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The Actuaries Act,2006
S. P. Subhedar
Sr. Advisor, Prudential Corporation Asia
August 2007
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The Actuaries Act,2006 - Disclaimer
The objective of this presentation is only to familiarize theparticipants with the provisions of the Act. For any action
in connection with the provisions of the Act, the
participants are advised to refer to the Act.
Further, the views expressed during discussions at the
session will be entirely presenters personal views and inno way be construed as the views of the IAI.
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Agenda
Background
The Actuaries Act, 2006
- Chapter I - Preliminary
- Chapter II - Institute of Actuaries of India
- Chapter III - Register of Members
- Chapter IV - Misconduct
- Chapter V - Appeals
- Chapter VI - Penalt ies
- Chapter VII - Quality Review Board
- Chapter VIII - Dissolution of the Actuarial Society of India
Registered Under The Societies Registration
Act
- Chapter IX - Miscellaneous
- The Schedule
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Background
Government should consider granting a charter to the society at
an appropriate time -- Malhotra Committee recommendation(1994).
Insurance Regulatory Authority, an interim authority, set up by an
executive order initiated action in this regard in late 1996.
After extensive debate at the professional level and discussions
with the IRA, the draft Bil l to be submitted to the government took
final shape in 1997.
The IRDA Act was enacted in December 1999.
The IRDA then pursued the matter and the draft Bil l was reviewed.
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Background
The Bill when introduced in the Parliament was referred to the
Standing Committee.
The Standing Committee held discussions with the various
stakeholders and gave its report on the basis of which the Bill was
amended.
The Bill was passed in the monsoon session of the Parliament in
August 2006 and received the assent of the President on 27th
August 2006.
The Actuaries Act, 2006 was published in the Gazette of India
dated 28th August 2006.
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Chapter I - Preliminary
The Act envisages that it shall come into force on such date as the
Central Government may appoint.
The Act provides for different dates to be appointed for different
provisions of the Act.
Through a notification dated 8th November 2006, the Government
appointed 10th November 2006 as the date from which all the
provisions of the Act shall come into force.
Definition of Actuary , inter alia, stipulates that he has to be a
fellow member of the Institute .
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Chapter I - Preliminary
A member of the Institute shall be deemed to be in practice
when - individually; or
- in partnership with Actuaries in practice as a member or
an employee of a company,
he - engages himself in actuarial practice; or
- offers to perform or performs services involving the
application of actuarial techniques in the field of
insurance, pension, investment..
- renders such other services as, in the opinion of the
Council, are or may be rendered by an actuary in practice;
- is in employment of a person engaged in one or of the
activities mention above.
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Chapter II - Institute of Actuaries of India
On the appointed day , i.e. 10th Nov 2006,
- a body corporate was constituted by the name of the
Institute of Actuaries of India; and
- all the assets and liabilit ies of the Actuarial Society stand
transferred to, and vested in, the Institute.
Entry of names in Register:
- any person who immediately before 10th Nov 2006 was
an associate or fellow member of the ASI;- any person who has passed the examinations of the ASI
and has completed specified training, except any such
person who is not a permanent resident of India;
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Chapter II - Institute of Actuaries of India
- any person who has passed specified examination and
completed specified training for membership of the
Institute;
- any person who has passed examination and completed
training outside India as is being specified as beingequivalent to that specified under the Act for membership
of the Insti tute. In case the person is not permanently
residing in India, he will have to satisfy conditions as may
imposed by the Government / Council.
The members of the Insti tute shall be divided into two classes :
Associates and Fellows.
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Chapter II - Institute of Actuaries of India
Honorary, Affil iated and Student Members:
- the Council may confer Honorary membership on persons
of eminence in matters relating to and of interest to the
actuarial profession;
- a person who is a holder of membership equivalent tofellow membership of the Insti tute may be admitted as an
Affiliate for such period and on such terms and conditions
as wil l be laid down in the regulations;
- a person having specified academic qualif ication and hasenrolled himself for examination of the Insti tute may be
admitted as Student member.
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Chapter II - Institute of Actuaries of India
Honorary Member, Affi liate Member and Student Member shall
have no right to vote on any matter or resolution.
No member of the Insti tute shall be entitled to practice unless he
fulfills the qualifications as may be specified and obtains from the
Council a Certificate of Practice (CoP).
Fees for CoP shall be payable on or before 1st April every year.
CoP may be cancelled by the Council under such circumstances
as may be laid down in the regulations.
Every member of the Institute in practice shall, and any othermember may, use the designation of an Actuary.
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Chapter II - Institute of Actuaries of India
Composition of the Council:
- minimum of nine and maximum of twelve elected members;
- an officer not below the rank of Jt.Secretary nominated by
the Government of India to represent the Finance Ministry;
- a person from the IRDA nominated by the CentralGovernment;
- two persons to be nominated by the Central Government
from amongst the persons having knowledge of insurance,
law, finance or any other discipline as would be useful tothe Council.
One third of the members of the Council shall retire every second
year by rotation.
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Chapter II - Institute of Actuaries of India
The first AGM of the Insti tute shall be held within a period of not
more than 18 months from the appointed day.
Not more than 15 months shall elapse between the date of one
AGM and that of the next.
An elected member of the Council shall be eligible for re-election
but not for more than two consecutive terms, I.e. three
consecutive terms in all.
A member of the Council who has been elected as a President
shall not be eligible for election or nomination as a member of the
Council.
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Chapter II - Institute of Actuaries of India
The Council shall refer all election disputes to the Tribunal
established by the Central Government for this purpose.
The Council shall elect three of its elected members as the
President, Vice President and Hon. Secretary.
These office bearers shall hold office for a period of two years
provided they continue to be the members of the Council.
The duty of carrying out the functions under the provisions of the
Act shall be vested in the Council.
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Chapter II - Institute of Actuaries of India
The Council may constitute such committees from amongst its
members, and co-opt therein persons who are not members ofthe Institute, as it deems necessary for the purpose of carrying
out the provisions of the Act.
The co-opted members shall not exceed one-third of the totalmembership of the committee.
The Council shall cause to be published in the Gazette of India a
copy of the audited accounts and its report for the year not laterthan 30th September of the year next fol lowing.
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Chapter III - Register of Members
The Council shall cause to be published a list of members as on
1st Apri l each year, and shall, if requested to do so by anymember, send him a copy of such list on payment of such amount
as may be laid down in the regulations.
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Chapter IV - Misconduct
The Council shall constitute a Disciplinary Committee consist ing
of:
- the President or the Vice President as the presiding
officer;
- two members of the Council, elected by the Council; and
- two members to be nominated by the Central Government
The Council may appoint a Prosecution Director and other
employees to assist the Disciplinary Committee in makinginquiries in respect of the complaint received.
The Disciplinary Committee to submit report of its inquiry to the
Council
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Chapter IV - Misconduct
For an inquiry under the provisions of the Act, the Appellate
Authority, the Disciplinary Committee and the ProsecutionDirector shall have the same powers as are vested in a civi l court
in respect of the following matters:
- summoning and enforcing attendance of any person and
examining him on oath;
- the discovery and production of any document; and
- receiving evidence on affidavit.
The Council is the final authority on all disciplinary matters.
When the Council finds a member guil ty of professional
misconduct it shall afford a member a reasonable opportunity ofbeing heard before making any order against him.
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Chapter IV - Misconduct
Section 31 of the Act confers on the Disciplinary Committee or the
Prosecution Director powers to inquire into the conduct of anymember of the Institute under any circumstances other than those
listed in the Schedule.
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Chapter V - Appeals
A member aggrieved by the order of the Council imposing on him
the penalty may within 90 days of the date of the order prefer anappeal to the Appellate Authority.
The Appellate Authority consti tuted under the Chartered
Accountants Act, 1949, shall be the Appellate Authority for thispurpose subject to the following modification:
- the Central Government shall, by notification, appoint two
part-time Members from amongst the persons who have
been members of the Council of the IAI for at least one full
term and who are not sitt ing members of the Council.
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Chapter VI - Penalties
Penalty for falsely claiming to be a member, etc.
- first conviction with fine which may extend up to one
lakh rupees; and
- any subsequent conviction - imprisonment up to one year
or fine up to two lakh rupees or both.
Except as otherwise provided in the Act,no person shall:
- use a name or a common seal which is identical with that
of the Institute- award any degree, diploma or certificate or bestow any
designation which purports to indicate any qualification
similar to that of a member of the Insti tute.
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Chapter VI - Penalties
This shall not apply to any University or other institution
established by law or to any body affiliated to the Institute.
Companies not to engage in Actuarial practice. Contravention of
this provision shall be punishable with fine - first conviction fine
of Rs 10,000 - subsequent conviction fine of Rs 25,000.
Only fellow members can sign documents on behalf of an actuary
in practice or a firm of actuaries in his or its professional capacity.
Contravention of these provisions shall be punishable - first
conviction fine up to Rs 25,000 - subsequent conviction -
imprisonment up to one year or fine up to one lakh or both.
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Chapter VII - Quality Review Board
The Central Government shall constitute a Quality Review Board
consisting of a Chairperson and not more than four members.
Two members of the Board shall be nominated by the Council and
the other two shall be nominated by the Central Government.
If the Board is consti tuted with two members, one each shall be
nominated by the Council and the Central Government.
The Board shall perform the following functions:
- to fix standards for the services provided by the members
of the Institute;
- to review the quality of services provided by the membersof the Institute.
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Chapter VII - Quality Review Board
- to guide the members of the Insti tute to improve the
quality of services and adherence to the various statutory
and other regulatory requirements.
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Chapter VIII - Dissolution of the Actuarial Society ofIndia Registered Under the Societies Act
On the appointed day, the Actuarial Society of India shall stand
dissolved.
Every persons employed in the dissolved society and continuing
in its employment immediately before the commencement of the
Act shall become an employee of the Institute.
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Chapter IX - Miscellaneous
Where an actuary in practice or a firm of such actuaries has more
than one office, each one of such offices shall be in charge of afellow member of the Insti tute.
The Council may in suitable cases exempt any Actuary in practice
or firm of such Actuaries from the operation of the aboveprovision.
The Central Government may, by notification, make rules to carry
out the functions of the Act.
The Council may, with the previous approval of the Central
Government make regulations to carry out the provisions of the
Act.
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The Schedule
Part I - Professional misconduct in relation to members of the
Insti tute in practice.
An Actuary in practice shall be deemed to be guilty of
professional misconduct, if he :
- allows any person to practice in his name as an actuary
unless such person is also an actuary in practice and is in
partnership with or employed by himself;
- if he pays by way of remuneration to an employee anyshare, commission or brokerage in the fees or profits of his
professional business;
- if he pays any share, commission or brokerage in the fees
or profits of his business to any person other than amember of the Institute;
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The Schedule
- if he enters into partnership with any person other than an
actuary in practice or if he enters into partnership with an
actuary resident outside India and does not share in the fees
or profits of the business of the partnership both within and
and outside India;- secures either through the services of a person who is not
an employee of such actuary or who is not qualif ied to be his
partner any professional business;
- accepts an assignment as Actuary previously held byanother Actuary without communicating with him in writing;
- charges or accepts in respect of any professional
employment fees which are based on percentage of profits
or which are contingent on the findings or results..
- .
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The Schedule
The other items in this Part are relatively simple.
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The Schedule
Part II - Professional Misconduct in relation to the members of the
Insti tute in service.
The acts of misconduct covered in the Part are:
- paying/allowing/ agreeing to pay directly/indirectly any
share in the emoluments of the employment;
- accepting/ agreeing to accept any part of fees/profits/
gains by way of commission;
- disclosing confidential information acquired in the courseof employment except when required by law.
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The Schedule
Part III: - Professional misconduct in relation to members of the
Insti tute generally.
The acts of misconduct covered in the Part are:
- giving particulars to the Council knowing those to be false
- acting as a fellow member when not being a fellow
member;
- not complying with the requirements asked by the
Council;- contravening any pf the provisions of the Act or
regulations made thereunder or guidelines issued by the
Council
- guil ty of any other act as may be specified by the Council.
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The Schedule
Part IV:- Other misconduct in relation to member of the Institute
generally.
The acts of misconduct covered in the Part are:
- being held guilty by any civil or criminal court which is
punishable with imprisonment;
- member, in the opinion of the Council, bringing disrepute
to the profession.
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Thank you