The government is going to formulate corporate governance guidelines to ensure compliance with applicable laws and regulations and good governance in the operation of insurance companies in Bangladesh.

As part of this initiative, the Insurance Development and Regulatory Authority (Idra) published the draft guidelines on its website on September 19.

Stakeholders concerned and the public have been given until September 24 to submit views and feedback on the draft.

Corporate governance covers areas of environmental awareness, ethical behaviour, corporate strategy, compensation and risk management. The basic principles of corporate governance are accountability, transparency, fairness, responsibility, and risk management, according to Investopedia.

The guidelines set the maximum number of directors on the board of an insurer at 20, including two neutral directors.

In addition, there will be a clear procedure for appointing and reappointing directors, the guidelines said.

A person who has been declared bankrupt by the appropriate court or been found to be a loan defaulter from any bank or financial institution, in Bangladesh or elsewhere, cannot become a director of an insurance company.

A person who has been convicted of any criminal offence or is involved in any fraud, financial offence or other illegal activity is also barred from becoming a director.

The chairperson of the board of directors shall be elected from among the non-executive directors of the company.

In the absence of the chairperson of the board of directors, the remaining members may elect one of the non-executive directors as chairperson. They must properly record in the minutes the reason for the chairperson's absence for that particular board meeting, the guideline stated.

Each director shall submit to the Idra within 15 days of their appointment the details of shares held by them or their family in any insurance company. They must also share details of themselves or of their family members holding the post of director or senior executive in any other organisation.

It is the primary responsibility of the board of directors to achieve long-term goals and to guide and supervise effective and efficient management. The board of directors will develop the necessary policies and corporate governance frameworks or mechanisms to achieve this goal.

According to the guidelines, the board of directors will formulate a code of conduct for all officers or employees, including the chairman of the board, members of the board and the chief executive officer of the company on the recommendation of the nomination and remuneration committee.

On behalf of the board of directors, there will be an investment sub-committee which will oversee the company's overall investments in the interest of insurance customers, shareholders and stakeholders, the guidelines said.

A sub-committee on behalf of the board of directors will play an effective role in mitigating emergent and potential risks in implementing strategies and action plans formulated by the board, the guidelines also said.

The company should also draft a whistle-blowing policy. This would enable any officer, employee, organisation representing them, external stakeholders and stakeholders within the organization to inform the board of undesirable behaviour or activities, the guidelines added.

Sheikh Rakibul Karim, chief executive officer of Guardian Life Insurance Ltd, said this new standout corporate governance guideline would craft a framework that would open the doors for a leap towards integrity and sustainability in the insurance industry.

It will not only cultivate trust, but also bolster the credibility of the entire sector, he said.

These corporate governance regulations will be the foundation of Bangladesh's insurance industry. It will ensure that we operate with the highest levels of transparency, accountability, and ethical conduct, he added.