IRDA slaps penalties on Bharti Axa

Continuing its crackdown on insurance companies, the Insurance Regulatory and Development Authority (IRDA) has imposed a penalty of Rs10 lakh each on two Bharti Enterprises-promoted outfits - Bharti Axa Life Insurance Co Ltd and Bharti Axa General Insurance Co Ltd for violating registration regulations and not voluntarily disclosing changes in the ownership pattern.

In separate orders issued to Bharti Axa Life chief executive officer Glenn Williams and Bharti Axa General chief executive officer Amarnath Ananthanarayan, IRDA asked both companies to pay the penalty within 15 days of the receipt of the order. The orders were posted on IRDA's website on Thursday.

The insurance regulator imposed a penalty of Rs5 lakh on both companies for restructuring the company in violation of relevant provisions and an equal amount for not voluntarily conveying the changes in ownership pattern.

Bharti Ventures Ltd, holding 40 per cent in Bharti Axa Life, was owned to the extent of 99 per cent by a partnership firm, Bharti Enterprises. However, Bharti Enterprises was converted into Bharti Enterprises (Holding) Pvt Ltd with effect from 8 January 2010.

"This change in the status of your promoter entity Bharti Enterprises from a partnership firm to a private limited company had conferred upon it the status of a subsidiary company in terms of Section 4 of the Companies Act, 1956," the order said, adding that the restructuring was found to be in violation of registration regulations.

The insurance companies confirmed that Bharti Enterprises holds 97.57 per cent shares of Bharti Ventures. According to IRDA, in response to show cause notices, the companies have not offered adequate reasons for the violations. Bharti Axa Life started its operation in July 2006 while the Bharti Axa General Insurance was incorporated in June, 2008.