Insurance Act 2079

Chapter- 13 Problematic Insurer

Section 102: Measures For the Reformation of Problematic Insurer
1) Notwithstanding anything contained elsewhere in the existing laws, the Authority shall give any of the following orders prescribing the period for the reformation of the insurer being problematic pursuant to Section 101:
(a) To increase capital, cause to issue the new shares or cause to make payment of amount instead of the shares remaining as unpaid within the prescribed period,
(b) To prohibit the distribution of the dividend to be paid to the shareholders for a fixed period or cause to issue bonus shares in instead of dividend including the dividend prohibited for distribution,
(c) To determine limitation for a fixed period on the payment of remuneration, privileges to be made to the directors, chief executive or payment of any other amount,
(d) To determine the new limitation on the management expenses of the insurer,
(e) To fulfil liability of the insurer by selling any property of the insurer,
(f) To make restrictions to extend the branches or cause to make merge or cause to make close existing all branches
(g) To cause a decrease in  the paid-up capital of the insurer,
(h) To prohibit operating any or all types of insurance business allowed to perform under this Act for a fixed period,
(i) cause to reduce the number of board of directors, executives or employees within the period prescribed or cause to make changes  or reconstitute the board of directors,
(j) To suspend rights and authorities of shareholders of the insurer or prohibit to transferring shares of such shareholders or cause to make other shareholders or the insurer itself buy out the share of such shareholders or cause to sell to another person or organisation,
(k) In case the insurer is registered as a listed company, write to remove such insurer from the stock market to prevent any activities against the interest of the general public,
(l) To perform or cause to perform other appropriate actions as deemed reasonable by the Authority to make the insurer competent from financial and managerial point of view.
2) Notwithstanding anything contained elsewhere in the existing laws, if the insurer does not reduce the directors, executives or employees within the period prescribed pursuant to clause (i) of sub-section (1), the Authority itself may remove such directors, executives or employees.
3) In case the financial or managerial condition of the insurer could not be improved within the period provided by the Authority to adopt the remedial measures pursuant to sub-section (1), the insurer shall be provided with a notice of thirty days to submit clarification with evidences if there is any reason for not taking the insurer under control.
4) If the explanation submitted by the insurer within the time limit given pursuant to sub-section (3) is found to be reasonable, the Authority may grant the insurer a maximum period of six months to make the desired improvements.
5) If the insurer being failure to make expected improvement even within the period pursuant to sub- section (4), the Authority shall form a Special Administration Team (SAT) pursuant to Section 103 and take operation and management in its control either by suspending or not suspending the Board of directors.