Duty of Due Care - determines the manner in which directors should carry out their responsibilities. Failure to uphold the set stipulations may constitute a breach of the fiduciary duty of care of expected directors. Duty of loyalty- requires directors to refrain from pursuing their own interests over the interests of the company. Breach of loyalty can occur even in the absence of conflicts of interest if directors consciously disregard their duties to the company and its shareowners.Duty of Good Faith – Its an important of directors fiduciary obligations, and any irresponsible, reckless, irrational or disingenuous behaviors or conduct can breach that fiduciary duty. Duty to promote success – directors should act in a good faith and promote the success of the company to benefit of its shareholders and other stakeholders. Includes: approving the establishment of strategic goals, objectives and policies that promote enduring shareholders value as well as protect existing value. Duty to avoid conflicts of interests - potential conflict of interest may occur when director: receives a gift from a third party he is doing business with, either directly or indirectly enters into a transaction or arrangement with that company, obtains substantial loans from the company, or engages in backdated stock options. Duty to exercise diligence, judgment, and skill- directors should be knowledgeable about the companies’ business and affairs, continuously update their understanding of the company activities and performance, and use reasonable diligence and independent judgment in making decisions.
The role of board members is to make policy for the organization, set mission, vision, elect and sustain senior executives. There is only one member from staff who deploys the BOD matters into orgn. If other members also start to act as staff, the morale of exixting staff goes down and there will occur a problem of employee turnoverBoard meeting should be held at a regular interval with proper minuting. Un necessary too many board meeting and too few board meeting is not a reflection of good governance. I has to be made with proper agenda on a regular time basis.There are different sub committee in Bod like finance committee, operation, committee, research committee, etc,. Especially in the bod with small Bod numbers, committee are formed with small member size. And the assignment handled by small committee adds no value to the organization and director cant make decision by that report. It’s just a wastage of committee time and effort.Selection of board members is an investment on company’s future. Selection of board members should not based upon the relation and friendliness because it shape the orgnal future. So proper care should be made in selecting the members.Before making any decision, board should carefully inspect the financial impact on the organization. This is the reason why finance is important in an organization.
Previoiously, life and non life insurance policies used to
Corporate governance and board governance system
Corporate Governance and Board
Functions of Insurance Board
To provide necessary suggestions to the Government of
Nepal to frame the Policy regarding to
systematize, regularize, develop and regulate the Insurance
To frame a policy for the investment of the amount
received from the insurance and to prescribe the priority
To register and renew the Insurer, Insurance
Agent, Surveyor and Broker and to cancel or cause to cancel
To arbitrate in the dispute arises between the
Insurer and the Insured.
To make decision on the complaints filed by the
Insured against the Insurer regarding to the
settlement of liability of the Insurance.
To issue necessary directives to the Insurer from
time to time regarding to the Insurance Business.
To formulate necessary basis for the protection of interests
of the Insured, and
To do or cause to do other necessary functions regarding to
the Insurance business.
Roles of BOD
Representatives of shareholders
Align the responsibilities of shareholders with
Defining company’s mission and goal
Appointment of senior management
Approve major corporate moves
Approve dividends and other financial matters.
Responsible for company’s business affairs and
Duties of BOD
The duty of care
The duty of loyalty
The duty of good faith
The duty to promote success
The duty to avoid conflict of interest
Duty to exercise diligence, judgment, and skill
Problems arising from ineffective Board
Board members assuming staff responsibilities
Unstructured board meeting
Weak board committee
Haphazard selection of new board members
Ignoring the financial implication of decisions
Cases Related to Board Governance of Insurance
industry of Nepal
Separation of life and non life Insurance Companies.
One person representing BOD of multiple Insurance
Advance payment against the insurance claimed by
Himalayan Snacks and Noodles.