Markets regulator Sebi has dropped proceedings against Max Financial Services, Max Life Insurance, Axis Bank, Axis Capital, Axis Securities and seven individuals in the matter related to the Max-Axis Life Insurance deal, saying the allegations of disclosure lapses and fraud were not established. The final order, passed by Whole-Time Member Amarjeet Singh, covered 12 noticees, including Max Financial Services, Max Life Insurance, Axis Bank, Axis Capital, Axis Securities, Analjit Singh, Mohit Talwar, Rahul Khosla, Sujatha Ratnam, Rahul Ahuja, Jatin Khanna and V Krishnan.

The case arose from Sebi’s investigation into transactions between Max Financial, Max Life and Axis Bank from FY10 to FY22. The regulator had examined whether the entities violated securities laws, listing norms and fraud regulations in relation to a series of share sale and buyback arrangements involving Max Life shares..

Sebi had alleged that Max Financial made inadequate or delayed disclosures about the bancassurance arrangement with Axis Bank and related share transactions in 2010, 2015 and 2020. The notice had also alleged that Max Financial, Max Life and Axis entities devised a fraudulent scheme to benefit Axis Bank at the cost of Max Financial and its shareholders.

The matter had also drawn from earlier findings by the Insurance Regulatory and Development Authority of India. Irdai had informed Sebi that it had imposed penalties of Rs 2 crore on Axis Bank and Rs 3 crore on Max Life for violation of its directions.

Irdai had observed that the transactions had circumvented limits on commission, remuneration or reward payable to insurance agents and intermediaries. Under the 2010 arrangement, Max Life issued shares to Axis Bank at Rs 10 per share, while later tranches saw the shares bought back at prices ranging from Rs 54 to Rs 111 per share.

99% stake in Max Life to Axis Bank at Rs 10 per share, and later bought back part of that stake at higher prices. Under the 2020 arrangement, Max Financial sold stakes in Max Life to Axis Bank, Axis Capital and Axis Securities.

002% to Axis Bank in March-April 2021. Max Life later became Axis Max Life Insurance.

The show-cause notice had alleged that the transactions caused a loss of Rs 3,912 crore to Max Financial and gave a corresponding benefit to Axis Group entities. It also alleged that disclosures by Max Financial were incomplete and misleading.

Sebi, however, said the disclosure framework applicable to listed entities had changed significantly since 2010. It said the old listing agreement left more room for judgment on materiality, while the later LODR framework introduced clearer thresholds and more detailed guidance.