For the purposes of the Explanation to sub-section (2) of section 7 and of clause (b) of sub-section (2) of section 10 of the Act, the part of the paid-up capital, or assets representing such paid-up capital as the case may be, allocated to the controlled business of an insurer shall be determined in the manner following namely;-
(i) in respect of an insurer entitled to receive compensation under Part A of the First Schedule to the Act, the paid-up capital allocable to the controlled business shall be that proportion of the total paid-up capital of the insurer which the annual average of the profits from the controlled business during the period covered by the relevant actuarial investigation bears to the total of such annual average of profits plus two times the annual average of the profits from other business during that period;
Provided that the paid-up capital so allocable to the controlled business shall not in any case exceed a sum of Rs.6 lakhs.
(ii) in respect of an insurer entitled to compensation under Part B of the First Schedule to the Act, the paid-up capital allocable to the controlled business shall be the excess, if any, of the amount of liabilities of the insurer appertaining to such business in existence on the 19 th day of January, 1956, computed as at that date in accordance with the provisions of paragraph 4 of Part B of the First Schedule to the Act over the value of the assets of the insurer appertaining to his controlled business (excluding the paid-up capital allocable to controlled business) in existence on the 19 th day of January, 1956 computed as at that date in accordance with the provisions of paragraph 3 of Part B of the First Schedule to the Act.
Explanation 1 – “Profits from controlled business” means the share of the surplus allocated to the shareholders as disclosed in the abstracts prepared in accordance with Part II of the Fourth Schedule to the Insurance Act in respect of the relevant actuarial investigations.
Explanation 2 – “Profits from other business” means the total of the Profits less losses transferred to “Profit and Loss Account” from the 10 fire, marine and miscellaneous Insurance revenue accounts prepared in accordance with Form F of the Third Schedule to the Insurance Act.
Explanation 3 – “Relevant Actuarial Investigations” means such minimum number of latest actuarial investigations as it dates earlier than the 1 st day of January, 1956 (not being less than 2 in any case) would leave the period intervening between the date as at which the actuarial investigation immediately preceding the first of such investigations was made and the date as at which the last of such investigations was made to be not less than 4 years.
Explanation 4 – Where an insurer has allocated to shareholders more than 5 per cent of any such surplus as is referred to in Explanation 1, the insurer shall be deemed to have allocated only 5 per cent of the surplus and where an insurer has not allocated any such surplus to shareholders or has allocated to shareholders less than 5 per cent of any such surplus the insurer shall be deemed to have allocated 5 per cent of the surplus.
19. Transfer of business of certain composite insurers to the Corporation –Every transfer by the Administrator under clause (a) of section 45 of the Act shall be made in pursuance of an agreement between the Administrator and the Corporation and no such agreement shall be entered into except with the previous approval of the Central Government.
20. Vesting of the management of the affairs of the insurer in the persons entitled thereto-As soon as the transfer in terms of rule 19 is effected, the Administrator shall by notice call upon the persons in charge of the management of the insurer immediately prior to the appointment of the Administrator to take charge of the management of any other kind of business not transferred to and vested in the Corporation and upon such notice being given, such persons shall take the management of that other kind of business.