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ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has decided to impose new conditions on the insurance companies for appointment of their chief executive or principal officers or directors.

The SECP has issued S.R.O. 369(I)/2022 to amend the Insurance Companies (Sound and Prudent Management) Regulations, 2012 here on Friday.

According to the new conditions, the chief executive or the principal officer of an insurer shall be full time employee of the insurer. No insurer shall appoint a person as its chief executive or principal officer or director who does not comply with the fit and proper criteria provided in these regulations and without prior approval of the Commission. (1B) An insurer shall follow the following procedure for obtaining approval for appointment or re-appointment or any change of its directors or chief executive or principal officer.

An insurer shall monitor whether any change in the status of its chief executive, directors and key executives is contrary to the requirements of these Regulations. In case of any change in status results in non-compliance with the fit and proper criteria, the insurer shall immediately stop the person from performing his assigned functions, inform the Commission and initiate the process for replacement of the individual with a fit and proper individual, SECP said.

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The SECP’s draft rules said that an insurer shall follow the following procedure for obtaining approval for appointment or re-appointment or any change of its directors or chief executive or principal officer: (a) in the case of election of directors in the annual general meeting or the extraordinary general meeting, the insurer shall 10 days before the date of the general meeting, in which the election of directors are to be held, submit application for the persons seeking to contest the elections whether they are retiring directors or otherwise; (b) within ten days from the date of appointment of the chief executive or principal officer by the board of directors, the insurer shall submit an application for appointment or reappointment of the chief executive or principal officer; (c) in case of occurrence of any casual vacancy in respect of a director or chief executive or principal officer, the insurer shall submit an application within 10 days of the appointment of the director or chief executive or principal officer by the board of directors; (d) in case the board of directors of an insurer decide to remove its chief executive or principal officer before the expiration of his term of office or the chief executive or principal officer decides to tender his resignation before the completion of his term of office, the insurer shall immediately inform the Commission along with reasons for the same; (e) in the case where appointment of chief executive or principal officer or nomination of director on the board of directors of an insurer is made by the Federal Government, the insurer shall submit application within 10 days of the appointment or nomination, as the case may be, by the Federal Government in this regard.

Provided that the insurer shall, prior to the appointment or nomination, as the case may be, by the Federal Government, directly or through the concerned ministry, seek clearance from the Commission under these Regulations on the fitness and propriety of the proposed persons. (f) any deficiency or shortcoming in the information or documents submitted by the insurer to the Commission shall be rectified by the insurer within 14 days of the issue of the letter by the Commission informing the insurer of the deficiency or shortcoming, SECP added.

Copyright Business Recorder, 2022

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