The capital markets regulator has said Bajaj Finserv is required to seek shareholder approval and make disclosures under the SEBI Listing Obligations and Disclosure Requirements (LODR) regulations.
Bajaj Finserv wrote to Sebi on July 27, 2023, seeking informal guidance if any transaction between BAGIC and Allianz SE is related to the parent company. In its letter, Bajaj Finserv stated that the words “related party transaction” LODR regulations indicate that the transaction should be with related parties of the listed entity and does not include a transaction between a subsidiary of the listed entity and a party. , which is not a related party of the listed entity.
Bajaj Finserv sought views on this aspect while asking the regulator whether approval is required from the shareholders of the holding company, which in this case is the company itself.
SEBI considered the submissions made by Bajaj Finserv in its letter and gave its opinion on the issue “without necessarily agreeing” with Bajaj Finserv’s interpretation of SEBI’s rules.
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In the ordinary course of its business, BAGIC has entered into a treaty with Allianz SE for reinsurance, in accordance with the regulatory general insurance/reinsurance provisions of IRDAI.
Bajaj Finserv is listed on NSE and BSE.
BAGIC, an unlisted general insurance company, holds 74% of Bajaj Finserv while the remaining 26% is held by Allianz SE.
SEBI further clarified that in case of any materially related party transaction involving a subsidiary, prior approval of the shareholders of the listed holding company is required. It further stated that transactions between a subsidiary and a related party of a subsidiary or holding listed company come under the definition of related party transactions.
However, Sebi also said that the guidance given by it is based only on specific questions raised by Bajaj Finserv. Sebi’s letter said, “Different facts or conditions may lead to a different result. This letter expresses the opinion of the department and does not express the decision of the Board on the referred question.”
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