CEO of All Life Insurers,
Non Life Insurers and
Re: Compliance with Corporate Governance Guidelines (CG Guidelines)
Attention is drawn to the Corporate Governance Guidelines issued by the Authority vide Circular no. IRDA/F&A/CIR/025/2009-10 dated 05th August, 2009, and Circular No. IRDA/F&I/CIR/F&A/014/01/2010 dated 29THJanuary, 2010.
The following additional stipulations shall form part of the Guidelines:-
I. Annual Filing of Compliance Status:
a) All insurers are required to file a Report on status of compliance with the C G Guidelines on an annual basis w.e.f. the Financial Year 2010-11. This report shall be filed within 90 days from the end of the Financial year (i.e., before 30th June).
The report should be filed in the format as placed in Annexure-1.
b) Clause 9 of the CG Guidelines requires confirmation of disclosures made in the Annual Accounts. In such instances, where the finalization of Annual Accounts extends beyond 90 days of the close of the financial year, the status on disclosure in the Financial Statements as required under the aforementioned clause may be made within 15 days of adoption of the Annual Accounts by the Board of Directors of the insurers. This is in line with the stipulations issued by IRDA vide Circular No. IRDA/F&A/013/2005-06 dated 9th June, 2005.
II. Filling up of the Vacancy to the Post of Independent Director on the Board
Clause 5.1 of the CG Guidelines lays down the requirements regarding appointment of a minimum number of independent directors on the Board of Directors of an insurer. These stipulations are in line with Section 48 of Insurance Act, 1938.
All insurers are required to ensure compliance with the stipulations regarding the minimum number of independent directors at all times. In case, the number of independent directors falls below the minimum requirement laid down, the vacancy shall be filled up within a maximum period of 180 days, under intimation to the Authority.
III. Optional Committees
Clause 7 of the CG Guidelines provides for the formation of following three optional committees:
1) Remuneration Committee
2) Nomination Committee
3) Ethics Committee
It is further clarified that though the formation of such Committees is optional, once these are in place, the insurer is required to comply with the requirements on the Role and Responsibilities of such Committees as laid down in the said clause of the CG Guidelines.
Insurers are advised to initiate steps to ensure compliance with respect to such Committees.
These stipulations come into force with immediate effect.
(R. K. Nair)