Amount of payment of remuneration in the form of profit related commission to each of the non-executive director should not exceed the limits specified in the norms on remuneration of non-executive directors and managing director /chief executive officer / whole-time directors of Insurers, as amended from time to time
Hyderabad:
The insurance regulator has issued detailed guidelines on profit related commission to non-executive directors.
Earlier, the IRDAI had simplified the process for appointment/continuation of common directors in insurance companies and had said that “insurers can’t pay any remuneration to nonexecutive directors without its prior approval .
However, insurers are currently permitted to pay sitting fees, as per applicable norms.
As a step towards further simplifying the processes, the IRDAI has now allowed the insurers to pay profit related commission to non-executive director(s) including the non-executive director(s) appointed under section 48A of the Insurance Act, 1938, subject to the following conditions:
-The insurer has reported positive profit after tax for the period for which the said commission is
proposed to be paid,
-the board of the insurer has passed the resolution approving such payment.
-the amount of payment of remuneration in the form of profit related commission to each of the
non-executive director should not exceed the limits specified in the norms on remuneration
of non-executive directors and managing director /chief executive officer / whole-time
directors of Insurers, as amended from time to time.
-Disclosures with regard to said payment should be made in the financial statements for the respective financial year,