Insurance Act 2021 and Pension Fund Management

Trustee and Pension Fund Regulations

• Section 178 prohibits trustees or pension fund managers from investing in shares or securities issued by themselves, custodians, or their shareholders to avoid conflicts of interest.

National Insurance Commission

• Established under the Insurance Act, 2021 (Act 1061) to regulate and supervise the insurance market.
• A body corporate with perpetual succession, can sue and be sued.
• Objectives include:
  • Promoting a fair, efficient, and stable insurance market.
  • Protecting past, current, and prospective customers.
  • Contributing to stable financial systems.
  • Encouraging financial inclusion and insurance penetration.

Working Relationships Among Financial Regulators

• Regulatory bodies have supervisory roles over licensees.
• The National Insurance Commission regulates banks licensed by the Central Bank acting as custodians and public companies.
• Fund managers regulated by the National Pension Regulatory Authority are also licensed by the Commission.

Liability of Members (Section 40 of Act 992)

• Members must contribute to outstanding amounts before winding up.
• Past members are liable for company debts if winding up occurs within a year after leaving.
• Shareholders have rights to:
  • Recommend actions to the board.
  • Ratify board decisions.
  • Initiate legal actions on behalf of the company when necessary.
  • Act in specific cases of board incapacity or deadlock.
• Resolutions made at member meetings include:
  • Dividend declarations and accounts consideration.
  • Director and auditor appointments and remuneration fixings.

Acts Done by or on Behalf of the Company

• A company acts through its members or board as per the constitution.
• Company is liable for acts performed by members or directors within their authority.
• Liability exceptions apply if the person knew of a lack of authority or irregular actions.

Legal Assumptions Regarding Company Dealings

• Assumptions for external dealings include:
  • Valid incorporation and appointment of officers.
  • Authority of officers to issue documents and authenticate them.
  • Seals of the company being duly authenticated.
• These assumptions are invalidated if the person had actual knowledge to the contrary.

Contractual Decisions and Acceptance

• Cross offers do not constitute acceptance as both are offers.
• Acceptance may be conditional upon a formal contract being drawn up.
• Acceptances must be communicated clearly; mere intention or silence does not count.
• If a mode of acceptance is prescribed, it must be followed; otherwise, any reasonable method may suffice.
• Acceptance by post is effective upon posting.

Legality of Purpose

• Contracts may be void if they involve illegal activities or breaches of law.
• Ignorance of law does not excuse illegality in contracts.

Consideration

• Contracts require consideration, which is the value exchanged between parties.
• Defined as rights, benefits, or detriments that accrue to parties involved.
• A promise can only be enforced if the promisee provided consideration.
• Consideration must be real and sufficient, though not necessarily adequate.
• Past rulings illustrate that certain agreements, even informal, can constitute binding contracts.

This quiz covers key aspects of Section 178 of the Insurance Act, 2021, focusing on the regulations that prevent trustees and pension fund managers from conflicts of interest when investing pension fund assets. Explore the roles of the National Insurance Commission and the implications for fair dealings in fund management.