) After receiving the approval pursuant to sub-section (7), both insurers shall make a mutual agreement in relation to the management of assets and liabilities of the targeted insurer, and the acquiring insurer shall purchase the defined number of promoter shares or other shares of the targeted insurer.

9) Other provisions related to acquisition of insurer shall be as prescribed.