The Board of Directors of Bangladesh National Insurance has been penalised for not taking IPO approval from the Insurance Development and Regulatory Authority (IDRA) and for changing the ratio of capital and share holdings violating rules.
The decision came at a hearing the insurance authority held at IDRA headquarters on Wednesday with the top management of National Insurance.
IDRA Chairman M Shefaq Ahmed chaired the hearing with the presence of National Insurance Vice-Chairman Mostafa Kamal, CEO (chief executive officer) Sana Ullah, CFO (chief financial officer) Ferozul Islam and others.
The authority imposed penalties of Tk50,000 to each of the directors of the Insurance company. Sana Ullah was suspended for four months, and at the same time the company was asked to take exemplary punitive action against Ferozul Islam and Company Secretary Masud Rana.
IDRA sent a letter in this regard to the company yesterday.
But Sana Ullah claimed that they informed IDRA time to time of the capital and IPO issues, but somehow the authority might have missed the letter since it lacked adequate manpower.
According to the letter, the insurance company was approved to go for IPO (initial public offering) subscription subject to payment penalties and implement the action that was asked to take against the accused officers.
The 12 board members who have been penalised are the insurance company Chairman, Abdul Baset Majumder, Vice-Chairman Mostafa Kamal, Director Beauty Akhter, Abdur Rouf, Tahmina Binthe Mostofa, Farida Akter, Tanjima Binthe Mostafa, Tanveer Ahmed Mostofa, Taif Bin Yousuf, Yousuf Ali, Abdul Baten and Hasina Begum.
The letter said the regulatory approval is a must in case of decision about capital change as per the Insurance Act 2010. The company changed its capital and share holding ratio without taking approval from the authority.
The authority accused the CEO of rule violation, explaining that the top manager failed to do his duties.
The board of the company was also responsible for the rule violation as it did not monitor the activities of the CEO, said the letter.
IDRA said the National Insurance lacked corporate governance, and that is why the rule violation was committed.
In reply to a show-cause notice served by the authority over the offence on November 24 this year, the CEO admitted his fault and begged pardon.
The letter also mentioned that insurance companies are instructed to go for IPO within a certain period, and they are obliged to pay fine for failing to do so. A company is required to maintain some procedures for offering IPO, but the National Insurance did not maintain it. Even it did not take approval from IDRA.
Bangladesh National Insurance paid Tk73 lakh in fines that accrued between 2011 and 2014 for failure to go for IPO within a certain period. In the letter, the IDRA chairman expressed satisfaction over the company for paying the penalty properly.