As per the instruction issued vide Circular Ref. U & R 20/2007 dated 24th October 2007. LIC were not allowing insurance under the employer-employee scheme if the beneficial ownership of the employee in the employer company is in excess of 5% For ascertaining the limit of 5% shareholding or ownership held by concerned employee, his/ her spouse, children, sons-in-law, daughters-in-law. parents brother or sisters was being aggregated together.
The Practice has been reviewed and it has been decided that insurance under the employer employee scheme can be granted subject to fulfillment of the following conditions.
Employee’s shareholding in the employer company is <51% & Family shareholding in the employer company is <71%
The definition of family for the purpose of granting insurance under employer employee scheme has also been revised to employee, his / her spouse and minor children.