An insurance company would require a minimum paid up capital of Nu 400mn which should be maintained all times, according to the rules and regulations on licensing of insurance companies released by the Royal Monetary Authority (RMA).
Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock and is created when a company sells its shares on the primary market, directly to investors.
In accordance with the Financial Services Act of Bhutan 2011, an applicant seeking for a license to conduct the business of insurance is hereby required to comply with these rules and regulations and submit the documents required therein.
According to the Royal Monetary Authority (RMA) rules and regulations on licensing of insurance companies, an application for a license to conduct an insurance business should submit in writing to the authority and should contain the documents along with a non-refundable application fee of Nu 200,000 in the form of cheque in favor of the authority.
The documents should include a letter of application, licensing application form; biographical report of promoters, proposed board of directors, and proposed chief executive officers are required to submit the biography report.
In respect of life insurance, the applicant is required to submit a certificate from the actuary that the rates, advantages, terms and conditions of all life insurance policies to be offered are sustainable.
It also states that 10% of the paid up capital should be deposited with the authority in cash or securities approved by the authority.
The promoters’ contribution of the initial paid up capital should have a lock-in-period of five years from the date of licensing of insurance company.
In line with section 50 of the Financial Services Act 2011, no person will hold more than the 20% in case of an individual, 30% in case of a company not being financial institutions and 5% in case of a company being financial institutions of shares in the insurance company.
Insurance company can float 40% of its shares to the general public through initial public offering within one year after the issuance of license.
As of now there are only two insurance companies, Royal Insurance Corporation of Bhutan limited and Bhutan Insurance Limited.
Dechen Dolkar from Thimphu
