Go Digit General Insurance, which is scheduled to go public, has been fined Rs 1 crore by the Insurance Regulatory and Development Authority of India (IRDAI) for excessively late submission of the joint venture agreement’s details regarding the modification of the conversion ratio of compulsorily convertible preference shares (CCPS) issued by its parent company to FAL Corporation.
The company in question received a show-cause notice from the regulator in November.
The parent company of Go Digit, Go Digit Info Works Services Pvt. Ltd. (GDISPL), issued roughly 63,00,000 CCPS to FAL Corporation, which is owned by the Fairfax Group.
The conversion ratio was originally set at “1 CCPS for 2.324 equity shares” when the joint venture agreement was signed in 2017. However, the company later modified this to “2.324 CCPS for 1 equity share.”
According to the regulator, GDISPL issued a total of 78,00,000 CCPS as opposed to 63,00,000, as stated 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.”
Since filing its DRHP in August 2022, Digit Insurance has been dealing with problems from the regulator. When it came to employee stock plans, SEBI initially refused to grant the approval and requested more details. It also returned Digit’s prospectus. The company refiled its draft IPO papers in April 2023.
IRDAI issued a show-cause notice and several advisories to the company in November for failing to disclose a change in the conversion ratio of compulsorily convertible preference shares (CCPS).
Nonetheless, Digit was successful in obtaining SEBI approval in March of this year in order to raise money through an initial public offering (IPO).
Digit is one of several companies that have previously experienced regulatory friction. FirstCry had to resubmit its draft IPO documents last month due to SEBI’s concerns.
Before this, the travel tech company TBO and the fintech company MobiKwik also refiled their draft papers with smaller IPO sizes.
