PART II | OBLIGATIONS OF TIER 1 INSURERS |
| 9. Where the Board of a Tier 1 insurer has delegated any of its powers for the oversight of the Tier 1 insurer to an executive committee or any other committee by whatever name described (referred to in these Regulations as an Executive Committee), consisting of such directors as the Board thinks fit, regulation 7 shall apply to the Tier 1 insurer in respect of the Executive Committee as if the Executive Committee were a Board. |
10.—(1) Subject to paragraph (2), a Tier 1 insurer shall have —| (a) | a Nominating Committee; | | (b) | a Remuneration Committee; | | (c) | an Audit Committee; and | | (d) | a Risk Management Committee. |
| (2) A Tier 1 insurer shall ensure that every member of each Committee referred to in paragraph (1) shall have unfettered access to information which the Tier 1 insurer is in possession of or has access to, for the purposes of carrying out the responsibilities of the Committee concerned. |
(3) A Tier 1 insurer which is a subsidiary of any bank or any other insurer, whether or not registered in Singapore, need not have a Nominating Committee, a Remuneration Committee or a Risk Management Committee, subject to the following conditions:| (a) | the Board of the Tier 1 insurer performs for the Tier 1 insurer all the functions of the Nominating Committee, the Remuneration Committee or the Risk Management Committee, as the case may be, set out in these Regulations; and | | (b) | the Tier 1 insurer informs the Authority in writing that the functions of the Nominating Committee, the Remuneration Committee or the Risk Management Committee, as the case may be, are performed by its Board. |
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| (4) Any Tier 1 insurer which contravenes paragraph (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
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11.—(1) Subject to paragraphs (2) and (4) and regulations 14(3), 19 and 20, a Tier 1 insurer shall have a Nominating Committee comprising —| (a) | at least 3 members of the Board of the Tier 1 insurer; and | | (b) | at least a majority of directors (including the chairman of the Nominating Committee) who are independent directors. |
(2) Where a single substantial shareholder holds 50% or more of the share capital or the voting power in a Tier 1 insurer, paragraph (1)(b) shall not apply to the Tier 1 insurer only if the Tier 1 insurer has a Nominating Committee comprising —| (a) | at least a majority of directors who are independent from management and business relationships with the Tier 1 insurer; and | | (b) | at least one-third of directors (including the chairman of the Nominating Committee) who are independent directors. |
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| (3) Every member of the Nominating Committee shall be appointed to hold office until the next annual general meeting following that member’s appointment, and shall be eligible for re‑appointment. |
(4) If a member of the Nominating Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Nominating Committee —| (a) | the Tier 1 insurer shall notify the Authority of the event within 14 days after the occurrence of the event; and | | (b) | if this results in a breach of any requirement under paragraph (1), the Board shall, within 3 months after that event, appoint such number of new members as may be required to rectify the composition of the Nominating Committee in accordance with that requirement. |
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| (5) Any Tier 1 insurer which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
| (6) Any Tier 1 insurer which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000. |
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| Responsibilities of Nominating Committee |
12.—(1) The Nominating Committee of a Tier 1 insurer shall identify the candidates and review all nominations for the appointment of the following persons of the Tier 1 insurer:| (a) | each director; | | (b) | each member of each board committee; | | (c) | the principal officer and deputy principal officer; | | (d) | any actuary appointed with the approval of the Authority under the Act; | | (e) | the chief financial officer; and | | (f) | the chief risk officer. |
| (2) Subject to paragraph (3), the Nominating Committee shall determine the criteria to be applied in identifying a candidate or reviewing a nomination for the purposes of these Regulations. |
(3) The criteria to be applied in identifying a candidate or reviewing a nomination for the purposes of these Regulations shall include the following:| (a) | the appointment of the candidate or nominee will not result in non-compliance with the requirements under regulations 7(1), 9, 11(1), 16(1), 17(1) and 18(1); and | | (b) | the candidate or nominee is a fit and proper person for the office and is qualified for the office, taking into account the candidate’s or nominee’s track record, age, experience, capabilities, skills and such other relevant factors as may be determined by the Nominating Committee. |
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| (4) The Nominating Committee shall review the reasons provided by each of the persons referred to in paragraph (1) for his resignation from his appointment in the Tier 1 insurer. |
| (5) The Nominating Committee shall maintain records of all its meetings. |
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| Determination of independence by Nominating Committee |
13.—(1) Where a person is proposed to be appointed as a director of a Tier 1 insurer, prior to his appointment, the Nominating Committee of the insurer —| (a) | shall determine —| (i) | whether he is independent from management and business relationships with the Tier 1 insurer; and | | (ii) | whether he is independent from any substantial shareholder of the Tier 1 insurer, |
| using the criteria set out in regulation 5 or 6, as the case may be, and, where applicable, in accordance with regulation 14; and |
| | (b) | shall maintain a record of its determination. |
(2) Prior to every annual general meeting of the Tier 1 insurer, the Nominating Committee —| (a) | shall determine —| (i) | whether each existing director is independent from management and business relationship with the Tier 1 insurer; and | | (ii) | whether each existing director is independent from any substantial shareholder of the Tier 1 insurer, |
| using the criteria set out in regulation 5 or 6, as the case may be, and, where applicable, in accordance with regulation 14; |
| | (b) | shall review and assess whether each existing director remains qualified for the office using the criteria set out in regulation 12(3); and | | (c) | shall maintain a record of its determination and its assessment, respectively. |
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| Alternative determination of independence by Nominating Committee |
14.—(1) The Nominating Committee of a Tier 1 insurer may determine that a director of the insurer who is —| (a) | not considered independent from business relationships with the Tier 1 insurer under regulation 5(3)(a) or (b); or | | (b) | not considered independent from a substantial shareholder of the Tier 1 insurer because of the relationship specified in regulation 6(3)(a)(v) or (b)(v), |
| shall nonetheless be considered independent from business relationships with the Tier 1 insurer, or independent from a substantial shareholder of the Tier 1 insurer, as the case may be, if the Nominating Committee is satisfied that the director’s independent business judgment and ability to act in the interests of the Tier 1 insurer will not be impeded, despite the relationships specified in that regulation. |
(2) If —| (a) | at any time, the Authority is not satisfied that a director of the Tier 1 insurer is independent notwithstanding any determination of the Nominating Committee made under paragraph (1); and | | (b) | the lack of independence of that director would result in a failure by the Tier 1 insurer to comply with any of the requirements under regulation 7(1), 9, 11(1), 16(1), 17(1) or 18(1), |
| the Authority shall direct the Tier 1 insurer to rectify the composition of the Board or any relevant committee in accordance with the requirements under regulation 7(1), 9, 11(1), 16(1), 17(1) or 18(1), as the case may be, within such time, and subject to such conditions or restrictions, as the Authority may specify. |
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| (3) Where the Authority has given a direction to a Tier 1 insurer under paragraph (2), the requirements under regulation 7(1), 9, 11(1), 16(1), 17(1) or 18(1), as the case may be, shall not apply to the Tier 1 insurer during the period between the time the Authority makes the direction and the time within which the Tier 1 insurer is required to rectify the composition of the Board or any relevant committee in accordance with the direction. |
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| Furnishing information to Authority by Tier 1 insurers |
15.—(1) A Tier 1 insurer shall, after the Nominating Committee has concluded its deliberations in respect of the matters under regulations 12 and 13 and after the Board has concurred with the Nominating Committee —| (a) | notify the Authority in writing of the particulars of the persons proposed to be appointed to the positions referred to in regulation 12(1)(a) and (b), including whether the requirements for independence in regulations 5 and 6 are satisfied; | | (b) | notify the Authority in writing of the review and assessment of each existing director referred to in regulation 13(2)(b); | | (c) | in the case where the Nominating Committee has made a determination under regulation 14, provide the Authority with the Nominating Committee’s explanation of its decision as to why the director should be considered independent; and | | (d) | furnish to the Authority such further information as the Authority may require. |
| (2) Any Tier 1 insurer which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
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16.—(1) Subject to paragraphs (2) and (6) and regulations 14(3) and 20, a Tier 1 insurer shall have a Remuneration Committee comprising —| (a) | at least 3 members of the Board of the Tier 1 insurer; and | | (b) | at least a majority of directors (including the chairman of the Remuneration Committee) who are independent directors. |
(2) Where a single substantial shareholder holds 50% or more of the share capital or the voting power in a Tier 1 insurer, paragraph (1)(b) shall not apply to the Tier 1 insurer only if the Tier 1 insurer has a Remuneration Committee comprising —| (a) | at least a majority of directors who are independent from management and business relationships with the Tier 1 insurer; and | | (b) | at least one-third of directors (including the chairman of the Remuneration Committee) who are independent directors. |
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(3) In addition to such other responsibilities as may be determined by the Board of the Tier 1 insurer, the Remuneration Committee of the Tier 1 insurer shall be responsible for —| (a) | recommending a framework for determining the remuneration of the directors of the Tier 1 insurer; | | (b) | recommending a framework for determining the remuneration of the executive officers of the Tier 1 insurer which shall include the following elements and factors in the design and operation of the framework:| (i) | the remuneration package of each executive officer of the Tier 1 insurer —| (A) | shall be aligned to the specific job function undertaken by the executive officer and, where the executive officer undertakes any of the Tier 1 insurer’s control job functions, the remuneration package of that executive officer shall be determined independently of the business functions of the Tier 1 insurer; | | (B) | shall take into account input from the Tier 1 insurer’s control job functions as may be relevant to the specific job function undertaken by the executive officer; | | (C) | shall be aligned with the risks that the Tier 1 insurer undertakes in its business that is relevant to the specific job function undertaken by the executive officer; | | (D) | shall be sensitive to the time horizon of risks that the Tier 1 insurer is exposed to, which includes ensuring that variable compensation payments shall not be finalised over short periods of time when risks are realised over long periods of time; | | (E) | shall, in relation to the quantum of bonus payable to the executive officer, be linked to his personal performance, the performance of his specific job function as a whole and the overall performance of the Tier 1 insurer; and | | (F) | shall, in relation to the rationale for the mix of cash, equity and other forms of incentives, be justified; and |
| | (ii) | the size of the bonus pool of the Tier 1 insurer shall be linked to the overall performance of the Tier 1 insurer; |
| | (c) | recommending the remuneration of each director and executive officer of the Tier 1 insurer based on the frameworks referred to in sub-paragraphs (a) and (b), respectively; and | | (d) | reviewing, at least once in each year, the remuneration practices of the Tier 1 insurer to ensure that they are aligned with the recommendations made in accordance with sub-paragraphs (a), (b) and (c). |
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(4) In paragraph (3) —| “business functions” means the job functions in the Tier 1 insurer that conduct risk-taking activities in relation to the business of the Tier 1 insurer; |
“control job functions” means the following job functions:| (a) | risk control and management; | | (b) | finance; | | (c) | compliance; | | (d) | internal audit; | | (e) | human resource; | | (f) | actuarial; and | | (g) | risk control related back office operations. |
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| (5) The Remuneration Committee shall maintain records of all its meetings. |
(6) If a member of the Remuneration Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Remuneration Committee —| (a) | the Tier 1 insurer shall notify the Authority of the event within 14 days after the occurrence of the event; and | | (b) | if this results in a breach of any requirement under paragraph (1), the Board shall, within 3 months after that event, appoint such number of new members as may be required to rectify the composition of the Remuneration Committee in accordance with that requirement. |
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| (7) Any Tier 1 insurer which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
| (8) Any Tier 1 insurer which contravenes paragraph (6)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000. |
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17.—(1) Subject to paragraph (4) and regulations 14(3) and 20, a Tier 1 insurer shall have an Audit Committee comprising —| (a) | at least 3 members of the Board of the Tier 1 insurer, all of whom are independent from management and business relationships with the Tier 1 insurer; and | | (b) | at least a majority of directors (including the chairman of the Audit Committee) who are independent directors. |
| (2) The Audit Committee shall, in addition to such other responsibilities as may be determined by the Board or provided under written law, be responsible for the adequacy of the external and internal audit functions of the Tier 1 insurer, including reviewing the scope and results of audits carried out in respect of the operations of the Tier 1 insurer and the independence and objectivity of the Tier 1 insurer’s external auditors. |
| (3) The Audit Committee shall maintain records of all its meetings. |
(4) If a member of the Audit Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Audit Committee —| (a) | the Tier 1 insurer shall notify the Authority of the event within 14 days after the occurrence of the event; and | | (b) | if this results in a breach of any requirement under paragraph (1), the Board shall, within 3 months after that event, appoint such number of new members as may be required to rectify the composition of the Audit Committee in accordance with that requirement. |
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| (5) Any Tier 1 insurer which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
| (6) Any Tier 1 insurer which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000. |
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| Risk Management Committee |
18.—(1) Subject to paragraph (4) and regulations 14(3) and 20, a Tier 1 insurer shall have a Risk Management Committee comprising —| (a) | at least 3 members of the Board of the Tier 1 insurer; and | | (b) | at least a majority of directors (including the chairman of the Risk Management Committee) who are non-executive directors. |
(2) The Risk Management Committee shall, in addition to such other responsibilities as may be determined by the Board, be responsible for overseeing —| (a) | the establishment and the operation of an independent risk management system for managing risks on an enterprise‑wide basis; and | | (b) | the adequacy of the risk management function of the Tier 1 insurer, including ensuring that it is sufficiently resourced to monitor risk by the various risk categories and that it has appropriate independent reporting lines. |
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| (3) The Risk Management Committee shall maintain records of all its meetings. |
(4) If a member of the Risk Management Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Risk Management Committee —| (a) | the Tier 1 insurer shall notify the Authority of the event within 14 days after the occurrence of the event; and | | (b) | if this results in a breach of any requirement under paragraph (1), the Board shall, within 3 months after that event, appoint such number of new members as may be required to rectify the composition of the Risk Management Committee in accordance with that requirement. |
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| (5) Any Tier 1 insurer which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
| (6) Any Tier 1 insurer which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000. |
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19.—(1) A Tier 1 insurer shall obtain the prior approval of the Authority for the appointment of the following persons:| (a) | the members of the Nominating Committee; | | (b) | the chief financial officer; and | | (c) | the chief risk officer. |
| (2) Without prejudice to any other matter that the Authority may consider relevant, the Authority shall, in determining whether to grant its approval under paragraph (1), have regard to whether the person is a fit and proper person to hold the office. |
| (3) Any Tier 1 insurer which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction. |
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| Exceptions to applicability of provisions to Tier 1 insurers |
20.—(1) Subject to paragraphs (2) and (3), the requirements under regulations 7(1)(b)(i), 9, 11(1), 16(1), 17(1) and 18(1) shall not apply in relation to a Tier 1 insurer —| (a) | where —| (i) | there is a change in the status of a director under regulation 5 or 6 during the period between the date immediately after the date of the director’s appointment and the date immediately before the next annual general meeting of the Tier 1 insurer; and | | (ii) | the Tier 1 insurer could not reasonably have known of that change on or before the date of the director’s appointment; or |
| | (b) | where —| (i) | there is a change in the status of a director under regulation 5 or 6 during the period between the date immediately after an annual general meeting of the Tier 1 insurer and the date immediately before the next annual general meeting of the Tier 1 insurer (other than the period referred to in sub-paragraph (a)(i)); and | | (ii) | the Tier 1 insurer could not reasonably have known of that change on or before the date of the first‑mentioned annual general meeting. |
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(2) Paragraph (1) shall not apply unless, in the circumstances prescribed in paragraph (1)(a)(i) or (b)(i), the insurer, within 14 days after becoming aware of the change in the status of a director, notifies the Authority of the change and, subject to paragraph (3) —| (a) | in respect of any requirement under regulation 7(1)(b)(i), at the next annual general meeting, appoints such number of new directors as may be required to rectify the composition of the Board in accordance with that requirement; or | | (b) | in respect of any requirement under regulation 9, 11(1), 16(1), 17(1) or 18(1), within 3 months after notifying the Authority of the change of status of the director, appoints such number of new members of the relevant committee as may be required to rectify the composition of the relevant committee in accordance with that requirement. |
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(3) Notwithstanding paragraph (2), the Authority may, upon being notified of a change in the status of a director under paragraph (2), direct the Tier 1 insurer —| (a) | to appoint such number of new directors as may be necessary to rectify the composition of the Board in accordance with the requirements under regulation 7(1)(b)(i), within such time before the next annual general meeting of the Tier 1 insurer and subject to such conditions or restrictions as the Authority may specify; or | | (b) | to appoint such number of new members of the relevant committee as may be necessary to rectify the composition of the relevant committee in accordance with the requirements under regulation 9, 11(1), 16(1), 17(1) or 18(1), as the case may be, within such time before the expiration of 3 months after the date the Tier 1 insurer notifies the Authority of the change and subject to such conditions or restrictions as the Authority may specify, |
| and the Tier 1 insurer shall comply with that direction. |
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| (4) Any Tier 1 insurer which fails to comply with any condition or restriction imposed by the Authority under paragraph (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000. |
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