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IRDA imposes Rs 1 Cr fine on Go Digit Insurance

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The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of Rs 1 crore on IPO-bound Go Digit General Insurance for inordinate delay in the filing the particulars of the joint venture agreement related to the change in the conversion ratio of compulsorily convertible preference shares (CCPS) issued by its parent company to FAL Corporation. In November, the regulator had issued a show cause notice to the firm in the matter. About 63,00,000 CCPS were issued by Go Digit’s parent company—Go Digit Info Works Services Pvt. Ltd. (GDISPL)— to Fairfax Group-owned FAL Corporation. During the time of the joint venture agreement in 2017, it was agreed upon that the conversion ratio was “1 CCPS for 2.324 equity shares”, which was changed by the company to “2.324 CCPS for 1 equity share.” Instead of 63,00,000 CCPS, a total of 78,00,000 were issued by GDISPL, the regulator noted in the order date of May 2, 2024. The company’s response further admits that “the specific non-submission of JV agreement to the authority was purely inadvertent and unintentional.” Digit Insurance has been facing issues from the regulator ever since it filed its DRHP in August 2022. Initially, SEBI did not provide the approval and sought additional information while it also returned Digit’s prospectus over employee stock plans. In April 2023, the company refiled its draft IPO papers. In November, the firm received show cause notice and multiple advisories from IRDAI for non-disclosure of change in the conversion ratio of compulsorily convertible preference shares (CCPS). However, Digit managed to get SEBI’s approval to raise funds through IPO in March this year. Digit is among a bunch of companies which had also faced friction from the regulators in the past. Last month, FirstCry had to refile its draft IPO papers after SEBI’s concern. Earlier, fintech firm MobiKwik and travel tech company TBO also refiled their draft papers with reduced IPO sizes.