AmendmentInvestment

SIB/63/2026 – REQUIREMENTS FOR PERSONS WITH SIGNIFICANT INFLUENCE IN AN INSURANCE COMPANY

National Bank of EthiopiaSIB/63/2026

Summary

This directive establishes 'fit and proper' criteria for persons with significant influence in insurance companies, including shareholders, directors, chief executive officers, and senior executive officers. It outlines requirements for knowledge, experience, integrity, and financial soundness, and mandates National Bank of Ethiopia approval for certain appointments and shareholdings. The directive also details ongoing fitness tests, notification requirements, whistleblowing policies, and submission procedures for applications and relevant documents. It repeals Directive No. SIB/32/2012.

Who's affected

Insurance companies and individuals seeking or holding significant influence roles (shareholders, directors, CEOs, senior executives) within them.

Action required

Insurance companies must ensure their persons with significant influence meet the 'fit and proper' criteria and establish a corresponding policy. Individuals must comply with application requirements and disclose relevant information to the National Bank of Ethiopia.

Key points

7
  • Establishes 'fit and proper' criteria for key individuals in insurance companies.
  • Requires National Bank of Ethiopia approval for directors, CEOs, senior executives, and influential shareholders.
  • Defines detailed educational and experience requirements for various roles.
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    • Mandates integrity and financial soundness assessments.
    • Requires insurance companies to implement a 'fit and proper' policy.
    • Includes ongoing monitoring and reporting obligations.
    • Repeals Directive No. SIB/32/2012.

Requirements

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  • Persons with significant influence must meet educational qualifications, work experience, and age requirements.
  • Directors must collectively provide a mixture of core competencies.
  • An insurance company shall have three independent directors, who must meet specific educational and experience criteria.
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    • Chief Executive Officers and Senior Executive Officers must meet specific educational and extensive experience requirements in insurance.
    • Persons with significant influence must demonstrate integrity, meaning they should be honest, reputable, and diligent.
    • Persons with significant influence must be financially sound.
    • Insurance companies must have a fit and proper policy and procedure as part of their risk management framework.
    • Persons with significant influence are required to immediately notify the National Bank of Ethiopia of any events that might change their assessment as fit and proper.
    • Board of directors, chief executive officers, or senior executive officers must report to the National Bank of Ethiopia if they have reasonable doubt about a person with significant influence failing to meet criteria.
    • An insurance company must notify the National Bank of Ethiopia in writing of any transfer or removal of a senior executive officer directly reporting to the board before implementation.
    • Insurance companies shall use whistleblowing as an intelligence source for fitness and propriety assessments and must have a policy encouraging disclosures in good faith.
    • Specific documents must be submitted to the National Bank of Ethiopia for fitness and propriety tests, including CVs, educational and work experience documents, organizational structure, appointment minutes, identification, good conduct certificates, tax identification numbers, and completed questionnaires.
    • For judicial person directors, both the company and its representative must be fit and proper.
    • For directors representing legal entities that are influential shareholders, company legal documents and audited financial statements for three consecutive years must be submitted.
    • Acting chief executive officers or senior executive officers cannot hold the position for more than six months (or nine months for CEO).
    • Experience gained exceeding six months in an acting capacity shall not be counted as relevant managerial experience.
    • Incumbent board members are exempt from certain educational requirements until their current term expires.
    • Senior executive officer positions requiring National Bank approval must obtain it within six months of the directive's effective date.

Rights and permissions

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  • Right to have their fitness and propriety assessed.
  • Right to be subject to ongoing fitness and propriety tests.
  • Shareholders have the right to have their voting rights suspended by the National Bank.
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    • Directors, chief executive officers, and senior executive officers have the right to have their positions suspended and/or removed by the National Bank.
    • Right to have whistleblowing policies that protect those making disclosures in good faith.

Restrictions

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  • Persons with significant influence must meet specific educational, experience, integrity, and financial soundness criteria.
  • Appointment of directors, chief executive officers, and senior executive officers are subject to National Bank of Ethiopia approval.
  • Any shareholding making a person an influential shareholder requires National Bank of Ethiopia approval.
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    • No single gender board is allowed in an insurance company.
    • A board must have at least two female directors.
    • Independent directors must meet specific educational and experience requirements.
    • Chief Executive Officers and Senior Executive Officers must meet specific experience requirements related to the type of insurance business they are involved in.
    • Acting chief executive officers or senior executive officers cannot hold the position for more than six months (or nine months for CEO).
    • Experience gained exceeding six months in an acting capacity shall not be counted as relevant managerial experience.
    • Penalties apply for late submission of approval requests for senior executive officer positions.

Penalties

3
  • Suspension of voting rights of an influential shareholder.
  • Suspension and/or removal of a director, chief executive officer, or senior executive officer.
  • A penalty of Birr 10,000 for each position for late approval requests for senior executive officer positions.

Objectives

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  • Ensuring sound practices, stability, and long-term institutional success in the insurance sector.
  • Enhancing public confidence in the financial system by ensuring insurance companies are owned and managed by fit and proper persons.
  • Enhancing the effectiveness of governance of insurance companies.
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    • Ensuring the National Bank of Ethiopia can effectively assess the sound and prudent management and direction of insurance companies.

Organizations

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  • National Bank of Ethiopia
  • Insurance companies

Legal references

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  • Insurance Business Proclamation No. 746/2012
  • Insurance Business (Amendment) Proclamation No. 1163/2019
  • Directive No. SIB/32/2012
Original sourcehttps://nbe.gov.et/files/sib-63-2026/
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