The Insurance Development and Regulatory Authority (IDRA) has appointed an observer to the board of directors of Takaful Islami Insurance PLC, a stock market-listed insurer in Bangladesh, amid continuing disputes over its director election and compliance with regulatory directives.
The appointment follows a governance review meeting with the company and has been made under Section 51(c) of the Insurance Act 2010. The regulator has assigned its Assistant Director, Marufa Akter, to monitor board proceedings until further notice.
In a letter issued on Thursday, 15 October, IDRA formally confirmed the appointment. The letter was signed by Mohammad Solaiman, the authority’s Deputy Director for non-life insurance, and outlined the observer’s responsibilities and limitations.
Under the instructions, Akter must attend meetings of the company’s board and report the decisions taken to IDRA. However, she will have no voting rights and will not be permitted to express opinions or make decisions during board meetings.
The company’s chief executive officer and company secretary have been instructed to ensure that she receives regular invitations to board meetings, along with the relevant notices. The arrangement will give the regulator a direct channel for receiving information about the board’s deliberations and decisions.
IDRA’s letter does not identify any specific irregularity or allegation discussed at the governance review meeting that led to the appointment. Consequently, the move should not be interpreted as evidence that a new breach has been established against the insurer.
Disputed director election draws regulatory scrutiny
The latest development comes against the backdrop of a dispute over the composition of Takaful Islami Insurance’s board. IDRA has taken several steps in recent months following allegations of irregularities in the election of directors at the company’s 25th annual general meeting.
Following an investigation, the regulator stated that the election process had violated Rule 11(2) of the Director Election Rules 2024. It also reported a discrepancy between the actual voting results and the results announced by the company.
On the basis of its findings, IDRA directed the removal of five directors and instructed the company to include the five candidates elected according to the actual vote count. The insurer was given 20 working days to implement the directive.
The regulator subsequently said that the instruction had not been properly implemented. In a directive issued in January, IDRA warned that failure to comply with its instructions could amount to a violation of the Insurance Act.
The dispute has raised questions about the integrity of the election process and the company’s response to regulatory requirements. For insurance companies, effective board oversight is central to accountability, sound management and compliance with applicable laws and regulations.
Disagreement over legal action reaches the High Court
The dispute over the director election has also extended to the courts.
In May this year, several directors of Takaful Islami Insurance complained to IDRA that a writ petition challenging the regulator’s directive had been filed with the High Court without the board’s approval. They alleged that the proposed legal action had neither been discussed at a board meeting nor authorised by the directors collectively.
The complaint brought the company’s internal decision-making procedures into focus, particularly the question of whether legal action against a regulatory directive had been properly authorised.
However, the available information does not establish the final outcome of the complaint or the court proceedings. The allegations therefore cannot be treated as proven findings.
What the observer’s appointment means
The appointment gives IDRA a more direct means of monitoring the insurer’s board activities. By attending meetings and reporting the decisions taken, the observer will help the regulator remain informed about the company’s governance and its response to previous directives.
Although the observer cannot vote or influence decisions through formal voting rights, the reporting requirement may help IDRA assess whether the board is operating in accordance with applicable rules and whether outstanding regulatory concerns are being addressed.
The appointment also highlights the importance of transparency in the governance of listed insurance companies. Clear election procedures, properly authorised board decisions and timely compliance with regulatory instructions are essential to maintaining accountability within a regulated business.
Nevertheless, the precise reasons for the appointment remain unclear because IDRA’s letter does not specify the particular concerns discussed at the governance review meeting. No new finding of misconduct has been established in the information provided.
Attention will now turn to how Takaful Islami Insurance responds to the regulator’s requirements, whether the outstanding dispute over the director election is resolved, and what further steps IDRA may take after monitoring the board’s activities.
