IRDAI notifies CG Regulations, 2024

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Mahak Agarwal | corplaw@vinodkothari.com

Introduction

The Guidelines for Corporate Governance (‘2016 Guidelines’) for insurers in India have been around for close to a decade now. These Guidelines were initially brought as an update to the then 2009 Guidelines for the purpose of aligning the same with the extensive changes to the governance of companies brought about by the Companies Act, 2013. As such, the new Guidelines were framed to be mostly in line with the Act of 2013 except certain provisions such as requiring the CEO to be a WTD of the Board (where the chairman is NED), prescribing fit and proper criteria for directors, requiring certain additional committees, having only profit criteria for CSR applicability, etc.

Through the years, these Guidelines have served as a valuable source of direction in ensuring corporate governance for insurers; laying down guidance for the composition, roles and responsibilities of the Board, functions of various Board Committees, appointment and remuneration of KMPs, disclosures in financial statements, etc.

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What’s new under the IRDAI’s Exposure Draft on Expenses of Management Regulations?

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-Mahak Agarwal, Executive (corplaw@vinodkothari.com)

On 14th November, 2023, the IRDAI released an Exposure Draft EOM Regulations, 2023 (‘Exposure Draft’) which proposes to repeal the following regulations:

  1. Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance Business) Regulations, 2023;
  2. Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting Life Insurance Business) Regulations, 2023 and
  3. Insurance Regulatory and Development Authority of India (Payment of Commission) Regulations, 2023.

The Exposure Draft is seemingly a consolidation of the aforesaid regulations with a few modifications. Further, most of these so-called modifications are essentially in the nature of rephrasing certain statements, for instance, formulation of business plan ‘in advance’ being replaced with ‘prior to commencement of financial year’.

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Entering in FY 23-24: Regulatory review of corporate law developments

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– Payal Agarwal, Deputy Manager (payal@vinodkothari.com)

As the new financial year 23-24 commences, we look back at where we stand at the end of FY 22-23, in terms of the regulatory developments. While there has been no substantial traffic in terms of regulatory developments to the Companies Act, the migration of various forms in MCA’s V3 portal proved to be (and still continues to be so in some cases) a turmoil, with a standstill in the fundraising process, and other practical difficulties, even resulting in levy of additional fines. 

There has been significant traction on the part of SEBI too. While Structured Digital Database (SDD) remained the buzzword for the listed entities with the stock exchanges requiring them to submit quarterly compliance certificates, the stress for proper controls on insider trading remained the focal point. Having stiffed the nerves of the Compliance Officers in the listed entities through the quarterly compliance certificates, the same has been finally absorbed in the annual secretarial compliance reports under the Listing Regulations.

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Guidelines on Information and Cyber Security extended to Insurance Intermediary

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– Kaushal Shah, Executive | kaushal@vinodkothari.com

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IRDA relaxes stringent norms for Common Directors among insurance intermediaries

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– Kaushal Shah, Executive | kaushal@vinodkothari.com

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Our related write-up:

IRDA rolls out conditions for common directorship in insurance company and intermediary – https://vinodkothari.com/2022/09/irda-rolls-out-conditions-for-common-directorship-in-insurance-company-and-intermediary/

Write ups on Corporate Laws – https://vinodkothari.com/category/corporate-laws/

IRDA rolls out conditions for common directorship in insurance company and intermediary

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If compliant, to be regarded as deemed approval under Section 48A of the Insurance Act, 1938.

– Aanchal Kaur Nagpal, Manager & Sharon Pinto, Manager (corplaw@vinodkothari.com)

Insurance relationships are fundamentally built on trust between insurers and their customers. (Insurance and Regulatory Development Authority of India (‘IRDA’) has been quite stringent with respect to curbing instances of conflicts of interest in case of insurance companies and/ or insurance intermediaries.

As per Exposure Draft on IRDAI (Conflict of Interest) Guidelines, 2019[1], “Conflict of Interest” means a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another and includes situations when a person’s impartial and objective performance of duties or decision-making could be jeopardized because of personal interests being involved;

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Increase in FDI Limit in Insurance Companies

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Corplaw Team | corplaw@vinodkothari.com

Amendment in Foreign Exchange Management (NDI) Rules, 2019 effective August 19, 2021- https://egazette.nic.in/WriteReadData/2021/229165.pdf

DPIIT Press Note on June 14, 2021 amending the FDI Policy for Insurance companies which shall be effective from date of FEMA notification – https://dpiit.gov.in/sites/default/files/pn2-2021.pdf

Consequential amendment in Indian Insurance Companies (Foreign Investment) Rules, 2015 are on May 19, 2021 – https://financialservices.gov.in/sites/default/files/Indian%20Insurance%20Companies%20(Foreign%20Investment%20)(amendment)%20Rules,%202021.pdf

Insurance (Amendment) Act, 2021 is passed on March 25, 2021 to increase FDI limit – https://financialservices.gov.in/sites/default/files/Insurance%20(Amendment)%20Act%202021%2025_3_2021.pdf