IRDA imposes Rs 1 Cr fine on Go Digit Insurance
In November, the firm received show cause notice and multiple advisories from the insurance regulator for non-disclosure of change in the conversion ratio of compulsorily convertible preference shares (CCPS).
![IRDA imposes Rs 1 Cr fine on Go Digit Insurance](https://www.psuconnect.in/sdsdsd/irdai.jpg)
The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of INR 1 crore on Go Digit General Insurance, which is planning to go public, for excessively delaying the filing of details related to its joint venture agreement, which pertains to the change in the conversion ratio of compulsorily convertible preference shares (CCPS) issued by its parent company to FAL Corporation.
In 2017, Go Digit Info Works Services Pvt. Ltd. (GDISPL) issued 63,000,000 Cumulative Compulsorily Convertible Preference Shares (CCPS) to FAL Corporation, a company owned by Fairfax Group, as part of a joint venture agreement. The original conversion ratio was agreed upon as "1 CCPS for 2.324 equity shares."
However, the company later changed it to "2.324 CCPS for 1 equity share." As a result, GDISPL ended up issuing a total of 78,000,000 CCPS instead of the originally agreed upon 63,000,000. This was noted by the regulator in an order dated May 2, 2024.
Read Also : IndusInd Bank Q1 FY25 results, net profit at 2% YoYThe company has acknowledged that it unintentionally failed to submit the JV agreement to the authority. Digit Insurance has been facing regulatory issues since August 2022 when it filed its DRHP.
Initially, SEBI did not approve it and asked for additional information. It also returned Digit's prospectus over employee stock plans. In April 2023, Digit refiled its draft IPO papers.
In November, the firm received show cause notice and multiple advisories from the insurance regulator for non-disclosure of change in the conversion ratio of compulsorily convertible preference shares (CCPS).
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