The government has proposed to significantly increase the authorised capital of Life Insurance Corporation of India (LIC) to Rs 25,000 crore to facilitate the listing of the state-owned company in the next fiscal year.
Currently, the paid-up capital of the life insurance company with over 29 crore policies is Rs 100 crore. Starting with an initial capital of Rs 5 crore in 1956, LIC has an asset base of Rs 31,96,214.81 crore.
The authorised share capital of LIC shall be Rs 25,000 crore divided into 2,500 crore shares of Rs 10 each, as per the amendments proposed in the Life Insurance Corporation Act, 1956.
The amendments proposed as part of Finance Bill 2021 will lead to the setting up of a board with independent directors in line with listing obligations.
According to one of the 27 proposed amendments, the central government will hold at least 75% in LIC for the first five years post the IPO, and subsequently hold at least 51% at all times after five years of the listing.
Up to 10% of the LIC IPO issue size would be reserved for policyholders, Minister of State for Finance Anurag Thakur had said last month.
The government will remain the majority shareholder and will continue to retain management control, safeguarding the interest of policyholders, he had said.
Currently, the government owns 100% stake in LIC. Once listed, it is likely to become the country's biggest company by market capitalisation with an estimated valuation of Rs 8-10 lakh crore.