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

Rohan Mehta is a licensed insurance agent who is invited to join the board of Sahyadri Life Insurance Ltd. as a director. Under the Insurance Act, 1938, what is the legal position on his eligibility?

Rohan, as an insurance agent, is ineligible to be a director of an insurance company under Section 48A. The only exception is where the Authority permits it subject to conditions or restrictions protecting policyholders or avoiding conflict of interest. Shareholder approval does not cure the bar.

  1. AHe is eligible, because only insurance surveyors are barred from directorship
  2. BHe is ineligible to be a director, unless the Authority permits it on conditions to protect policyholders or avoid conflict of interestCorrect
  3. CHe is eligible if he surrenders his agency commission for the first year
  4. DHe is eligible if the shareholders pass a special resolution approving him

Explanation

Section 48A says no insurance agent or intermediary or insurance intermediary is eligible to be or remain a director in an insurance company. The second proviso lets the Authority permit it subject to conditions or restrictions. A shareholder resolution or a commission waiver cannot override this bar.

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