Approval from the Bank Negara Malaysia (BNM) is required for the appointment of the chief executive officer and directors.
Yes, BNM approval is required for the appointment of directors and the chief executive officer. There is no distinction between an executive director and non-executive director (to the extent that it relates to the approval requirement).
No. There is no distinction between EDs and NEDs presently (to the extent that it relates to the approval requirement). However, there is a requirement that the insurance company must not have more than one ED, unless BNM approves otherwise in writing. Further, the chair of the board must not be an ED.
Yes. The approval of BNM must be obtained prior to the removal or resignation of an independent director. Additionally, BNM must be notified if a director or anybody from senior management (including the chief executive officer) ceases to hold office. There is no distinction between EDs and NEDs (to the extent that it relates to the resignation and removal of EDs and NEDs).
Directors and senior management are subject to fit and proper requirements specified by BNM.
Yes. Candidates must satisfy the fit and proper requirements, which include minimum requirements relating to probity, personal integrity and reputation, meet the competency criteria and fulfill the financial integrity requirements.
Yes. This includes where a director is an active politician, has competing time commitments that impair his/her ability to discharge his/her duties effectively, is an undischarged bankrupt, has suspended payments, has compounded with his/her creditors, has been convicted for criminal offense(s) relating to dishonesty or fraud, is prohibited by a court order from being a director of a company or being involved in the management of a company in Malaysia or has been subject to any form of restrictions or supervision including an order of detention, supervision and deportation under any law relating to prevention of crime, drug trafficking or immigration. A partner of the external auditor of an insurance company and any of its officers directly involved in its engagement are also disqualified from being a director of that insurance company.
Each Malaysian-incorporated insurance company must have two resident directors at all times. Further, a chief executive officer of an insurance company shall have his principal or only place of residence within Malaysia.
Yes. An insurance company is expected to objectively assess the fitness and probity of directors and senior management prior to their appointment. The assessment must be supported by relevant information, which may vary according to the degree of the proposed candidate's influence and responsibilities in the affairs of the insurance company, and should be verified by the insurance company where possible.
There is no distinction in the duties and responsibilities or regulatory treatment for EDs and NEDs.
Directors are responsible for the oversight and supervision of the affairs and policies of an insurance company, and promoting the sustainable growth and financial soundness of an insurance company. The board of directors of an insurance company is also subject to specific corporate governance roles and responsibilities.
Yes, unless it is proven that the breach was committed without their consent or connivance and that they have exercised all such diligence to prevent the commission of the offence as they ought to have exercised, having regard to the nature of their functions in that capacity and to all the circumstances.
Statutory penalties include fines and/or imprisonment, and the quantum of the fine and/or the length of imprisonment varies according to the offense(s) committed.
BNM may also take administrative actions on the directors/senior management, which include written orders of restitution and public reprimands.
Generally, no periodic filings apply to the directors/senior management.
However, ad hoc filings by the insurance company to the registrar of companies or the stock exchange (if the insurance company is listed) may apply where there are changes in relation to the status of the director/senior management in the insurance company.
Additionally, an independent director must disclose to the board any change in the circumstances affecting his status as an independent director, and the board must review the independent director's designation and notify the same to BNM.
Yes. Malaysia-incorporated insurance companies are generally required to have a minimum of two directors.
An insurance company may have only one executive director unless otherwise approved by BNM, and the majority of the board must comprise independent directors.
Yes, an insurance company is required to establish the following board committees:
- Nominations committee – supports the board in the appointment, removal, composition, performance evaluation and
development, and fit and proper assessments of the board, senior management and company secretary - Remuneration committee – supports the board in overseeing the design and operation of the remuneration system, and the
periodic review of the remuneration of directors - Risk management committee – supports the board in meeting the expectations on risk management, implementing risk
management policies, processes and controls of the insurance company, managing the key and emerging risks to the insurance
company, and assisting the implementation of a sound remuneration system. - Audit committee – supports the board in ensuring that there is a reliable and transparent financial reporting process, overseeing
the effectiveness of the internal audit function and/or the external auditor, and monitoring all related-party transactions, chair's statements and compliance with conflict of interest policy
Rules on the composition (for example, the minimum number, qualification and independence) of the various committees apply.
Yes, provided that there is no conflict of interest, appropriate disclosure of any such conflict by the director to the board of directors of the insurance company having been made.