Insurance Act Flashcards
(39 cards)
What is the lock-in period (restriction period) for the sale or pledge of promoter shares of an insurance company?
Within five years from the date of establishment of the insurance company.
Under what exceptional situations can promoter shares be sold amongst promoters within 5 years of the establishment of an insurance company?
- Arising a special circumstance due to emergence of any obstruction or hindrance in the operation of insurer,
- or a promoter shareholder is included on the blacklist as per prevailing laws.
What constitutes “Special Circumstances” in the context of selling promoter shares within 5 years?
A situation in which:
- Board meeting not conducted for 3 consecutive terms due to lack of quorum,
- or Situation of not reaching into any conclusion arises due to conflict amongst promoters/directors.
What is required to sell or pledge shares by a promoter of an insurance company after 5 years from establishment?
Conditions and limitations shall be as prescribed by NIA.
Under what circumstances is an insurer restricted from declaring and distributing dividends to its shareholders?
- It has not recovered all of its Preliminary expenses and Accumulated losses up to the preceding fiscal year,
- It has not maintained Risk bearing fund or reserve fund as prescribed by this Act and Authority,
- It has not maintained minimum paid up capital pursuant to Section 36,
- It has not maintained the proportion of assets and liabilities pursuant to Section 42,
- The shares set aside for general public are not allotted and fully paid up.
What approval is required before an insurer can declare a dividend?
Prior approval from NIA must be obtained.
Who is required to pay regulatory fees?
Every insurer
What is the rate of regulatory fees payable by an insurer?
0.75% of total premium earned.
What is the rate of regulatory fees for an insurance company operating micro-insurance business?
To the tune of 0.5% of total insurance premium annually earned.
Chairperson - Independent Director?
No. Independent directors cannot be Chairperson.
Family Directors - Limit?
Max 1 director per family in similar insurance businesses.
Director Vacancy Filling (Non-Institutional/Alternate)?
Board of Director until next general meeting.
Director Vacancy - Time Limit to Fill?
35 days.
Director Tenure - Max Years? (Section 48)
4 years.
Director Re-appointment/Re-nomination?
No restriction.
Independent Director Tenure - One Term?
Yes
Independent Director Re-appointment?
Restricted.
Independent Director - Appointed By?
Board of directors.
Independent Director - Qualification?
Qualification and experience as per Section 49.
Independent Director - Appointment Info Furnished Where?
First General Meeting after appointment.
Chairperson Appointment?
Directors appoint from amongst themselves.
Director Appointing Authority - Generally?
General Meeting.
Director Appointing Authority - Before 1st AGM?
Promoters.
Director Appointing Authority - Share held by Govt/Institution etc.?
Institution can appoint directors in proportion to shareholding.
