Irdai imposes a fine of Rs 1 crore on IPO-bound Go Digit Insurance

2 min read Last Updated : May 07 2024 | 9:46 PM IST

The Insurance Regulatory and Development Authority of India (Irdai) imposed a penalty of Rs 1 crore on Go Digit General Insurance for non-disclosure of a change in the conversion ratio of compulsorily convertible preference shares (CCPS), the regulator said in a press release.

The insurance regulator had earlier issued a show cause notice after noticing that Go Digit had changed its conversion ratio of 63,00,000 CCPS issued by Go Digit Infoworks Services Pvt Ltd (GDISPL), the parent company of the general insurer, to FAL Corporation, owned by Fairfax Group. It was changed from “1 CCPS for 2.324 equity shares” to “2.324 CCPS for each equity share.”

ALSO READ: Fairfax-backed Go Digit receives Sebi’s approval to raise funds via IPO

This was shown in an amendment to the joint venture (JV) agreement dated August 11, 2023. The company had not furnished the full particulars of the revision to the regulator, violating Section 26 of the Insurance Act.

Previously, Irdai had rejected the conversion of CCPS into shares because it would have resulted in GDISPL, the holding company of Digit Insurance, becoming a subsidiary of the Fairfax group, which is not allowed by regulations.

In March, Go Digit General Insurer received final approval from the Securities and Exchange Board of India (Sebi) to raise funds worth Rs 1,250 crore through an initial public offering (IPO), which will be used to augment the company’s capital base, maintain solvency levels, and fulfil general corporate purposes.

According to recent general insurance council data, the company had a gross written premium (GWP) of Rs 7,941.1 crore in financial year 2023-24, 28.91 per cent year-on-year (Y-o-Y) higher than Rs 6,160.08 crore in the year-ago period.

First Published: May 07 2024 | 9:34 PM IST

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