Guidelines in respect of Conflict of Interest and Common Directorship among Intermediary

IRDAI vide Ref: No: IRDAI/INT/GDL/MISC/202/9/2022 has issued a Guidelines in respect of Conflict of Interest and Common Directorship among Intermediary or Insurance intermediary * dated, September 28, 2022 to address the issues relating to conflict of interest arising out of common directorship amongst registered Intermediaries or Insurance Intermediaries under the same groups.

(As per Section 2(f) of IRDAI Act, 1999 “Intermediary or Insurance Intermediary” includes Insurance Brokers, Reinsurance Brokers, Insurance Consultants, Corporate Agents, Third party Administrators, Surveyors and Loss Assessors and such other entities as may be notified by the Authority from time to time)

Highlight of the Guidelines are as follows:

• The Guidelines specifies that wherever the Authority has granted/ is granting Certificate of Registration (COR) for more than one entity to act as intermediaries or insurance intermediaries under the same group and also permitted the appointment of common directors on the Board of the entities shall be subject to the maximum numbers of directorship as stipulated under Section 165 of Companies Act, 2013,
• Where Common directors are appointed in accordance to the Section 165 of Companies Act, 2013, the intermediary or insurance intermediaries shall ensure following:
• A Board approved policy to deal with transactions with related parties as defined under Section 2 (76] of the Companies Act, 2013 shall be in place
• All related party transactions among the intermediary or insurance intermediary shall comply with the provisions of Section 188 of Companies Act, 2013 and applicable Accounting Standard AS 18;
• The Statutory Auditor of the intermediary or insurance intermediary shall certify the compliance requirement of Section 188 of the Companies Act, 20I3 to IRDAI as at the end of the financial year, by September 30 th of the subsequent financial year.
• The intermediary or insurance intermediary shall file a communication with the lRDAl on the appointment of common director within 30 days of appointment.
• The common director(s) shall comply with the disclosure requirement under Section 184 of the Companies Act, 2013 and the disclosure shall be placed before the Board and also recorded in the Register of Director(s);
• No common Director (s) of an intermediary or insurance intermediary shall hold the position of KMP/CEO/ Principal Officer/ Whole-time Director with another intermediary or insurance intermediary. However, it is clarified that the person can hold the position of non-Executive Director.
• The compensation will be paid to the common Director(s) in accordance with the provisions of Companies Act, 2013.
• The common Director(s) shall abstain from discussion and voting in a situation where contracts or arrangements between intermediary or insurance intermediary who are related, are proposed to be related
• The intermediary or insurance intermediary which is appointing the common director shall also inform the other intermediary or insurance intermediary wherever this director is already on their board, for the purpose of compliance with these guidelines.
• An undertakings to the Authority as per format attached to Guidelines, along with a copy of Board Approved Policy to deal with related party transactions, shall be submitted by all the intermediaries or insurance intermediaries where the common director is appointed on the Board.

Source category: IRDAI

Attachments

• /2022/89_GUIDEL~1.PDF