IRDAI puts Care Health Insurance on notice over ESOPs to Rashmi Saluja
India's insurance regulator, IRDAI, has issued a show cause notice to Care Health Insurance, a subsidiary of Religare Enterprises, regarding the grant of stock options to Rashmi Saluja, who serves as the chairperson of Religare. The notice alleges that Care Health Insurance violated IRDAI directions by issuing stock options to Saluja despite prior refusal in May 2022. Saluja, an executive chairperson at Religare, was granted these options as an employee, though she is a non-executive director at Care.
India's insurance has issued a show cause notice to subsidiary, Insurance (Care), in relation to the grant of stock options to , the Religare chairperson, said sources aware of the development.The board of Religare, which in turn owns Care, and the promoter family of are locked in a protracted battle over the control of Religare. The Burman family made an open offer to minority investors of Religare and has accused the board of giving Saluja stock options in alleged violation of rules.
In the show cause notice, which was issued last month, the regulator has alleged Care failed to comply with the directions of the Insurance and Regulatory Development Authority of India (), sources added.
The stock options were issued even after the regulator, through a letter in May 2022, disallowed Care from allotting to Saluja as she is a non-executive director on the board of Care.
As per IRDAI guidelines, a threshold of ₹10 lakh per year is stipulated for payment to non-executive directors. However, despite the regulator's refusal, Care issued the ESOPs to Saluja as an employee of Religare Enterprises, an action IRDAI believes is in defiance of its directions.
Apart from being a non-executive director on the board of Care, Saluja is the executive chairperson of Religare Enterprises. which owns Care Health. The show-cause notice has asked Care why a penalty should not be imposed against the company and why proceedings should not be initiated against the company under the Insurance Act and the IRDAI Act 1999.
Care Healthcare and IRDAI did not respond to ET's queries.
ET had reported in May that IRDAI is investigating the issuance of stock options in Care to Saluja. Care Health had allotted stock options worth ₹250 crore, representing approximately 2.5% of the unlisted insurer's shareholding.
A Right to Information query dated April 9, 2024, filed with the IRDAI, revealed that Care had sought its approval to grant ESOPs to Saluja on December 31, 2021. The regulator had not given its approval.
Earlier, a proxy advisory firm, InGovern, said stock options were issued with an exercise price of ₹45.32 per share in January 2022, while in the same year, a rights issue of Care Health Insurance shares was priced at ₹110 per share.
InGovern said Religare did not seek shareholder approval for the allotment of Care Health shares to , and there was no disclosure of this matter.
The Burman family, the largest shareholder of Religare Enterprises, has also alleged that 22.7 million options in Care Health Insurance were illegally issued to Saluja and sought the cancellation of these stock options.
On Tuesday, the Securities Appellate Tribunal (SAT) asked to apply for an open offer and change in control by July 22, in line with directions given by the markets regulator Securities and Exchange Board of India (Sebi) in its order dated June 19, 2024.
Source: Stocks-Markets-Economic Times
