4. Transfer of shares of Indian insurance companies.—(1) On the appointed day, all the shares in
the capital of every Indian insurance company shall, by virtue of this Act, stand transferred to and vested
in the Central Government free of all trusts, liabilities and encumbrances affecting them.
(2) Out of the shares so transferred and vested, the Central Government shall, immediately thereafter,
by notification, provide for the transfer of not less than ten shares of every such company to such persons
as may be specified in the notification to enable the Indian insurance company to function as a
Government company.
(3) Every notification made under sub-section (2) shall specify the names and description of the
persons to whom the shares are transferred and the particulars of the shares which are transferred to each
such person.
(4) A copy of every notification made under sub-section (2) shall, as soon as may be after it is made,
be sent by the Central Government to the concerned Indian insurance company, who shall, on receipt of
such copy, and notwithstanding anything contained in the Companies Act or in its articles of association,
forthwith rectify its register of members by including therein the persons mentioned in the notification as
the holders of the shares specified therein.
(5) For the removal of doubts it is hereby declared that the transfer and vesting of shares effected
under sub-section (1) shall not be deemed to affect any right of the Indian insurance company subsisting
immediately before the appointed day against any shareholder to recover from him any sum of money on
the ground that that shareholder has not paid or credited to the insurer the whole or any part of the value
of the shares held by him or on any other ground whatsoever.
5. Transfer of undertakings of other existing insurers.—(1) On the appointed day, the undertaking
of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in
the Central Government and the Central Government shall immediately thereafter provide, by
notification, for the transfer to and vesting in such Indian insurance company, as it may specify in the
notification, of that undertaking.
(2) Any notification made under sub-section (1) may provide that any of the undertakings aforesaid
may be transferred to and vested in more than one Indian insurance company in such manner and subject
to such conditions as may be specified in the notification.
6. Effect of transfer of undertakings.—(1) The undertaking of every such existing insurer as is
referred to in section 5 shall be deemed to include all assets, rights, powers, authorities and privileges and
all property, movable and immovable, cash balances, reserve funds, investments and all other rights and
1. Ins. by Act 3 of 1985, s. 2 (w.e.f.17-9-1984).
2. Ins. by Act 37 of 2021, s. 2 (w.e.f. 27-8-2021).
5
interests in, or arising out of, such property as were immediately before the appointed day in the
ownership, possession, power or control of such existing insurer in relation to the undertaking, whether
within or without India, and all books of accounts, registers, records and all other documents of whatever
nature relating thereto, and shall also be deemed to include all borrowings, liabilities and obligations of
whatever kind then subsisting of the existing insurer in relation to the undertaking.
(2) Unless otherwise expressly provided by this Act, all deeds, bonds, agreements, powers of
attorney, grants of legal representation and other instruments of whatever nature subsisting or having
effect immediately before the appointed day and to which any such insurer as is referred to in section 5 is
a party or which are in favour of such existing insurer shall be of as full force and effect against or in
favour of the Indian insurance company in which the undertaking or the part to which the instrument
relates has vested and may be enforced or acted upon as fully and effectually as if, in the place of the
existing insurer referred to in section 5, the Indian insurance company in which the undertaking or any
part thereof has vested had been a party thereto, or as if they had been issued in its favour.
(3) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any
business of the undertaking which has been transferred under section 5 is pending by or against any such
existing insurer as is referred to in that section, the same shall not abate, be discontinued or be in any way
prejudicially affected by reason of the transfer of the undertaking or of anything contained in this Act, but
the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Indian
insurance company in which the undertaking or the part to which the proceeding relates has vested.
(4) For the removal of doubts it is hereby declared that in the case of a foreign insurer or, as the case
may be, the Life Insurance Corporation, the provisions of section 5 and of the preceding sub-sections
shall only apply to the extent to which any property appertains, in the former case, to the general
insurance business carried on in India and, in the latter case, to the general insurance business carried on,
whether within or without India, and to rights and powers acquired, and to debts, liabilities and
obligations incurred and to contracts, agreements and other instruments made by the foreign insurer or the
Life Insurance Corporation, as the case may be, for the purpose of such general insurance business and to
legal proceedings relating to those purposes, and the said provisions shall be construed accordingly.
(5) If any question arises as to whether any property appertains to any such general insurance
business as is referred to in this section or whether any rights, powers, liabilities or obligations were
acquired or incurred or any contract, agreement or other instrument was made by the foreign insurer or
the Life Insurance Corporation, as the case may be, for the purposes of any such business or whether any
documents relate to those purposes, the question shall be referred to the Central Government which shall,
after giving an opportunity of being heard to the persons interested in the matter, decide it in such manner
as it thinks fit.
7. Transfer of service of existing employees in certain cases.—(1) Every whole-time officer or
other employee of an existing insurer other than an Indian insurance company who was employed by that
insurer wholly or mainly in connection with his general insurance business immediately before the
appointed day shall, on the appointed day, become an officer or other employee, as the case may be, of
the Indian insurance company in which the undertaking of that insurer or that part of the undertaking to
which the service of the officer or other employee relates has vested, and shall hold his office or service
under the Indian insurance company on the same terms and conditions and with the same rights to
pension, gratuity and other matters as would have been admissible to him if there had been no such
vesting, and shall continue to do so unless and until his employment in the Indian insurance company in
which the undertaking or part has vested is terminated or until his remuneration, terms and conditions are
duly altered by that Indian insurance company:
Provided that nothing in this sub-section shall apply to any such officer or other employee who has
given, in writing, notice to the Central Government or to any person nominated in this behalf by that
Government before the appointed day intimating his intention of not becoming an officer or employee of
the Indian insurance company in whom the undertaking or part thereof to which his service relates has
vested.
(2) If any question arises as to whether any person was a whole-time officer or employee, or as to
whether any officer or employee, was employed wholly or mainly in connection with the general
insurance business of the existing insurer referred to in sub-section (1) immediately before the appointed
day, the question shall be referred within a period of two years from the appointed day and not thereafter
6
to the Central Government which shall, after giving an opportunity of being heard to the person
concerned in the matter, decide it in such manner as it thinks fit and such decision shall be final.
(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any
other law for the time being in force, the transfer of the services of any officer or other employee under
sub-section (1) shall not entitle any such officer or other employee to any compensation under that Act or
such other law, and no such claim shall be entertained by any court, tribunal or other authority.
8. Provident, superannuation, welfare and other funds.—(1) Where an existing insurer has
established a provident, superannuation, welfare or any other fund for the benefit of his employees and
constituted a trust in respect thereof (hereafter in this section referred to as an existing trust), the moneys
standing to the credit of such fund on the appointed day, together with any other assets belonging to such
fund, shall stand transferred to and vested in the Indian insurance company on the appointed day free
from any such trust.
(2) Where all the employees of the Life Insurance Corporation or any other existing insurer do not
become employees of an Indian insurance company, the monies and other assets belonging to any such
fund as is referred to in sub-section (1), shall be apportioned between the trustees of the fund and the
Indian insurance company in the prescribed manner; and in case of any dispute about such apportionment
the decision of the Central Government thereon shall be final.
(3) Where the undertaking of an existing insurer has vested in more than one Indian insurance
company, the Central Government may, by order, provide for the apportionment among such Indian
insurance companies of monies and other assets belonging to any existing trust relating to that
undertaking in such manner as in its opinion may be appropriate.
(4) The Indian insurance company shall as soon as may be after the appointed day constitute in
respect of the moneys and other assets which are transferred to and vested in it under this section one or
more trusts having objects as similar to the objects of the existing trusts as in the circumstances may be
practicable.
(5) Where all the moneys and other assets belonging to an existing trust are transferred to and vested
in an Indian insurance company under this section, the trustees of such trust shall, as from the appointed
day, stand discharged from the trust, except as respects things done or omitted to be done before the
appointed day.