The Insurance Development and Regulatory Authority (IDRA) has appointed an observer to the board of directors of Takaful Islami Insurance PLC, a company listed on Bangladesh’s stock market, amid continuing questions over its director election and compliance with regulatory directives.
The appointment follows a governance review meeting with the insurer and has been made under Section 51(c) of the Insurance Act 2010. IDRA Assistant Director Marufa Akter has been assigned to monitor the company’s board proceedings until further notice.
The appointment was confirmed in a letter issued on Thursday, 15 October, and signed by Mohammad Solaiman, IDRA’s Deputy Director for non-life insurance. The letter sets out the observer’s responsibilities and limits her role in the board’s decision-making process.
Under the directive, Akter must attend board meetings and report the decisions taken to the regulator. She will not have voting rights, nor will she be permitted to express opinions or make decisions during the meetings.
The company’s chief executive officer and company secretary have been instructed to invite her regularly to board meetings and provide the relevant notices. The arrangement will give IDRA a direct channel through which to receive information about the board’s deliberations and decisions.
However, the appointment letter does not identify any specific irregularity or allegation discussed during the governance review meeting. It is therefore not possible to establish whether the appointment was prompted by a particular breach or whether it forms part of a broader effort to strengthen oversight.
Director election dispute remains a key concern
The latest regulatory move comes against the backdrop of a dispute over the composition of Takaful Islami Insurance’s board. IDRA has taken several steps following allegations of irregularities in the election of directors at the company’s 25th annual general meeting.
After investigating the allegations, the regulator stated in its directive that the election process had breached 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 instructed the insurer to remove five directors and appoint the five candidates elected according to the actual vote count. The company was given 20 working days to implement the order.
The regulator later said that its directive had not been properly implemented. In a further instruction issued in January, IDRA warned that failure to comply with its orders could amount to a violation of the Insurance Act.
The dispute has placed the company’s election procedures, board composition and regulatory compliance under scrutiny. For an insurance company, these issues are particularly significant because the board is responsible for overseeing management, maintaining accountability and ensuring that the business operates within the applicable legal and regulatory framework.
Complaint over High Court petition
The disagreement over the director election has also reached 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 raised questions about the company’s internal decision-making procedures, particularly whether legal action against a regulatory order had been properly approved.
The available information does not establish the final outcome of the complaint or the court proceedings. The allegations should therefore be distinguished from any findings formally established by a court or the regulator.
What the appointment means for oversight
The appointment gives IDRA a more direct means of monitoring the insurer’s board activities. By attending meetings and reporting decisions, the observer will help the regulator remain informed about the company’s governance and its response to earlier directives.
Although the observer cannot vote or formally influence decisions, her presence may improve the regulator’s access to information about board proceedings. This could help IDRA assess whether the company is following the applicable rules and addressing outstanding concerns.
The move also highlights the importance of transparent election procedures and properly authorised board decisions in the insurance sector. Regulatory oversight is intended to ensure that companies meet their legal obligations and maintain appropriate standards of governance.
Nevertheless, the appointment should not be taken as proof of any new wrongdoing by Takaful Islami Insurance. IDRA’s letter does not specify the precise reasons for the decision, and the information available does not establish a fresh finding of misconduct.
Attention will now focus on whether the company implements the regulator’s outstanding directives, how the dispute over the director election develops, and whether IDRA takes further action after receiving reports from the observer.
