chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Insurance Act, 2022

22. Audit: (1) The audit of the Authority shall be conducted by the Auditor General.

(2) The Authority shall have its internal audit conducted regularly. 23. Audit Committee: (1) The Board shall form an audit committee, answerable to it, as follows:-

(a) One director designated by the Board - Coordinator

(b) One expert in the relevant subject designated by the Board - Member

(2) The departmental head looking after internal audit of the Authority shall act as the Secretary of the Audit Committee.

(3) Arrangements relating to the functions, duties and powers of the Audit Committee under sub-section (1) shall be as prescribed. Chapter-4

License

24. Not to Carry on or Cause to Carry on Insurance Business without License: (1) No person shall, without obtaining a license under this Act, directly or indirectly carry on or cause to carry on any transaction, business, industry or trade relating to insurance business whether by using words such as insurance, reinsurance, insurance fund or otherwise.

(2) No person shall, in contravention of sub-section (1), carry on any transaction, business, trade or industry relating to insurance business or use words such as insurance, reinsurance, insurance fund in the name of his/her company, firm or organization for any other purpose.

(3) No person shall carry on or cause to carry on insurance-related transactions or insurance business with any company, firm or organization other than an insurer licensed under this Act. 25. Establishment of Insurance Company: (1) A person desiring to conduct insurance business under this Act shall establish an insurance company by registering as a public limited company in accordance with prevailing law.

(2) Notwithstanding anything contained in sub-section (1), an insurance company already established and licensed to carry out insurance business before the commencement of this Act shall not be required to re-establish a company for the same purpose.

(3) A person or his/her single family or a company or organized entity in which a member of his/her single family is a founding shareholder shall not invest in shares exceeding fifteen percent of the paid-up capital of an insurance company to be established under this Section.
Insurance Act, 2022

27. May Refuse to Grant Prior Approval: (1) Notwithstanding anything contained in Section 26, the Authority may refuse to grant prior approval for establishing an insurance company or opening a branch office of a foreign insurance company in any of the following circumstances:-

(a) If the name of the proposed insurance company matches the name of any insurer already registered,

(b) If the name of the proposed insurance company or the insurance business to be carried out by it appears inappropriate or undesirable from the perspective of public interest, morality, decency, religion, caste or community or public order,

(c) If, upon studying the feasibility study report, details, documents and other infrastructure submitted by the applicant, the insurance business market is limited and it cannot be believed that the insurance business can be conducted in a healthy and competitive manner if further insurance companies are licensed,

(d) If the objective of the proposed insurance company appears to be contrary to or against prevailing law,

(e) If documents and details specified by the Authority under Section 26 are not submitted,

(f) If each founder does not agree to take at least ten thousand shares of the proposed insurance company or does not clearly specify the number of shares to be taken,

(g) If the proposed insurance company is not seen to have proposed to maintain paid-up capital under Section 36,

(h) If any founder of the proposed insurance company has been convicted by a court for an offense relating to insurance, banking offense, fraud, forgery, money laundering, corruption, human trafficking, kidnapping or hostage-taking or other offense involving moral turpitude and five years have not elapsed since serving such sentence,

(i) If the proposed insurance company appears to have the objective of conducting other businesses in addition to insurance business,

(j) In circumstances where the grant of prior approval has been prohibited under Section 31,

(k) If any founder of the proposed insurance company or any member of his/her single family has been blacklisted under prevailing law and three years have not elapsed since being released,

(l) If fifteen percent or more of the shares of the capital that the founders of the proposed insurance company have committed to pay immediately are to be owned by a single person, single family, entity or group,

Provided that this provision shall not apply to shares to be taken by the Government of Nepal, Provincial Government or foreign investor.

(m) If he/she or his/her single family has founding shares in any insurer carrying on the same type of insurance business.

(2) Notwithstanding anything contained in sub-section (1), the Authority shall not grant prior approval for establishing any company to carry on more than one type of insurance business, except reinsurance business.

(3) If the Authority refuses to grant prior approval for establishing an insurance company under this Section, it shall give written notice with reasons to the applicant within sixty days of the application.
Insurance Act, 2022

28. Application to be Submitted: (1) If a company established in accordance with prevailing law after obtaining prior approval under Section 26 desires to carry out insurance business, it shall submit an application to the Authority attaching the following details and documents:-

(a) Prior approval given by the Authority for establishing the insurance company,

(b) Copy of the certificate of incorporation of the insurance company,

(c) Copy of the Memorandum of Association and Articles of Association of the insurance company,

(d) If the founder of the insurance company is a company or organized entity, the audit report with tax payment and annual financial statements of such company or organized entity for the last three fiscal years,

(e) Name of the founding shareholders of the founding company or organized entity under clause (d) and details of their single families,

(f) Type of insurance business the insurer intends to carry out,

(g) Class (portfolio) of insurance business the insurer intends to carry out,

(h) Details of infrastructure required to conduct insurance business or a copy of the lease agreement if the building is rented,

(i) Personal details of the Chief Executive and other managerial level officers,

(j) Arrangement regarding insurance risk retention,

(k) Details relating to investment policy, risk rating, claims, reinsurance, information technology,

(l) Draft of proposed insurance policy or, in case of a reinsurance company, proposed reinsurance contract,

(m) Documents evidencing payment of the amount of shares the founders committed to take,

(n) Details relating to the organizational structure of the company,

(o) Regulations relating to remuneration, service conditions and facilities of the company's employees,

(p) Regulations relating to financial administration and procurement of the company,

(q) Other details and documents determined by the Authority.

(2) When a branch office of a foreign insurance company submits an application to conduct insurance business, in addition to the details mentioned in sub-section (1), the following details shall also be attached:-

(a) License granted by the regulatory body of the concerned country to such foreign

40. Catastrophe Fund to be Maintained: (1) An insurer shall maintain a separate catastrophe fund to bear future losses arising from catastrophic events.

(2) Other provisions relating to the catastrophe fund shall be as determined by the Authority. 41.
Insurance Act, 2022

Catastrophe Fund to be Maintained: (1) An insurer shall maintain a separate catastrophe fund to bear future losses arising from catastrophic events.

(2) Other provisions relating to the catastrophe fund shall be as determined by the Authority. 41. Claim Payment Fund and Reserve Fund: (1) An insurer shall establish a claim payment fund and a reserve fund and shall deposit the following amounts in such fund:

(a) Amount of liability on account of claims that could not be paid within the specified period (outstanding claims),

(b) Amount of liability for insurance claims where an event has occurred in relation to the property and liability insured by the insurer but has not been reported to the insurer (incurred but not reported) or insufficient information has been provided (incurred but not enough reported),

(c) Amount of liability on account of unexpired risk of the insurer (unexpired risk reserve).

(2) Other provisions relating to the fund under sub-section (1) and the amount to be deposited in such fund shall be as determined by the Authority. 42. Assets to Exceed Liabilities: (1) The total assets of an insurer shall be more than the total liabilities.

(2) For the purpose of sub-section (1), the ratio of total assets to total liabilities (solvency margin) of any insurer shall be as determined by the Authority.

(3) An insurer or a branch office of a foreign insurance company engaged in the insurance business at the time of commencement of this Act shall maintain the ratio of assets to liabilities (solvency margin) under sub-section (2) within the period specified by the Authority.

(4) For the purpose of this section, the valuation of the total assets and total liabilities of an insurer shall be made as specified. 43. Restriction on Distribution of Dividends: (1) Notwithstanding anything contained in the prevailing law, an insurer shall not declare and distribute dividends to its shareholders in the following circumstances:

(a) Until provision has been made for all its preliminary expenses, losses up to the previous financial year, and the fund or reserve fund required to be maintained for bearing risks as determined by this Act and the Authority,

(b) Until the minimum paid-up capital required to be maintained under section 36 is fulfilled,

(c) Until the ratio of assets and liabilities under section 42 is maintained,

(d) Until the shares allocated to the general public are distributed and the full paid-up capital is paid.

(2) An insurer shall obtain the approval of the Authority as specified before declaring dividends in accordance with the prevailing law. 44. Allocation of Shares: (1) An insurer shall set aside at least thirty percent of its total issued capital for sale to the general public.
Insurance Act, 2022

44. Allocation of Shares: (1) An insurer shall set aside at least thirty percent of its total issued capital for sale to the general public. Provided that an insurer registered as a branch office of a foreign insurance company shall not issue and sell shares.

(2) The insurer may set aside up to five percent of the shares allocated to the general public under sub-section (1) for its employees.

(3) With the approval of the Authority, the insurer may convert the remaining portion into a general public share group, keeping the ownership of the promoter share group not less than fifty-one percent.

(4) Notwithstanding anything contained elsewhere in this section, the provisions relating to shares of an insurer established under the ownership of the Government of Nepal or a Provincial Government shall be as determined by the Government of Nepal.

(5) Other provisions relating to the allocation, sale, and distribution of shares of an insurer shall be in accordance with the prevailing federal law on securities. 45. Prospectus and Share Issuance: (1) An insurer shall submit to the Authority a prospectus approved by the Nepal Securities Board in accordance with the prevailing law before making a public issuance of securities.

(2) Unless the prospectus is submitted under sub-section (1), such insurer or any person on its behalf shall not publish such prospectus.

(3) The Authority shall not register such prospectus until written information that the Nepal Securities Board has granted approval to the prospectus under sub-section (1) is received by the Authority.

(4) An insurer may issue shares to the general public only after the completion of one year from the commencement of the insurance business. When issuing shares in this manner, the audit of the latest year must have been completed.

(5) Notwithstanding anything contained in the prevailing law, when an insurer calls for applications for the purchase of shares from the general public, it shall demand one hundred percent of the face value of the shares. 46. Prohibition on Selling, Mortgaging, or Transferring Rights: (1) A promoter of an insurer shall not sell, mortgage, or in any way transfer the rights of promoter shares until five years have elapsed from the establishment of the insurance company.
Insurance Act, 2022

46. Prohibition on Selling, Mortgaging, or Transferring Rights: (1) A promoter of an insurer shall not sell, mortgage, or in any way transfer the rights of promoter shares until five years have elapsed from the establishment of the insurance company. Provided that if, before the commencement of this Act, any person has taken shares of any insurer in excess of the number mentioned in this Act, such person shall sell and distribute such excess shares within two years of the commencement of this Act.

(2) Notwithstanding anything contained in sub-section (1), if an obstacle or disruption occurs in the operation of an insurer and a special situation arises, or if a promoter is blacklisted under the prevailing law, shares may be purchased and sold among promoters with the approval of the Authority. Explanation: For the purpose of this sub-section, "special situation" shall be understood to mean a situation where a meeting of the board of directors cannot be held for three consecutive times due to a lack of a quorum, or where no decision can be reached due to a dispute among directors.

(3) Provisions relating to the conditions and restrictions for mortgaging or selling and distributing shares held in the name of a promoter of an insurer after the completion of five years shall be as determined by the Authority.

(4) While holding such office or within one year from the date of retirement from such office, the chief executive, auditor, employee, company secretary, or a person directly involved in the management and accounting work of an insurer shall not purchase or sell, cause to purchase or sell, mortgage, cause to mortgage, give or take donations, transfer, or transact shares of the concerned insurer or its subsidiary company in their own name, in the name of a member of their immediate family, any other person with a financial interest, or a firm, company, or institution under the control of such person, or to another person. Provided that this sub-section shall not be deemed to prevent the purchase, sale, or transfer of shares when bonus shares, rights shares, shares allocated to employees, or new shares are issued, when one insurer acquires another insurer, merges, amalgamates, or when an insurance business is transferred under Chapter-14, or when implementing a directive of the Authority.

(5) The purchase, sale, and other arrangements of shares of an insurer shall be in accordance with the prevailing law. Chapter-6

Board of Directors and Chief Executive

47.
Insurance Act, 2022

Chapter-6

Board of Directors and Chief Executive

47. Formation of Board of Directors: (1) Notwithstanding anything contained in the prevailing law, the board of directors of an insurer shall consist of at least five and at most seven directors, including one independent director.

(2) The directors under sub-section (1) shall be appointed by the general meeting of the insurer. Provided that,

(a) Until the first annual general meeting of the insurer, directors shall be appointed by the promoters.

(b) If the position of a director, other than a director representing an institutional representation or an alternate director, becomes vacant before the annual general meeting, the board of directors of the insurer may appoint a director for the period until the next general meeting.

(c) In the case of an insurer in which the Government of Nepal, a Provincial Government, any insurer, any organized institution, company, or foreign insurer has taken shares, the Government of Nepal, Provincial Government, or such institution may appoint directors in proportion to the number of shares it has taken, and while appointing directors in this manner, alternate directors shall also be appointed who can act in the absence of the director.

(3) More than one person from the same immediate family shall not be a director of the same insurer or of insurers of the same type.

(4) The board of directors shall appoint at least one independent director from among persons having the qualifications and experience under section 49 and shall provide information thereof at the first general meeting held after such appointment.

(5) The directors shall elect a chairperson of the board of directors by a majority of themselves. Provided that an independent director shall not be the chairperson of the board of directors.

(6) A person appointed as chairperson of the board of directors shall take an oath of office and secrecy in the format as per the schedule before the chairperson of the Authority, and a person appointed as a member of the board of directors shall take an oath of office and secrecy before the chairperson of the board of directors before assuming office as a director.

(7) If the position of a director becomes vacant for any reason, the board of directors shall, within thirty-five days, appoint a director to such vacant position for the period until the next general meeting. 48. Term of Office of Director: The term of office of a director shall be a maximum of four years, and they may be reappointed or renominated. Provided that an independent director may be appointed for only one term. 49.
Insurance Act, 2022

48. Term of Office of Director: The term of office of a director shall be a maximum of four years, and they may be reappointed or renominated. Provided that an independent director may be appointed for only one term. 49. Qualification of Director: (1) The following person shall be qualified to be appointed as a director of an insurer:

(a) Has worked for at least five years as a director or officer level of a foreign or domestic insurer, bank or financial institution, or an organized institution in a related field, or at the officer level of government service or an organized institution,

(b) Has obtained a postgraduate degree in any subject and has worked for at least three years as a director or officer level of a foreign or domestic insurance, bank or financial institution, or an organized institution in a related field, or at the officer level of government service or an organized institution,

(c) Has completed chartered accountancy or has obtained a master's degree in insurance, monetary, banking, financial, commerce, management, public administration, statistics, mathematics, economics, or commercial law.

(2) Notwithstanding anything contained in sub-section (1), a person who has obtained a master's degree or equivalent in insurance, monetary, banking, financial, commerce, management, public administration, statistics, mathematics, economics, or commercial law and has at least five years of experience at the director or managerial level of a domestic or foreign insurer or an organized institution in a related field shall be qualified to be appointed as an independent director of an insurer. Provided that a director, a member of the immediate family of a director, auditor, consultant, fundamental shareholder of the insurer, or a person having a financial interest with the insurer shall not be an independent director. 50.
Insurance Act, 2022

Provided that a director, a member of the immediate family of a director, auditor, consultant, fundamental shareholder of the insurer, or a person having a financial interest with the insurer shall not be an independent director. 50. Disqualification of Director: The following person shall be disqualified from being elected or nominated to the position of director:

(a) Has not completed the age of 25 years,

(b) Is unable to serve as a director due to physical or mental illness,

(c) Is in a state of insolvency under the prevailing law,

(d) Has been blacklisted under the prevailing law and three years have not elapsed since the date of removal from the blacklist,

(e) Is a director of an insurer, bank or financial institution, or any type of deposit-collecting organized institution, or a current director or employee who has taken fundamental shares of the promoter group of any other insurer,

(f) Is a current auditor or consultant of the concerned insurer, or a person, institution, firm, or company that is a partner in any contract or lease with the insurer or has a private interest,

(g) Has obtained membership of the securities market to act as a securities dealer, or is a merchant banker,

(h) Is serving as a director of another insurer,

(i) Is disqualified under the articles of association of the concerned insurer from being a director due to share ownership,

(j) Has not taken the minimum number of shares required to become a director,

(k) Holds a public office or is a current employee of the Government of Nepal, or an institution, authority, board, insurer, bank, or financial institution owned by the Government of Nepal,

Provided that this provision shall not be deemed to prevent the Government of Nepal, a Provincial Government, or an institution owned by the Government of Nepal from nominating a director in a different type of insurer whose shares it has purchased.

(l) Has not paid taxes due under the prevailing law,

(m) Has been convicted by a court in Nepal or a foreign country on charges of theft, fraud, forgery, cheating, corruption, any criminal offense involving moral turpitude, or offenses related to insurance, banking, or money laundering, and five years have not elapsed since the completion of the sentence,

(n) Has been penalized by a regulatory body under the prevailing law for acting contrary to the law, or five years have not elapsed since such action,

(o) Has unpaid imprisonment or fines imposed by a court order, or has outstanding government dues,

(p) Has not completed three years from the date of action taken by the Authority for failing to comply with the Authority's directives. 51.
Insurance Act, 2022

51. Circumstances for Director Not to Remain in Office: (1) A person shall not remain in the position of director of an insurer in the following circumstances:

(a) If disqualified from holding the position of director under section 50,

(b) If a proposal submitted to the general meeting by at least fifty-one percent of the shareholders of the group the director represents in the board of directors to remove the director from office is passed by a majority,

Explanation: For the purpose of this section, "group" shall be understood to mean the group of promoters and general public shareholders.

(c) If the resignation submitted by the director from their position is accepted,

(d) If the Authority directs the removal of a director on the grounds that such director is disqualified from holding the position and performing the functions of director of the insurer due to acting against the interests of the insurer or the insured.

(2) If the insurer believes that any of its directors is disqualified from remaining in office due to acting contrary to this Act, the regulations made under this Act, or the directives of the Authority, or if a director ceases to hold such office, the insurer shall provide written information thereof to the Authority within fifteen days.

(3) If the Authority is informed in writing under sub-section (2) that a director is disqualified from remaining in that office, the Authority may conduct necessary inquiries and direct the insurer to remove such director from office. 52. Meeting of Board of Directors: (1) The meeting of the board of directors shall be held at least six times a year.
Insurance Act, 2022

52. Meeting of Board of Directors: (1) The meeting of the board of directors shall be held at least six times a year. Provided that the interval between two meetings shall not exceed two months.

(2) If at least one-fourth of the directors make a written request, the chairperson of the board of directors shall call a meeting of the board of directors at any time.

(3) The meeting of the board of directors shall be held at the place, date, and time specified by the chairperson.

(4) The chairperson shall preside over the meeting of the board of directors, and in their absence, the senior-most director shall preside over the meeting.

(5) A meeting of the board of directors shall not be held without at least fifty-one percent of the total number of directors being present.

(6) The decision of the majority in a meeting of the board of directors shall be valid, and if the votes are equal, the member presiding over the meeting shall cast the deciding vote.

(7) The names of directors present, the subjects discussed, and the decisions of the meeting (minutes) in a meeting of the board of directors shall be recorded in a separate book, and all directors present at the meeting shall sign the said decision. Provided that if a director wishes to record a dissenting opinion on a decision of the board of directors, such dissenting opinion may be signed by them and recorded.

(8) If any subject in which a director has an interest is to be discussed in a meeting of the board of directors or any other sub-committee, information of that shall be provided to the meeting, and such director shall not participate in that meeting.

(9) The board of directors may obtain necessary opinions and advice from an expert on the subject scheduled for discussion in the meeting.

(10) A director shall receive meeting allowances and other facilities as determined by the general meeting, subject to the directives issued by the Authority, for attending meetings. 53.
Insurance Act, 2022

53. Functions, Duties, and Powers of Board of Directors: (1) Subject to this Act, the rules or regulations made under this Act, the directives, orders, memorandum, articles of association, and other prevailing laws, all functions, duties, and powers of the insurer, except those performed by the general meeting of the insurer, shall vest in the board of directors of the insurer.

(2) It shall be the duty of the board of directors to manage the overall risk of the insurer, conduct the insurance business in the interest of the insured and general public shareholders, maintain corporate governance, and ensure non-interference in the day-to-day operations.

(3) Other functions, duties, and powers of the board of directors shall be as follows:

(a) To make and implement necessary regulations, directives, and procedures subject to this Act, or the rules, regulations, directives, orders, memorandum, articles of association, and prevailing laws made under this Act,

(b) To formulate and implement or cause to implement policies and plans on risk assessment, management, insurance claim payment, asset and liability management, budget, planning, and other necessary subjects of the insurer,

(c) To approve and implement or cause to implement necessary policies and standards in accordance with the directives of the Authority relating to the operation of the insurance business,

(d) To cause to maintain the paid-up capital, insurance fund, and other current and fixed assets of the insurer as determined by the Authority,

(e) To regularly monitor and analyze the policies adopted by the insurer and give necessary directions to the management,

(f) To present the audit report along with the annual report of the insurer to the general meeting,

(g) To perform or cause to perform functions as specified by the Authority from time to time. 54. May Form Committee or Sub-Committee: (1) Except for functions explicitly stated to be performed by a particular body or office bearer in this Act, the board of directors may, for a specific purpose, form other committees or sub-committees as necessary, subject to the directives of the Authority.

(2) The functions, duties, and powers of a committee or sub-committee formed under sub-section (1), and the procedure for its meetings, shall be as determined by the board of directors. 55. Delegation of Authority: The board of directors may delegate some of its powers to any director, committee or sub-committee under section 54, chief executive, or person acting as the chief executive of the insurer, subject to this Act, the regulations made under this Act, and the memorandum and articles of association of the insurer. Provided that managerial authority shall not be delegated to a director. 56.
Insurance Act, 2022

58. Functions, Duties, and Powers of the Chief Executive: (1) It shall be the duty of the chief executive to perform the daily, commercial, and administrative functions of the insurer in accordance with the policies approved by the board of directors, the directives given by the Authority, and the prevailing law.

(2) The functions, duties, and powers of the chief executive of the insurer shall be as follows, subject to the authority delegated by the board of directors:

(a) To exercise the powers conferred by the board of directors, implement the decisions of the board of directors, and oversee and control the work, activities, and transactions of the insurer, subject to the memorandum and articles of association,

(b) To prepare the annual budget and work plan of the insurer and submit them to the board of directors for approval,

(c) To manage the necessary human resources, subject to the employee regulations of the insurer,

(d) To implement or cause to implement the decisions made by the general meeting and the board of directors,

(e) To operate the institution in accordance with this Act or the directives of the Authority and ensure effective internal control and risk management of the institution,

(f) To submit reports, statements, documents, and decisions that the insurer is required to submit to the Authority or other bodies, subject to this Act, or the rules, regulations, directives or orders made under this Act, memorandum, and articles of association, in a timely manner.

(3) The chief executive shall be responsible to the board of directors for their work. 59. Management or Technical Service Agreement: (1) An insurer may enter into a management or technical service agreement with any domestic person or foreign organized institution with the prior approval of the Authority.

(2) Before entering into an agreement under sub-section (1), the draft of such agreement shall be submitted to the Authority for approval.

(3) Other provisions relating to management or technical service agreements or expert services shall be as specified. 60. May Formulate Whistleblower Policy: (1) An insurer may formulate and implement a whistleblower policy to confidentially report irregularities or potential irregularities committed or likely to be committed by the management, office bearers, or employees of the insurer in relation to compliance with this Act, the rules, regulations, and directives issued under this Act.

(2) The board of directors of the concerned insurer shall have the duty to protect the professional security of a person who confidentially reports irregularities committed by the chief executive, office bearers, auditors, consultants, employees, or insurance intermediaries of the insurer under sub-section (1). Chapter-7

Operation of Insurance Business

61.
Insurance Act, 2022

Chapter-7

Operation of Insurance Business

61. Types of Insurance Business: (1) The types of insurance business shall be as follows:

(a) Life insurance business,

(b) Non-life insurance business, and

(c) Reinsurance business.

(2) An insurer conducting life insurance business may conduct life insurance business of the type (portfolio) as specified, subject to the license.

(3) An insurer conducting non-life insurance business may conduct non-life insurance business of the type (portfolio) as specified, subject to the license.

(4) The type of business to be conducted by an insurer conducting reinsurance business shall be as determined by the Authority. 62. Insurance Contract: (1) An insurance contract shall be in writing.

(2) The proposal made by the insured for insurance, the policy, its schedules, and the confirmations issued in relation thereto shall be considered integral parts of the insurance contract.

(3) When entering into an insurance contract, the insurer and the insured shall clearly inform each other of factual information regarding the proposed risk in good faith.

(4) An insurable interest in the subject matter of the insurance must exist at the time of the proposal for insurance.

(5) Other provisions relating to the insurance contract shall be as specified. 63. Insurance Policy: (1) An insurer shall issue an insurance policy as approved by the Authority.

(2) After the issuance of the insurance policy, it shall be deemed that an insurance contract has been concluded between the insurer and the insured regarding the matters mentioned in the policy, and the terms of such contract shall be binding on both parties.

(3) The insurer shall not raise any question regarding a matter not disclosed by the insured at the time of making the insurance proposal after one year from the date of issuance of the insurance policy.

(4) Notwithstanding anything contained in sub-section (3), if it is confirmed that an insured has maliciously concealed a material fact relating to the risk or provided false information after the issuance of the insurance policy, the insurer may at any time direct the insured to correct such information or stop any benefits receivable by the insured.

(5) An insured may transfer the rights of a life insurance policy to another person as specified.

(6) Other provisions relating to the insurance policy shall be as determined by the Authority. 64.
Insurance Act, 2022

64. Premium: (1) An insurer shall calculate the premium based on the insurance rates as determined by the Authority.

(2) An insurer shall not issue an insurance policy without receiving the full premium.

(3) Notwithstanding anything contained in sub-section (2), if a lump sum payment has not been made for some reason, the premium shall be deemed received if a policy is issued on the guarantee of a bank or the Government of Nepal, specifying the period for payment. Provided that a policy shall not be issued on a bank guarantee for a period longer than thirty days.

(4) Notwithstanding anything contained elsewhere in this section, in the case of life insurance, there shall be no bar to issuing a policy by receiving premium in installments, or in the case of any specified non-life insurance, by receiving partial payment.

(5) If the premium is not received by the insurer in time from a person or institution responsible for collecting and paying the premium to the insurer, the insurer shall provide information thereof to the insured.

(6) Other provisions relating to insurance rates and premiums shall be as specified by the Authority. 65. Co-Insurance Fund: The Authority may establish or cause to establish a co-insurance fund (insurance pool) for an insurer to bear the liability of a specific risk group under the insurance business. 66. Prohibition on Insurance: (1) Notwithstanding anything contained elsewhere in this Act, an insurer shall not insure any property or liability of the following persons or institutions:

(a) The liability borne by the insurer itself,

(b) The insurer's own fundamental shareholders, directors, consultants, auditors, employees, or a member of their immediate family,

(c) Fundamental shareholders or a member of their immediate family,

(d) A firm, company, or institution that has the right to nominate or appoint a director of the insurer,

(e) Any firm, company, or institution in which a director of the insurer has a financial interest, or for which a director, managing agent, or partner of the insurer serves as a director, managing agent, or partner, or a fundamental shareholder or member of their immediate family. Provided that an insurer conducting life insurance business shall not be prevented from insuring the persons mentioned in this sub-section, subject to the terms and limits of the insurance sum determined by the Authority.

(2) Notwithstanding anything contained elsewhere in this section, the provision mentioned in sub-section (1) shall not apply to insurance of property or liability owned by the Government of Nepal. 67.
Insurance Act, 2022

67. Prohibition on Joint Business or Pooling of Assets: (1) An insurer shall not engage in any business in partnership or pool assets with its director, director's immediate family, fundamental shareholders, persons having a financial interest, any firm, company, or institution for which the insurer or its director acts as a managing agent or partner, or the chief executive.

(2) If, prior to the commencement of this Act, an insurer has engaged in any business in partnership or pooled any assets with its director, director's immediate family, fundamental shareholders, persons having a financial interest, any firm, company, or institution for which the insurer or its director acts as a managing agent or partner, or the chief executive, it shall separate its business or assets from such business or assets within six months of the commencement of this Act. 68. Prohibition on Use of Assets: (1) Except for facilities or benefits receivable as a director, chief executive, shareholder, employee, or insurance intermediary of a company under the prevailing law, an insurer's directors, director's immediate family, fundamental shareholders, persons having a financial interest, any firm, company, or institution for which the insurer or its director acts as a managing agent or partner, or the chief executive shall not in any way enjoy the use of the insurer's assets.

(2) An insurer shall not lease or utilize in any other way the property of its director, director's immediate family, fundamental shareholders, any firm, company, or institution for which the insurer or its director acts as a managing agent or partner, or the chief executive. 69.
Insurance Act, 2022

69. Acts Not to be Performed by Insurer: (1) An insurer shall not do or cause to do any of the following acts:

(a) Purchase or sell movable or immovable property for an amount exceeding the limit determined by the Authority,

(b) Provide loans or any kind of guarantee or security to its fundamental shareholders, its directors, or a director's immediate family, or any firm, company, or institution for which the insurer, fundamental shareholders, or managing agent acts as a managing agent or partner,

(c) Provide any kind of loan except for granting loans to the insured against the security of a life insurance policy,

Provided that this provision shall not be deemed to prevent the insurer from granting advances or loans to its employees as provided in the employee service condition regulations.

(d) Issue an insurance policy in any format other than the format approved by the Authority,

(e) Issue any type of insurance policy other than the insurance policy approved by the Authority,

(f) Calculate the premium in a manner adverse to the insurance rates determined by the Authority,

(g) Invest in shares or securities of an insurer or insurance broker conducting the same type of insurance business,

Provided that this provision shall not be deemed to prevent an insurer conducting one type of insurance business from purchasing securities of an insurer conducting another type of insurance business with prior approval of the Authority.

(h) Invest in any kind of company, firm, or organized institution in which any member of the board of directors is a director, or in which such member has a private, financial, or commercial interest,

(i) Establish any kind of monopoly in the insurance business or perform any other act of a nature that controls the insurance business,

(j) Create any kind of obstacle to the competitive environment in the insurance sector or do or cause to do any act that creates a restrictive practice,

(k) Do or cause to do any act contrary to this Act, the rules, regulations, or directives issued under this Act.

(2) If an insurer comes to know or suspects that any person is obtaining insurance through illegal means or by committing money laundering offenses, the insurer shall not conceal such insurance, or alter, pay, or conceal or falsify information regarding its origin or source, or provide any kind of assistance for that purpose, in order to protect such person from legal action.

(3) If an insurer comes to know, receives information, or has reasonable grounds to suspect that any person has committed or assisted in committing an act under sub-section (2), the insurer shall immediately provide such information to the Authority and the Financial Information Unit established under the prevailing law.
Insurance Act, 2022

70. Compliance Officer to be Appointed: (1) An insurer shall, within one year of obtaining the license, appoint or designate a compliance officer from among officer-level employees at the managerial level who have obtained a master's degree in insurance, management, commerce, or law, and shall inform the Authority thereof.

(2) Insurers that have already obtained licenses at the time of commencement of this Act shall, within six months of the commencement of this Act, appoint or designate a compliance officer under this section and inform the Authority thereof.

(3) The compliance officer shall prepare details regarding whether or not the subjects mentioned in sub-section (3) are being complied with by the insurer and submit them to the Authority on a quarterly basis.

(4) Notwithstanding anything contained in sub-section (4), the Authority may request updated details from the compliance officer at any time regarding whether or not the subjects mentioned in sub-section (3) are being complied with by the concerned insurer.

(5) If details are requested under sub-section (5), the compliance officer shall submit such details to the Authority within the period specified by the Authority.

(6) The concerned compliance officer shall be responsible for the truthfulness and authenticity of the details submitted under sub-section (6).

(7) Nothing mentioned in this section shall be deemed to exempt the insurer, the board of directors of the insurer, or the chief executive from the obligation to ensure updated compliance with the subjects mentioned in sub-section (3). 71. Distribution of Surplus: (1) In a life insurance business where policies are issued with participation in profits, the insurer shall allocate and provide for the distribution of surplus arising from the life insurance business based on the actuary's valuation report.

(2) To allocate and provide for the distribution of surplus under sub-section (1), the insurer shall, with the approval of the Authority, transfer at least ninety percent of the surplus amount to the Life Insurance Fund.

(3) Other provisions relating to the distribution and provision of surplus from the life insurance business shall be as specified. 72. Risk Acceptance Based on Net Assets: (1) An insurer shall accept risk based on its net assets.

(2) Other provisions relating to the risk accepted by the insurer shall be as specified. 73.
Insurance Act, 2022

72. Risk Acceptance Based on Net Assets: (1) An insurer shall accept risk based on its net assets.

(2) Other provisions relating to the risk accepted by the insurer shall be as specified. 73. Investment in Subsidiary Company: (1) An insurer may, with the approval of the Authority, establish a subsidiary company or invest in such a company.

(2) While granting approval to establish a subsidiary company or invest under sub-section (1), the Authority may impose necessary conditions, and it shall be the duty of the concerned insurer to comply with such conditions.

(3) Notwithstanding anything contained elsewhere in this section, an insurer shall not establish a subsidiary company or invest in a company that conducts the type of insurance business the insurer itself is operating.

(4) Other provisions relating to investments made by an insurer shall be as determined by the Authority from time to time. 74. Approval Required for Sale of Assets: (1) When a foreign insurance company sells or mortgages immovable property located in Nepal, or movable property exceeding the specified limit, or repatriates it to a foreign country, approval of the Authority shall be obtained in addition to the body required to give approval under the prevailing law.

(2) While granting approval under sub-section (1), the Authority may impose necessary conditions or standards. Chapter-8
Micro Insurance Business

75. Micro Insurance to be Conducted: Every insurer shall conduct micro insurance business targeting low-income groups and backward areas. 76. Insurance Company May be Established Solely for Micro Insurance: (1) Notwithstanding anything contained elsewhere in this Act, an insurance company may be established with the objective of conducting only micro life insurance or micro non-life insurance business.

(2) The capital of an insurer established for the purpose mentioned in sub-section (1) shall be as specified.

(3) Provisions relating to the establishment and licensing of an insurer established under sub-section (1) shall be in accordance with this Act. 77. Contract to be Made: (1) An insurer shall enter into a written agreement with an insurance agent who is to perform micro insurance-related work before appointing such insurance agent.

(2) When making an agreement with an agent performing micro insurance work under this section, if such agent is an organized institution established under the prevailing law, the insurer may delegate the specified authority to such agent. 78.
Insurance Act, 2022

78. Micro Insurance Claim: (1) An insurer conducting micro insurance business shall, if a claim relating to the insured life

८७. बीमकको लेखापरीक्षण: (१) बीमकले आर्थिक वर्ष समाप्त भएको मितिले तीन महिनाभित्र प्रचलित कानून बमोजिम लेखापरीक्षण गराउनु पर्नेछ । (२) उपदफा (१) बमोजिमको अवधिभित्र लेखापरीक्षण गराउन नसक्ने बीमकले मनासिब कारण खुलाई लेखापरीक्षण गराउने अवधि थपको लागि अनुरोध गरेमा प्राधिकरणले दुई महिनासम्मको अवधि थप गरिदिन सक्नेछ । (३) लेखापरीक्षण प्रतिवेदनमा लेखापरीक्षण गर्दा कुनै कैफियत तथा अनियमितता देखिए सो कुरा र सो सम्बन्धमा बीमकको व्यवस्थापनबाट कुनै जवाफ प्राप्त भएमा वा नभएमा सो व्यहोरा समेत उल्लेख भएको हुनु पर्नेछ । (४) यस दफामा अन्यत्र जुनसुकै कुरा लेखिएको भए तापनि प्राधिकरणले बीमकको लेखापरीक्षण प्रतिवेदन तयार गर्नको लागि छुट्टै विस्तृत लेखापरीक्षण प्रतिवेदन (लङ्ग फर्म अडिट रिपोर्ट) को ढाँचा तोक्न सक्नेछ र त्यस्तो ढाँचा तोकेकोमा लेखापरीक्षकले त्यस्तो ढाँचा बमोजिमको लेखापरीक्षण प्रतिवेदन तयार गरी प्राधिकरण समक्ष पेश गर्नु पर्नेछ । (५) बीमकले आफ्नो लेखापरीक्षण सम्पन्न भएको तीस दिनभित्र आफ्नो वित्तीय विवरण स्वीकृतिका लागि प्राधिकरण समक्ष पेश गर्नु पर्नेछ । (६) बीमकको वित्तीय विवरणको सम्बन्धमा छलफल गर्न आवश्यक परेमा प्राधिकरणले बीमकका सञ्चालक, कार्यकारी प्रमुख, कर्मचारी, लेखापरी क्षक वा अन्य सम्बन्धित कुनै व्यक्ति वा संस्थालाई बोलाउन सक्नेछ र त्यसरी बोलाएको बखत प्राधिकरण समक्ष उपस्थित हुनु निजको कर्तव्य हुनेछ । (७) उपदफा (५) बमोजिम प्राधिकरणमा प्रतिवेदन पेश नगरी बीमकले प्रचलित कानून बमोजिम पेश गर्नु पर्ने सरकारी निकाय बाहेक अन्य निकायमा पेश गर्न, प्रकाशित गर्न वा बीमकको साधारण सभा आह्वान गर्नु हुँदैन । (८) बीमकले प्रत्येक वर्ष लेखापरीक्षण भएको वित्तीय विवरण कम्तीमा दुई पटक राष्ट्रिय स्तरका सञ्चार माध्यमबाट प्रकाशन तथा प्रसारण गर्नुको साथै आफ्नो वेबसाइट मार्फत समेत सार्वजनिक गर्नु पर्नेछ । (९) प्रचलित कानूनमा जुनसुकै कुरा लेखिएको भए तापनि उपदफा (२) बमोजिम अवधि थप गर्दा समेत बीमकले लेखापरीक्षक नियुक्त नगरेको कारणबाट लेखापरीक्षण हुन नसकेमा प्राधिकरणले त्यस्तो बीमकको लागि लेखापरीक्षक नियुक्त गरिदिन सक्नेछ । (१०) उपदफा (९) बमोजिम प्राधिकरणले नियुक्त गरेको बीमकको लेखापरीक्षकको पारिश्रमिक तथा लेखापरीक्षण सम्बन्धी अन्य खर्च सम्बन्धित बीमकले व्यहोर्नु पर्नेछ । (११) लेखापरीक्षकले लेखापरीक्षण प्रतिवेदनमा खुलाउनु पर्ने कुरा तथा बीमकको लेखापरीक्षण सम्बन्धी अन्य व्यवस्था तोकिए बमोजिम हुनेछ । ८८. लेखापरीक्षण सम्बन्धमा आदेश दिन सक्ने: (१) यस ऐन वा अन्य प्रचलित कानूनमा जुनसुकै कुरा लेखिएको भए तापनि लेखापरीक्षकको प्रतिवेदन प्राप्त गरेपछि प्राधिकरणले आवश्यक ठानेमा बीमकको लेख