Section 14 of The General Insurance Business (Nationalisation) Act, 1972
- (1)Notwithstanding anything contained elsewhere in this Act, if a majority in number of the persons, who, immediately before the appointed day, were registered in the books of an Indian insurance company as the members thereof, and representing two-thirds in value of the amount payable to the Indian insurance company, agree either in person or by proxy at a meeting specially convened for the purpose that the amount so payable instead of being distributed among the members shall be given to any such person or body of persons as the members may nominate either at that meeting or subsequently for the purpose of carrying on any business, and the Central Government is satisfied that due provision has been or will be made for the payment of the value of their respective shares to persons who have dissented from the reasolution, the amount may be given to the person or body of persons so nominated in such manner and subject to such conditions as the Central Government may think fit.
- (2)No resolution passed at any such meeting as is referred to in sub-section (1) held after the appointed day shall have any effect unless the meeting has been convened after obtained the approval of the Central Government.
Summary
- Shareholders can vote to give their acquisition money to a specific person or group instead of receiving individual payments.
- This decision must be made by a majority of the total number of members in the insurance company.
- The members who agree to this must also represent at least two-thirds of the total money value due to the company.
- The purpose of giving the money to a nominee must be for carrying on a business.
- The Central Government must be convinced that shareholders who voted against the plan will still receive the full value of their shares.
- If a meeting for this purpose is held after the official start date of the law (the appointed day), it is only valid if the government gave prior approval to hold it.
Practical examples
FAQ
1. Can shareholders decide to pool their compensation under Section 14 of the General Insurance Business (Nationalisation) Act, 1972?
Yes, Section 14 of the General Insurance Business (Nationalisation) Act, 1972 allows a majority of members representing two-thirds of the payment value to nominate a person or body to receive the money for business purposes.
2. What happens to shareholders who disagree with a payout plan under Section 14 of the General Insurance Business (Nationalisation) Act, 1972?
Under Section 14 of the Act, the Central Government will only allow the transfer if it is satisfied that dissenting members will still be paid the proper value of their shares.
3. Is government permission needed to hold a shareholder meeting under Section 14 of the General Insurance Business (Nationalisation) Act, 1972?
If the meeting takes place after the appointed day defined in the General Insurance Business (Nationalisation) Act, 1972, it has no effect unless the Central Government approved the meeting in advance.
4. What is the main requirement for the person receiving the pooled funds under Section 14 of the General Insurance Business (Nationalisation) Act, 1972?
According to Section 14 of the Act, the members must nominate the person or body for the specific purpose of carrying on a business.
Test yourself
Q1.Under Section 14 of the General Insurance Business (Nationalisation) Act, 1972, what specific voting majority is required to redirect payments?
Q2.What is the required purpose for nominating a person to receive pooled funds under Section 14 of the General Insurance Business (Nationalisation) Act, 1972?
Q3.Under Section 14 of the General Insurance Business (Nationalisation) Act, 1972, whose approval is needed for a meeting held after the appointed day?
Q4.Under Section 14 of the General Insurance Business (Nationalisation) Act, 1972, what protection is provided to members who dissent from the resolution?