The country's largest state-run insurance company Life Insurance Corporation (LIC) submitted the draft IPO (DRHP) to the market regulator SEBI on February 13, 2022. According to this, the company will sell about 31.6 crores or 5% of the shares. In this, employees and policy holders will get a discount.
10% share reserve for policy holders
As per DRHP, 10% share will be reserved for LIC policy holders under the reservation portion. Maybe they can get a discount of 5% in the share price. We are telling here the answers to all those questions in 25 points, which must be running in your mind. Let us first understand LIC. It is the largest government insurance company in the world.
It is the largest investment institution in the country's stock market. It is a village-wide life insurance institution. At present, the entire stake is with the government.
1) Is it necessary for policyholders to have a demat account to buy shares?
Yes. As per SEBI regulations, equity shares of any company are issued only in demat form. Hence, anyone, be it policy holders or retail investors, needs to have a demat account.
2) How to open Demat account?
You can open it with two depositories. NSDL and CDSL. We call this demat account. After this you have to open a trading account with any brokerage house. However, if you open a trading account with a brokerage house, that broker will do the demat work.
3) Is there any lock-in period for the policyholders' share of reserves?
No, there is never any lock-in period for retail investors. Policyholders can sell the shares immediately after they are listed. It's up to them.
4) I have a policy in some other life insurance. Can I apply for IPO under Policyholders Reservation Portion?
No. In Policy Holders Reservation, only LIC policy holders can buy shares. However, you can apply for shares from the common quota after or before listing.
5) What is the minimum and maximum number of shares that can be bought?
It's not decided yet. When the IPO will be launched, it will be told that the minimum number of shares you can buy. As far as the maximum is concerned, you can buy shares under retail quota only up to Rs 2 lakh.
6) Is there any minimum balance rule in demat account?
No, there is no such rule.
7) Can a policy holder apply from the demat account of his/her spouse or son or any relative?
No, Policyholders should have a Demat account in his/her name.
8) How much discount is there for policy holders?
It is yet to be decided. But it is believed that a discount of 5% can be available.
9) Will there be tax exemption on investment in LIC shares?
No, there is no tax exemption on investment in equity shares of LIC. Like normal tax, profits will be taxed here too.
10) At what price band can the policy holders bid.
There are usually two expressions in an issue. One lower and one upper. You should bid at the higher price, as it is finally finalized at the time of allotment of shares.
11) I have a joint life policy. Will my wife and I both be eligible for reservation or not
Policyholders can apply for only one of the two equity shares under the reservation portion. The PAN number of the applicant (you or your spouse) bidding for the offer should be updated in the policy record. The applicant should have a demat account in his own name. If the demat account is a joint one, the applicant should be the primary holder of the demat account.
12) My daughter is studying in America. Will she be eligible to bid under Policyholders Reservation Portion, as she has a policy in India?
He needs to be in India while applying for the offer.
13) I am the proposer of a policy for my minor son. Am I eligible for reservation under the policyholders reservation portion?
Since you are the owner of the policy and therefore being the policy holder, you are eligible for reservation under the policy holders reservation portion.
14) I have a lapse policy of LIC. Can I buy shares under Policyholders Reservation?
All policies that have not been taken out of LIC's record by maturity, surrender or death of the policyholders are eligible under the policyholders' reservation portion.
15) How can I link my PAN with the policy?
The options provided on the LIC website are the easiest option to update PAN. You should have your PAN number, policy number, mobile number and email ID. Through a very simple process, your PAN number will be updated. You can also approach LIC offices where PAN number can be updated.
16) I applied the policy before the date of DRHP, but received the policy bond later. can I apply?
Policyholders to be eligible under Reservation under Reservation portion category, the policy must be issued on or before the date of DRHP. Should not be out of maturity, surrender or death on the date of issue.
17) I have a joint demat account in the name of my life partner. We have two different policies. PAN is attached to it. Can we both apply in the issue on the basis of that one joint demat account?
As per SEBI rules, separate applications cannot be made by both the beneficiaries of the demat account. The application can be made only in the name of the primary beneficiary.
18) I have the policy of Pradhan Mantri Vaya Vandana Yojana. Can I buy LIC shares
Yes, all policy holders other than Group Policy are eligible to bid for the reservation portion.
19) I am the spouse of the policy holders (now deceased) under an annuity policy. Currently I am receiving annuities. Can I apply for LIC shares?
No, as you are not the policyholder and only a beneficiary, you are not eligible to apply for the offer.
20) Is the allocation guaranteed to the eligible policyholders under the policy holders reservation portion?
No, there is no guarantee of allotment. About 10% of the issue size is reserved for eligible policy holders.
21) I am a nominee under a policy issued by LIC, am I eligible to bid for equity shares under my name?
No, only eligible policy holders are eligible to bid under the policy holders reservation portion. Nominees are not eligible.
22) Can NRI policy holders or other policy holders residing outside India apply for the offer?
No, Only Resident Indians can apply.
23) Can senior citizens apply for any of the offers?
Yes, there is no age restriction. If you are above 18 years then you can apply.
24) Whether allotment will be based on premium amount or sum assured or number of policies
All eligible policyholders will be treated at the same level irrespective of premium, insurance or number of policies.
25) Is there any condition of minimum premium or sum assured for policyholders to be eligible to bid under reservation portion?
There is no such condition. All eligible policy holders, subject to the rules, are eligible to bid under the policy holders reservation portion.
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