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CS Professional · Banking and Insurance - Laws and Practice · Concept of Insurance

Mr. Deshpande was a director of Konkan General Insurance Ltd. and also an insurance intermediary when the Insurance Laws (Amendment) Act, 2015 (5 of 2015) commenced. No permission was sought from the Authority. Under the Section 48A provisos, what is the position?

Mr. Deshpande was protected only for six months from commencement of the 2015 Amendment Act. After that period expired, Section 48A made him ineligible to remain a director, unless the Authority permitted it under the second proviso on conditions. Prior service gave no indefinite protection.

  1. AHe could continue as director indefinitely, as he held office before commencement
  2. BHe ceased to be eligible immediately on commencement
  3. CHe needed shareholder ratification within one year of commencement
  4. DHe did not become ineligible by reason of the section until six months from the date of commencement expired, after which he could not remain without the Authority's permissionCorrect

Explanation

The first proviso to Section 48A protects a director holding office at commencement of the 2015 Act until the expiry of six months from commencement. After that, the bar on remaining a director applies, unless the Authority permits under the second proviso. Indefinite continuation and immediate ineligibility are both wrong.

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