IRDAI Order dated 23.7.2024 – Stock Options – Non-Executive Director – Prior approval
On 26.4.2012, the Care Health Insurance Ltd (Religare Health Insurance Co Ltd) was given registration for health insurance business as per Section 3 of the Insurance Act, 1938.
Section 48A of the Act requires permission of the Authority for new appointment or continuation of appointment of Common / Nominee Director(s) representing insurance agent or intermediary or insurance intermediary on the Board of the Insurer. Moreover, no remuneration is payable to Non-executive Director without prior approval of the Authority.
On 18.9.2019, approval to Dr. Rashmi Saluja as Common Director and further approval was given on 28.1.2022 on the condition that prior approval of Authority should be taken for remuneration.
On 31.12.2021, CHIL requested for approval to stock options under Employee Stock Options (ESOP) Scheme to Dr.Rashmi Saluja, Non-Executive Chairperson in her capacity as a Non-Executive Director of CHIL.
This was requested dated 10.5.2022 and the request for reconsideration was later withdrawn on 17.5.2022.
On 16.11.2023, a news article was published about Stock Options of 2,2711,327 granted to Dr.Saluja.
HELD that the requirement of prior approval to remuneration to Non-Executive Directors of insurers who are common Directors of Intermediaries cannot be avoided on the grounds of such common Director receiving stock options of Insurer in capacity as a Director / Employee of any other Company.
Penalty of Rs.1 crore is imposed on CHIL and it is directed to revoke stock options. It is further directed not to further allotment is made to Dr.Saluja.
Sections 34, 34E and 102 of the Insurance Act, 1938 read with the Guidelines dated 5.8.2016 on Remuneration of Non-Executive Directors and Managing Director / Chief Executive Officer / Whole- tie Directors of Insurers, 2016 and the IRDAI Circular dated 30.8.2018 on Appointment of Common / Nominee Director (s) on the Board of Insurance Company.
