The capital market regulator has said that Bajaj Finserv is required to seek shareholder approval and make disclosures under the Sebi Listing Obligations and Disclosure Requirements (LODR) regulations.
Bajaj Finserv on July 27, 2023 wrote to Sebi seeking an informal guidance if a transaction between BAGIC and Allianz SE was related with the parent company. In its letter, Bajaj Finserv said that the words “transaction with the related party” LODR regulations suggest that the transaction must be with the related party/ies of the listed entity and would not include a transaction between a subsidiary of listed entity and a party, which is not a related party of the listed entity.
Bajaj Finserv sought an opinion on this aspect while asking the regulator if there is a requirement of approval 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 “without necessarily agreeing” with Bajaj Finserv’s interpretation of the Sebi regulations on this issue.
In the ordinary course of its business, BAGIC, in conformity with the provisions of IRDAI’s governing general insurance/reinsurance, has entered into a Treaty with Allianz SE for reinsurance.Bajaj Finserv is listed on NSE and BSE.BAGIC, which is the unlisted general insurance company has 74% holding 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 from the shareholders of the listed holding company was necessary. It further said that the transactions between a subsidiary and the related party of either the subsidiary or the holding listed company fall under the definition of related party transactions.
However, Sebi also said that the guidance given by it is based solely on the specific queries raised by Bajaj FInserv. “Different facts or conditions might lead to a different result. This letter expresses the Department’s view and does not express a decision of the Board on the question referred,” the Sebi letter said.
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