KATHMANDU, JUL 22 -
The Insurance Board (IB) is all set to prohibit directors and promoters with larger stakes in insurance companies from getting insurance coverage from their own companies for their business es and property.
The regulator will put in place the provision through the ‘good governance’ guideline which it plans to issue shortly.
A senior IB official said the move came after some directors and promoters were found getting insurance coverage for their business es from their own company without paying premiums. “They were also found taking away huge claims for minor damages,” said the official.
IB will set a certain shareholding percentage mark, and promoters/directors owing shares above the mark cannot get insurance coverage from their companies. The guideline will also remove the post of executive chairman, managing director and executive director in insurance companies. “Presence of these posts created governance-related problems as a single person is all powerful and has the authority to run day-to-day business ,” said the official.
The Nepal Rastra Bank (NRB) has also banned the appointment of executive chairman in banks and financial institutions, given most of the financial institutions that faced trouble were managed by executive chairmen.
The IB’s guideline will also ban directors from taking membership of multiple sub-committees within the board. NRB has also banned banks and financial institutions from creating more than three sub-committees — risk management, audit and staff management — and each of the sub-committees should be led by non-executive board members; the chairman of the board cannot get involved in the panels; and the coordinator of a sub-committee cannot head another.
IB will also cap the salary of chief executive officers of insurance companies, keeping a certain range between the salary of the lowest ranking employees and the CEO. It will also fix the qualification of CEO. “For this, we are planning to ban promoters or anybody having 1-2 percent stake in the company from becoming CEO,” he said.
Source: The Kathmandu Post
The Insurance Board (IB) is all set to prohibit directors and promoters with larger stakes in insurance companies from getting insurance coverage from their own companies for their business es and property.
The regulator will put in place the provision through the ‘good governance’ guideline which it plans to issue shortly.
A senior IB official said the move came after some directors and promoters were found getting insurance coverage for their business es from their own company without paying premiums. “They were also found taking away huge claims for minor damages,” said the official.
IB will set a certain shareholding percentage mark, and promoters/directors owing shares above the mark cannot get insurance coverage from their companies. The guideline will also remove the post of executive chairman, managing director and executive director in insurance companies. “Presence of these posts created governance-related problems as a single person is all powerful and has the authority to run day-to-day business ,” said the official.
The Nepal Rastra Bank (NRB) has also banned the appointment of executive chairman in banks and financial institutions, given most of the financial institutions that faced trouble were managed by executive chairmen.
The IB’s guideline will also ban directors from taking membership of multiple sub-committees within the board. NRB has also banned banks and financial institutions from creating more than three sub-committees — risk management, audit and staff management — and each of the sub-committees should be led by non-executive board members; the chairman of the board cannot get involved in the panels; and the coordinator of a sub-committee cannot head another.
IB will also cap the salary of chief executive officers of insurance companies, keeping a certain range between the salary of the lowest ranking employees and the CEO. It will also fix the qualification of CEO. “For this, we are planning to ban promoters or anybody having 1-2 percent stake in the company from becoming CEO,” he said.
Source: The Kathmandu Post
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