Requirements to be appointed as a director of an insurance company in South African Law

Abstract

This study investigates current problems pertaining to the recruitment and appointment of suitable candidates for directorship in private and public companies. Conduct risk is one of the key drivers of potential misconduct of directors in the insurance industry and across industries. In order to regulate conduct risk, legislation worldwide focuses on the institution on the one hand, and on the regulation of individuals on the other hand. There are numerous examples of misconduct of directors across industries, but in particular in state-owned entities in South Africa. This emphasises the importance of recruiting and appointing the most suitable candidates as directors to ensure long-term sustainability and value growth for shareholders and all stakeholders. This study investigates whether this is possible and, if it is indeed the case, which criteria should be used to recruit and appoint directors. The study focus specific on the Insurance Industry. As part of the new Twin Peak regime it is the Reserve bank’s duty to apply the Fit and Proper requirement to appoint suitable candidates. Additional to that requirement, there the Insurance Act 17 of 2018 and the Companies Act 2008 apply to directors that serve on the board of an insurance company. It is concluded that the Fit and Proper criteria as applied by the insurance industry, other professions and best practice in the United Kingdom must be maintained. It is further proposed that Board Notices should be issued to provide for additional criteria based on where the industry is heading world-wide.