Responsibility and participation in decision-making of deputy members of the board of insurance companies
The board of directors of an insurance company may consist only of ordinary members or the board may also include deputy members. Both practices are used in insurance companies.
A deputy member of the board serves and is obliged to serve on the board in place of an ordinary member of the board only when the ordinary member is temporarily or permanently prevented from discharging his or her duties. A deputy member of the board accordingly has the rights and obligations of a member of the board, and the deputy member's participation in decision-making and responsibility for decisions made are unequivocal.
If a deputy member of the board attends board meetings even when he or she is not serving in place of an ordinary member, the status of the alternate member must be considered case-by-case based on the decision-making circumstances. A deputy member may be deemed responsible for decisions made if the deputy member serves in a board meeting in the manner of an ordinary member, exercising real influence in the company’s affairs, for example by participating in making proposals for decision or influencing the final text of decisions through the right to speak.
The Financial Supervision Authority (FIN-FSA) supervises decision-making in boards of directors and the other actions of insurance companies, for example by monitoring board materials, which underlines the importance of the accuracy of the information obtained from the minutes of board meetings.
The FIN-FSA considers it appropriate with regard to the clarity of management systems, responsibility for decision-making and the supervision of those responsible that only ordinary members of the board and their deputies serving in their absence participate in the decision-making discussions of the board.
The FIN-FSA recommends
- that deputy members of the board attend board meetings only when serving in place of ordinary members, or
- if deputy members attending a board meeting do not serve in place of ordinary members, minutes are taken of the meeting clearly indicating the content of the spoken contributions made by the deputy members and their other participation in the meeting.
The recommendation applies to non-life, life and employee pension insurance companies.
For further information, please contact
Kaisa Forsström, Head of Department, tel. +358 9 183 5252 or kaisa.forsstrom(at)finanssivalvonta.fi