Regulation of Insurance Industry (Amendment) Act 2011 · As enacted
14. Insertion of new sections 33A, 33B, 33C, 33D and 33E of the principal enactment
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The following new sections are hereby inserted immediately after section 33 of the principal enactment and shall have effect as sections 33A, 33B, 33C, 33D and 33E of that enactment:—
33A. (1) A director or an employee of an insurer shall not be appointed, elected or nominated as a director of another insurer, except where such insurer is a subsidiary company or an associate company of the first mentioned insurer.
An employee of an insurer may be appointed, elected or nominated as a director of that insurer, subject however to the condition that the number of employees that may be so appointed, elected or nominated as directors, shall not exceed one-third of the total number of members of the Board of Directors of that insurer.
33B. (1) Every insurer shall submit to the
Board along with the Form required to be filed with the Registrar-General of Companies, a notice in such form and manner as shall be determined by the Board, giving information about each person sought to be appointed, elected or nominated as a director of the insurer, prior to the making of such appointment, election or nomination, as the case may be, and obtain the Boards approval for the same.
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Appointments, elections or nominations of directors of an insurer approved by the Board .
Where the Board receives a notice from an insurer under subsection (1) informing it of a proposed appointment, election or nomination of a person as a director of such insurer, the Board shall within thirty days of receipt of such notice and having regard to the provisions of section 33A, and to the disqualifications specified in the Second
Schedule to this Act, approve or refuse to approve such appointment, election or nomination, as the case may be, and inform the insurer of its decision along with its reasons for reaching such decision. It shall also be the duty of the insurer to communicate to the person concerned, who is sought to be appointed, elected or nominated, as a director, the decision of the Board.
Any person aggrieved by a decision given by the Board under subsection (2), may submit an appeal against such decision to the
Board which shall be referred by the Board to a
Panel of Review, consisting of three persons appointed by the Minister, from among persons who have experience and shown capacity in the field of insurance, financial management or law. The Panel of Review shall having considered the grounds on which the appeal is being made and any other matters which in its opinion merits consideration, make a decision either confirming the refusal or approving the appointment, election or nomination, as the case may be, of such person as a director of the insurer concerned.
33C.
to be
An insurer shall not appoint, elect or nominate as a director of such insurer a person whose appointment, election or nomination has not been approved by the
Board under section 33B of this Act.
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Removal of a director who is ineligible to hold office as a director.
Notwithstanding the provisions of subsection (1), a person whose name has been submitted to the Board for approval under subsection (1) of section 33B, may be appointed, elected or nominated as a director of the insurer, pending the receipt of the decision of the
Board. However, where the Board refuses to grant approval and the insurer communicates to the person concerned, the decision of the
Board, such person shall from the date of such communication, cease to hold office as a director of the insurer, subject to any decision the Board may reach upon any objections that may have been tendered by the person concerned, under subsection (3) of section 33B, against the decision of the Board refusing to grant approval.
It shall be the duty of an insurer to inform the Board forthwith of every appointment, election or nomination of a director, whose appointment, election or nomination, as the case may be, was approved by the Board.
33D. (1) An insurer shall, immediately upon becoming aware that a director of such insurer has become subject to any one or more of the disqualifications specified in the Second
Schedule to this Act or has become ineligible to continue to hold office as a director of the insurer, inform the Board of such fact.
Where the Board receives any information under subsection (1) about a director or where the Board becomes aware at any time that a person appointed, elected or nominated as a director of an insurer has thereafter become disqualified under any one or more of the disqualifications specified in the Second Schedule to this Act or has otherwise become ineligible to continue to
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hold office as a director of an insurer, the Board shall—
direct the insurer concerned, in writing, to remove such person from the office of a director within such period as may be specified in such direction; and
in writing, notify the person who is to be removed of the fact of such removal, with a copy of the direction issued to the insurer regarding the same annexed to such notification.
The insurer to whom a direction is issued under subsection (2) shall, within the period specified in the direction—
remove the person from the office of director; and
take such steps as are necessary to inform the shareholders of the insurer and the
Registrar-General of
Companies of such removal.
The removal of a director in accordance with a direction issued under paragraph (a) of subsection (2) shall, notwithstanding the
Articles of Association of the insurer, take effect from the date of receipt by the director of the notification of removal sent by the insurer.
Any person who is aggrieved by the removal of such person from the office of a director under subsection (3) of this section, may within fourteen days of being notified of such removal, appeal therefrom to the Court of
Appeal. The Court of Appeal may on appeal made under this section, confirm, revise, modify or set aside the decision against which the
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Failure to comply to be an offence.
appeal is made and may make such order as the interests of justice may require.
33E. An insurer who fails to comply with any direction given under paragraph (a) of subsection (2) of section 33D within the period specified in such direction and a director who has been served with a notice under paragraph (b) of that subsection who continues to function as a director thereafter, shall each be guilty of an offence under this Act and shall be liable on conviction after summary trial before a
Magistrate to a fine not exceeding five hundred thousand rupees and shall in addition be liable—
in the case of the insurer, to a further fine of one hundred thousand rupees, for each day that the insurer continues to commit such offence after conviction; and
in the case of a director of the insurer, to a further fine of rupees one hundred thousand for each day such director continues to function as director, after conviction.”.