CHAPTER 403 INSURANCE BUSINESS ACT - European …ec.europa.eu/internal_market/finances/docs/actionplan/... · · 2008-09-01INSURANCE BUSINESS [CAP. 403. 1 CHAPTER 403 INSURANCE

INSURANCE BUSINESS [CAP. 403. 1

CHAPTER 403

INSURANCE BUSINESS ACT

To regulate the business of insurance.

1st October, 1998

ACT XVII of 1998, as amended by Act XVII of 2002.

ARRANGEMENT OF ACT

Articles

Part I. Preliminary 1-2

Part II. Supervision of Business of Insurance 3-4

Part III. Authorisation for carrying on Business of Insurance 5-13

Part IV. Conditions for carrying on Business of Insurance 14-18

Part V. Accounts, Actuarial Investigations and FinancialStatements 19-24

Part VI. Powers of Intervention 25-28

Part VII. Supervision of Authorised Companies 29-32

Part VIII. Transfer of Business of Insurance 33-37

Part IX. Acquisition and Disposal of Shares, Withdrawal,Dissolution and Winding up 38-42

Part X. Conduct of Business of Insurance 43-48

Part XI. Protection and Compensation Fund 49-54

Part XII. General Provisions 55-69

SCHEDULES

First Schedule Provisions relating to Lloyd’s

Second Schedule Classes of long term business

Third Schedule Classes and groups of classes of general business

Fourth Schedule Provisions relating to insurance agents and managers

2 CAP. 403.] INSURANCE BUSINESS

PART I

PRELIMINARY

Short title. l. This Act may be cited as the Insurance Business Act.

Interpretation.Amended by:XVII. 2002.236.

2. (1) In this Act, unless the context otherwise requires -

"advertisement", in relation to business of insurance, means anyform of advertising, whether done verbally or in writing, and,without prejudice to the generality of the foregoing, includesadvertising in a publication, the display of notices, signs, labels orshowcards, by means of letters, circulars, prospectuses, catalogues,price lists or other documents, by an exhibition of pictures orpho tog raph ic o r c inema tog raph ic f i lms , by way o f soundbroadcasting or television, by the distribution of recordings or inany other manner, and references to the issue of an advertisementshall be construed accordingly;

"approved actuary" and "actuary" have the meaning assigned tothem by article 22(5);

"approved auditor" and "auditor" have the meaning assigned tothem by article 21(10);

"authorisation", in relation to business of insurance, or to amat te r connec ted therewi th or anc i l la ry there to , means anauthorisation or a deemed authorisation under this Act, and"authorised" shall be construed accordingly;

"body corporate" means any entity having a legal personalitydistinct from that of its members;

"branch" means premises of the company, other then its headoffice, from which the business of insurance is carried on;

"business of insurance" means the effecting and carrying out ofcontracts of insurance of such class or classes of long term businesso r c l a s s o r c l a s se s o r pa r t c l a s se s o f gene ra l bus ine s s a srespectively specified in the Second Schedule and Part I of theThird Schedule, and, without prejudice to anything contained inany other law, includes -

(a) the effecting and carrying out, by a person not carryingon business of banking, of -

(i) contracts for fidelity bonds, performance bonds,administration bonds, bail bonds or customsbonds or similar contracts of guarantee, beingcontracts effected by way of business (and notmerely incidentally to some other businesscarried on by the person effecting them) inreturn for the payment of one or more premiums;

(ii) capital redemption contracts;(iii) contracts to manage the investments of pension

funds,

and, in relation to contracts to manage the investmentsof pension funds, the expression "a person not carryingon business of banking" includes "a person notcarrying on investment services";


(b) any business carried on in connection with or ancillaryto business of insurance;

(c) unless otherwise specified, business of reinsurance;

"commitment" means a commitment represented by any one ormore of the kinds of classes of long term business contained in theSecond Schedule;

"company" includes a company whose head office is in Malta orin a country outside Malta;

Cap. 386.

"company whose head office is in Malta" means a l imitedliability company formed and registered in Malta in accordancewith the Companies Act;

"company whose head office is in a country outside Malta"means a company registered, incorporated or constituted outsideMalta under the laws of any country provided that such companyhas complied with the provisions of any law which may from timeto time be in force in Malta relating thereto, and includes, subjectto the provisions contained in the First Schedule, Lloyd’s and anyother recognised insurance body recognised by the competentauthority for the purposes of this Act and each member of Lloyd’sand of any such other recognised insurance body;

"competent authority" means the body established under article3(2);

"conditions" includes obligations and restrictions;

"contract of insurance" and "contract", in relation to business ofinsurance, mean an agreement in which an insurer agrees, for aconsideration, to pay to or for the account of the insured a sum ofmoney or other consideration, whether by way of indemnity againstloss, damage or liability or otherwise, on the happening of aspecified event with respect to which there is an element ofuncertainty as to when or whether it will take place;

"control", in relat ion to a body corporate, is the power todetermine the f inancia l and opera t ing pol ic ies of the bodycorporate;

"controller", in relation to a body corporate, is a person who,alone or together with others, exercises control of the bodycorporate;

"country of the commitment" means any country where thepolicyholder has his habitual residence or, if the policyholder is alegal person, the country where the latter’s establishment, to whichthe contract relates, is situated;

"country outside Malta" means and includes any country,territory or place outside Malta;

"director", in relation to a company, includes an individualoccupying the position of a director of the company, by whatevername he may be called, empowered to carry out substantially thesame functions in relation to the direction of the company as thosecarried out by a director and, in respect of a company whose headoffice is in a country outside Malta, includes a member of a local


board, an agent and the person designated as the representative ofthat company for the purpose of sub-paragraph (i) of paragraph (d)of article 11(1);

"establishment" means the head office, agency, or branch of anu n d e r t a k i n g a n d i n c l u d e s a n y p e r m a n e n t p r e s e n c e o f a nundertaking in Malta, even if that presence does not take the formof a branch or agency but consists merely of an office managed bythe undertaking’s own staff or by an independent person who hasexpress or implied authority to act for the undertaking;

"financial year" shall be construed in accordance with article19(4);

"functions" includes responsibilities, powers and duties;

"general business" has the meaning assigned to it by article 5(1);

"guarantee fund" shall be construed in accordance with article16(1);

Cap. 386."holding company" has the same meaning as is assigned to the

term "parent company" in the Companies Act;

"inspector" means a person appointed as such by the competentauthority under article 30(1);

"insurance agent", in relation to a company, means a personauthorised as such under article 13 appointed by the company to beits agent in respect of business of insurance with authority to enterinto contracts of insurance on behalf of the company under theterms of the appointment;

"insurance directive" means a directive in respect of the businessof insurance issued by the competent authority in virtue of article4(3);

"insurance manager" means a person authorised as such underarticle 13 whose activities consist of accepting an appointmentfrom:

(a) an insurer to manage any part of its business, or toexercise managerial functions therein, or to beresponsible for maintaining accounts or other recordsof such insurer, and, in this context, "management"includes authority to enter into contracts of insuranceon behalf of the insurer under the terms of theappointment; and

Cap. 404. (b) an insurance broker authorised under the InsuranceBrokers and Other Intermediaries Act, to manage anypart of its business, or to exercise managerial functionstherein, or to be responsible for maintaining accountsor other records of such insurance broker;

"insured" means the party to whom, or on whose account, or towhose beneficiaries, a sum of money or other consideration ispayable under a contract of insurance on the happening of aspecified event;

"insurer" means the party to a contract of insurance who agrees


to pay a sum of money or other consideration on the happening of aspecified event;

Cap. 370."investment services l icence" has the same meaning as is

assigned to it by the Investment Services Act;

"Lloyd’s" has the meaning assigned to it in the First Schedule;

"long term business" has the meaning assigned to it by article5(1);

" M a l t a ’ s i n t e r n a t i o n a l c o m m i t m e n t s " m e a n s M a l t a ’ scommitments, responsibili t ies and obligations arising out ofm e m b e r s h i p o r o f a f f i l i a t i o n t o o r r e l a t i o n s h i p w i t h a n yinternational global or regional organisat ion or grouping ofcountries or out of any treaty, convention or other internationalagreement however called, whether bilateral or multilateral, towhich Malta is a party;

"margin of solvency" and "Malta margin of solvency" shall beconstrued in accordance with article 14;

"Minister" means the Minister responsible for finance;

Cap. 373."money laundering" has the same meaning as is assigned to it by

the Prevention of Money Laundering Act;

"mutual association" shall be construed in accordance witharticle 6(3);

"officer", in relation to a company, includes a director, partner,manager or company secretary or any person effectively acting insuch capacity whether formally appointed or not;

"overseas regulatory authority" means an authority which in acountry outside Malta exercises any function corresponding to -

(a) a function of the Minister under this Act; or

(b) a function of the competent authority thereunder;

"own funds" shall be construed in accordance with an insurancedirective made by the competent authority for the purposes of thisAct to determine the amount of, and the components which makeup, the company’s own funds;

"policy", in relation to business of insurance, means and includesa policy or a similar document, by whatever name it may be called,evidencing a contract of insurance;

"policyholder" means the person who for the time being is thelegal holder of the policy for securing the contract with the insurer;

"premium" means the consideration paid or payable by aninsured under a contract of insurance;

"prescribed" means prescribed by rules or regulations madeunder this Act;

"qualifying shareholding" means a direct or indirect holding in acompany which represents ten per centum or more of the sharecapital issued by such company or of the voting rights attaching tosuch share capi ta l or which makes i t possible to exercise asignificant influence over the management of the company, and


"qualifying shareholder" shall be construed accordingly;

"recognised insurance body" means any society, corporation orbody (howsoever constituted) established and recognised under thelaw of a country outside Malta the members of which, by virtue ofsuch membership, are entitled to carry on the business of insurancein that country subject to the rules and regulat ions and anylimitations from time to time established or imposed by suchsociety, corporation or body and which is recognised for thepurposes of this Act by an order made by the competent authority;

Cap. 386. "reconstruction" has the same meaning as in the Companies Act;

"risk situated in Malta" means and includes -

(a) in the case where the insurance relates either tobuildings or to buildings and their contents, in so far asthe contents are covered by the same insurance policy,any risk related to property situated in Malta;

(b) in the case where the insurance relates to vehicles ofany type, any risk related to any vehicles registered inMalta;

(c) in the case where the insurance relates to travel orholiday risks, whatever the class concerned, any riskrelated to travel or holiday if the policy covering therisk is of a duration of four months or less and thepolicy is taken out in Malta;

(d) in the case where the insurance relates to any risk ofany kind, other than a risk specified in the foregoingparagraph (a), (b) or (c), any risk of any such kind ifthe policyholder has his habitual residence in Malta or,where the policyholder is a legal person if theestablishment, to which the contract relates, is situatedin Malta;

"risk situated outside Malta" means a risk which is not a risksituated in Malta;

Cap. 386."subsidiary" has the same meaning as is assigned to the term

"subsidiary undertaking" by the Companies Act;

"technical provisions", in relation to business of insurance, shallbe construed in accordance with article 17(1) to (6);

"valuation regulations" means regulations made under article 63;

Cap. 104."vehicle" has the same meaning as is assigned to motor vehicle

by article 2 of the Motor Vehicle Insurance (Third Party Risks)Ordinance.


Cap. 404.

(2) (a) The competent authority may by order recogniseLloyd’s as a recognised insurance body fo r thepurposes of this Act and, upon such recognition, eachmember of Lloyd’s shall be deemed to be authorised,subject to such restrictions as may be set out in theorder to carry on in or from Malta, either through anauthorised insurance agent acting for such a member,or with an insurance broker (acting on behalf of aninsured person or a person to be insured) authorisedunder the Insurance Brokers and Other IntermediariesAct, such business of insurance as in accordance withthe rules and regulat ions of Lloyd’s and any lawapplicable thereto such member is permitted to carryon.

(b) The provisions of the First Schedule shall apply toLloyd’s and each of its members; and this Act shall,subject to the provisions of the said Schedule, apply toLloyd’s and each of its members in the same mannerand to the same extent as it applies to an authorisedcompany.

Cap. 12.(c) Notwithstanding the provisions of the Code ofOrganization and Civil Procedure, it shall be sufficientin any judicial act (other than an application for theissue of any precautionary or executive warrant) filedby or against members of Lloyd’s in connection with apolicy underwritten by them to file the act in the nameof the Lloyd’s representative in Malta asrepresentative of those members; provided the actcontains a statement that it is being filed in connectionwith a policy of insurance underwritten by members ofLloyd’s and giving particulars of the number referenceand date of the policy in respect of which the act isfiled, the identifying number of each of the syndicatessubscribing thereto and, where known, the names ofthe members of Lloyd’s comprising those syndicates.

The Lloyd’s representative shall within forty-fivedays after the filing by him of the judicial act, or of itsservice on him, as the case may be, file a note in therecords of the judicial act filed as aforesaid containinga list of the names of the members comprising thesyndicates subscribing to the policy and any such noteshall be deemed to be an integral part of the judgmentor decree emanating from the court subsequent to thejudicial act and such judgment or decree shall bebinding on the members whose names are listed in thenote in the same manner as it would so have boundthem if they had been named as parties to the saidjudicial act:

Provided that the Lloyd’s representatives shallnot be bound to file any such note following the filingof any judicial act where particulars of the names ofthe members of Lloyd’s comprising those syndicates


are already contained in the act or where any such notehas already been filed in the records of the case.

(d) The competent authority may by order extendparagraphs (a) and (c) and the provisions of the FirstSchedule to a recognised insurance body, other thanLloyd’s, as may from time to time be recognised by itand to the members of any such body, subject to suchmodifications and additions as it may deem necessary.

(e) Any order made under this article may be revoked oramended by a subsequent order of the competentauthority and the provisions of article 58 shall mutatismutandis apply to a revocation or amendment of anysuch order.

(3) In this Act and in any rules or regulations made thereunder,if there is any conflict between the English and the Maltese texts,the English text shall prevail.

PART II

SUPERVISION OF BUSINESS OF INSURANCE

Powers and duties of the Minister.Amended by:XVII. 2002.237.

3. (1) It shall be the duty of the Minister to exercise thepowers conferred upon him by this Act to ensure compliance bypersons authorised to carry on the business of insurance with theprovisions of this Act and any rules or regulations made thereunderand with such conditions as may from time to time be specified inthe respective authorisation.

(2) The Minister shall by order in the Gazette* appoint a bodyto be the competent authority for the purposes of this Act to carryout the functions of the competent authority under this Act and toperform such other funct ions as the Minis ter may considerappropriate in relation to the operation of this Act.

Powers and duties of the competent authority.Amended by:XVII. 2002.238.

4. (1) It shall be the duty of the competent authority to carryout the functions assigned to it by or under this Act and to ensurethat persons authorised to carry on the business of insurance in orfrom Malta comply with the provisions of this Act and of any rulesor regulations made thereunder, with any insurance directive madeby the competent authority in virtue of this Act and of any rules orregulations made thereunder and with the conditions specified intheir respective authorisation.

(2) When considering whether to grant or refuse to grant anauthorisation under this Act, the competent authority shall, inparticular, have regard to:

(a) the protection of insured persons, policy holders andthe general public;

(b) the protection of the reputation of Malta, taking intoaccount Malta's international commitments; and

(c) the promotion of competition and choice.

*See Legal Notice 190 of 1998.


(3) The competent authority may make insurance directives asmay be required for carrying into effect any of the provisions ofthis Act and of any rules or regulations made thereunder. Thecompeten t au thor i ty may amend or revoke such insurancedirectives.

(4) Insurance directives and any amendment or revocationthereof shall be officially communicated to the persons concernedand be open to public inspection at the offices of the competentauthority at all times during the normal working hours of theauthority.

(5) Insurance directives imposing an obligation or requirementon the public shall be made by regulations in accordance witharticle 64.

PART III

AUTHORISATION FOR CARRYING ON BUSINESS OF INSURANCE

Classification of business of insurance.Amended by:XVII. 2002.239.

5. (1) Subject to the provisions of subarticles (5) and (6), forthe purposes of this Act, business of insurance is divided into longterm business and general business; and -

"long term business" means business of insurance of any ofthe classes specified in the Second Schedule, and

"general business" means business of insurance of any ofthe classes specified in Part I of the Third Schedule.

(2) For the purposes of this Act, the effecting and carrying outof a contract of insurance whose principal object is within one classof business of insurance, but which contains related and subsidiaryprovisions within another class or classes, shall be taken toconstitute the carrying on of business of insurance of the first-mentioned class, and no other, if subarticle (3) or (4) applies to thecontract.

(3) This subarticle applies to a contract whose principal objectis within any class of long term business but which containssubsidiary provisions within general business class 1 or 2 if thecompany is authorised under art icle 7 to carry on long termbusiness class 1.

(4) This subarticle applies to a contract whose principal objectis within one of the classes of general business but which containssubsidiary provisions within another of those classes, not beingclass 14, 15 or 17:

Provided that the risk included in class 17 shall be deemedto be an ancillary risk of class 18 if the conditions of subarticle (5)are satisfied and where the main risk relates solely to the assistanceprovided to persons in difficulty while travelling or away fromtheir home or permanent residence, and the risk included in class17 shall also be deemed an ancillary risk where it concerns disputesor risks arising out of or in connection with, the use of seagoingvessels and the conditions of the said subarticle are satisfied.

(5) The conditions referred to in subarticle (4) are the


following:

(a) that the risks to be insured are connected with theprincipal risk;

(b) that these risks concern the object which is coveredunder the principal risk; and

(c) that they are covered by the contract insuring theprincipal risk.

(6) The Minister may, after consultation with the competentauthority, make rules or regulations determining the class or classesof long term business and the class or classes or part classes ofgeneral business that may be effected and carried out under thisAct.

(7) The competent authority may, by an insurance directivemade for the purpose of this article, determine that long termbusiness contracts of insurance as may be specified be of a kind asmay be specified or be expressed to be in effect for a period as maybe specified.

(8) The competent authority may, by an insurance directivemade for the purposes of this article, provide that general businesscontracts of insurance of a kind specified in the directive containsuch conditions or include such requirements or arrangements asmay be determined by the directive.

Restriction on carrying on business of insurance.Amended by:XVII. 2002.240.

6. (1) No person shall carry on, nor hold itself out as carryingon, in or from Malta business of insurance unless authorised by thecompetent authority.

(2) Without prejudice to subarticle (1), no company whosehead office is in Malta shall carry on, nor hold itself out as carryingon, business of insurance in or from a country outside Malta, unlessauthorised by the competent authority.

(3) Subarticles (1) and (2) shall not apply to a mutualassociation if such mutual association satisfies such requirementsas may be set out in an insurance directive made for the purpose.

Cap. 370.

(4) Where business of insurance, either wholly or partly,consists of contracts of long term business within the meaning ofclass I I I conta ined in the Second Schedule , and the personproviding such contracts holds a valid investment services licenceunder the Investment Services Act, the provisions of subarticles (1)and (2), in the case of that person and in so far as they refer to thatbusiness, shall not apply:

Cap. 370.Provided that, where the instrument (as defined in the

Investment Services Act) to which the business refers is issued by acompany whose head office is in Malta or is issued in or fromMalta by a person having a place of business in Mal ta , theprovisions of this subarticle shall not apply with regard to theperson issuing the instrument.

(5) The Minister, acting on the advice of the competentauthority, may make regulations under this article -

(a) declaring certain services and activities ancillary to or


connected with business of insurance as notconstituting business of insurance for any or all of thepurposes of this Act;

(b) prescribing the persons who may carry out suchservices and activities and the persons to or for whomsuch services and activities may be rendered;

(c) providing for any matter incidental to or connectedwith the above, and for the better carrying out of theprovisions of this subarticle.

(6) In the event of a doubt as to whether an activity constitutesbusiness of insurance, or whether business of insurance is or is notbeing carried on in or from Malta, the matter shall be conclusivelydetermined by the competent authority.

Authorisation by competent authority for carrying on business of insurance.Amended by:XVII. 2002.241.

7. (1) The competent authority may authorise a company tocarry on under this Act -

(a) in the case of a company whose head office is inMalta, in or from Malta or in or from a country outsideMalta;

(b) in the case of a company whose head office is in acountry outside Malta, in or from Malta,

such of the classes of business of insurance specified in the Secondor Third Schedule, or such parts of those classes, as may bespecified in the authorisation.

(2) An authorisation under this article may be restricted tobusiness of reinsurance; and a company may not carry on businessof reinsurance by virtue of an authorisation under this article unlessthe authorisation expressly extends to such business.

(3) The competent authority shall have the power to requireany company to provide such information as it may deem necessaryfor the purpose of determining an application for authorisation.

(4) An authorisation under this article shall only be issued ifthe competent authority is satisfied, on the basis of the informationrequired to be submitted under this Act and any informationreceived by it, that the authorisation ought to be granted.

(5) An authorisation issued under this article may identifyclasses or part classes of general business by referring to theappropriate groups specified in Part II of the Third Schedule.

(6) Subject to the provisions of this Act, the competentauthority may subject an authorisation issued or held under thisarticle to such conditions as it may from time to time deem fit toimpose.

(7) Subject to subarticle (8), the competent authority shalldetermine an application for authorisation under this article withinsix months of receiving the information required to be submittedunder this Act; and if it refuses to issue the authorisation it shallinform the applicant in writing of the reasons for the refusal.

(8) Where the authorisation sought is one restricted to


reinsurance, the period prescribed by subarticle (7) shall be of threemonths.

(9) On the issue to a company of an authorisation under thisarticle, any previous authorisation of that company under thisarticle shall lapse.

Authorisation requirements.Amended by:XVII. 2002.242.

8. (1) The competent authority shall not issue anauthorisation under article 7 unless it is satisfied that -

(a) an application for authorisation is made in writing by acompany in such form and manner as the competentauthority may from time to time determine;

(b) the company’s objects are limited to business ofinsurance and operations arising directly therefrom, tothe exclusion of all other commercial business;

(c) the company has disclosed to the satisfaction of thecompetent authority such information as the competentauthority has requested of it in relation to persons whowill, upon the authorisation of the company, have anyproprietary, financial or other interest in, or inconnection with, that company;

(d) all qualifying shareholders, controllers and all personswho will effectively direct the business of insuranceare fit and proper persons to ensure its sound andprudent management;

(e) the company has submitted to the satisfaction of thecompetent authority a scheme of operations whichshall include the particulars or proof as may bedetermined by an insurance directive made for thepurpose of this article;

(f) the company’s own funds, whether in Maltese liri or inother currencies acceptable to the competent authorityare, at all times, not less than such amount appropriatefor the kind of business to be carried on, or beingcarried on, by the company, as may be determined byan insurance directive made for the purposes of thisAct; and such own funds are unencumbered at alltimes.

(2) Where close links exist between a company applying forauthorisation and any other person, the competent authority shall:

(a) only issue an authorisation if it considers that suchclose links do not prevent it from effectivelyexercising its supervisory functions; and

(b) refuse to issue such authorisation if it considers thatthe laws, regulations or administrative provisions ofany country, other than Malta, governing any personwith whom the company has close links, or theirenforcement, prevent it from effectively exercising itssupervisory functions.

(3) The competent authority may, from time to time, by means


of an insurance d i rec t ive i s sued under th i s Act def ine thecircumstances in which close links are to be regarded as existingbetween a company and any other person.

Combination of long term business and general business.Amended by:XVII. 2002.243.

9. (1) Subject to subarticle (2), the competent authority shallnot, under article 7, authorise a company to carry on both long termbusiness and general business unless -

(a) the long term business is restricted to reinsurance; or

(b) the general business carried on by the company isrestricted to classes 1 and 2 of Part I of the ThirdSchedule (accident and sickness) or to any class or partof a class of business within that group.

(2) Without prejudice to the provisions of subarticle (3), theprovisions this article shall not apply to a company which holds anauthorisation to carry on both long term business and generalbusiness under thi Act as in force immediately before the cominginto force of subarticle (1) until such time as the Minister may byOrder in the Gazette establish.

(3) A company authorised as aforesaid shall, in respect of longterm business and general business, be managed separately in amanner as may be determined by an insurance directive made forthe purpose of this article.

Applicants with head office in Malta.Amended by:XVII. 2002.244.

10. (1) The competent authority shall not issue anauthorisation under article 7 to a company whose head office is inMalta, nor shall the competent authority permit such company tohold the authorisation issued thereunder, unless it is satisfied that -

(a) the company has fulfilled or complied with therequirements of articles 8 and 14 and, whereappropriate, of article 9; and

(b) where the authorisation sought or held is one notrestricted to reinsurance, the company submits proofthat the minimum guarantee fund required to bemaintained under article 16 has been deposited withand held in custody for its account by a person as maybe prescribed under article 18.

(2) A company authorised as aforesaid may, with the approvalof the competent authority given in writing -

(a) open a branch in Malta;

(b) appoint:

(i) an insurance manager; or(ii) an insurance agent; or

(iii) both an insurance manager and an insuranceagent.

(3) Except with the written consent of the competent authority,no company authorised as aforesaid may open a branch, agency orset up or acquire any subsidiary in any country outside Malta.


Applicants with head office outside Malta.Amended by:XVII. 2002.245.

11. (1) The competent authority shall not issue anauthorisation under article 7 to a company whose head office is in acountry outside Malta, nor shall the competent authority permitsuch company to hold the authorisation issued thereunder, unless itis satisfied that -

(a) the company has fulfilled or complied with therequirements of articles 8 and 14, and, whereappropriate, of article 9;

(b) the company is permitted in the country where its headoffice is situated to carry on the business of insurancewhich forms the object of the application;

(c) the company maintains in Malta at all times assets ofsuch kind and amount as may be prescribed by ordetermined in accordance with regulations made forthe purposes of this Act; and, where the authorisationsought or held is one not restricted to reinsurance, thewhole or a specified proportion of such assets as maybe prescribed or determined is deposited with and heldin custody for the company’s account by a person asmay be prescribed under article 18;

(d) the company has in Malta at all times:

(i) a representative fulfilling the requirements ofarticle 12; and

(ii) a branch as defined by subarticle (2); or(iii) an authorised insurance agent; or(iv) both a branch and an authorised insurance agent.

(2) In relation to a branch of a company whose head office is ina country outside Malta, the business of insurance shall be carriedout f rom such branch by a person fu l f i l l ing the fo l lowingrequirements of this subarticle:

(a) the person must be an individual resident in Malta oran authorised insurance manager who has beendesignated by the company for the purpose of thisarticle;

(b) where the person is an individual -

(i) the person must not be the approved auditor, or apartner or an employee of the approved auditor,of the company;

(ii) the person possesses the qualifications andfulfils or complies with the requirementsdetermined by an insurance directive made forthe purpose of this article; and

(iii) the person is fit and proper to ensure its soundand prudent management.

General representatives.

12. The requirements referred to in article 11(1)(d)(l) are thoseset out in the following provisions of this article:

(a) the representative must be a person resident in Maltawho has been designated as the company’s


representative for the purpose of this article;

(b) the representative must be authorised to act generally,and to accept service of any document, on behalf of thecompany;

(c) the representative must not be the approved auditor, ora partner or an employee of the approved auditor, ofthe company;

(d) if the representative is not an individual, it must be acompany whose head office is in Malta and must itselfhave an individual representative resident in Maltawho is authorised to act generally, and to acceptservice of any document, on behalf of the company, inits capacity as representative of the company.

Insurance agents and managers.

13. (1) No person shall act as an insurance agent of anauthorised company or as an insurance manager unless authorisedby the competent authority.

(2) The competent authority may authorise a person to act as aninsurance agent of an authorised company or as an insurancemanager.

(3) Subject to the provisions of subarticles (4) and (5), thecompetent authority shall not issue an authorisation under thisarticle to a person nor shall the competent authority permit suchperson to hold the authorisation issued thereunder, unless it issatisfied that such person fulfils or complies with the requirementsse t ou t in Par t I o f the Four th Schedule appropr ia te to theapplication.

(4) The provisions of this Act shall apply with respect to anauthorisation to be issued, or issued, or held under this article, andthe holder thereof, subject to the provisions set out in Part II of theFourth Schedule.

(5) The holder of an authorisation issued or held under thisarticle is also subject to the requirements set out in Part III of theFourth Schedule.

(6) The competent authority shall, by an insurance directivemade for the purposes of this article, determine matters required tobe determined under any provis ion contained in the FourthSchedule.

PART IV

CONDITIONS FOR CARRYING ON BUSINESS OF INSURANCE

Margins of solvency.

14. (1) A company whose head office is in Malta authorisedunder this Act shall maintain at all times a margin of solvency ofsuch amount as may be prescribed by or determined in accordancewith regulations made for the purposes of this article.

(2) Subject to subarticle (3), a company whose head office is ina country outside Malta authorised under this Act shall maintain atall times -


(a) a margin of solvency, and

(b) a Malta margin of solvency,

of such amounts as may be prescribed by or determined inaccordance with the regulations made for the purposes of thisarticle.

(3) Subarticle (2)(b) shall not apply to a company if itsbusiness in Malta is restricted to reinsurance.

(4) Without prejudice to article 15, a company authorised asaforesaid which fails to comply with subarticle (1) or (2) -

(a) shall submit to the competent authority a plan for therestoration of a sound financial position; and

(b) shall propose modifications to the plan (or the plan aspreviously modified) if the competent authorityconsiders it inadequate; and

(c) shall give effect to a plan acceptable to the competentauthority.

(5) For the purposes of this Act -

(a) the margin of solvency of an authorised company isthe excess of the value of its assets, over the amount ofits liabilities, that value and amount being determinedin accordance with any applicable valuationregulations;

(b) the Malta margin of solvency of an authorisedcompany is the value of assets of the companyrepresenting the margin of solvency required to bemaintained by it under subarticle (2).

(6) In the case of an authorised company which carries on bothlong term business and general business, subarticles (1) and (2)shall have effect as if -

(a) the requirements to maintain a margin of solvency, and

(b) where the company carries on both kinds of businessin or from Malta, the requirement to maintain a Maltamargin of solvency,

were requirements to maintain separate margins in respect of thetwo kinds of business (and accordingly as if the reference insubarticle (5)(a) to assets and liabilities were a reference to assetsand liabilities relating to the kind of business in question).

(7) In applying subarticle (5), the amount of the company’sliabilities shall be taken to be increased by the amount of anyreserve maintained under article 17(7).

Failure to minimum margin of solvency.

15. (1) If -

(a) the margin of solvency of an authorised company towhich article 14(1) applies, or

(b) the margin of solvency or Malta margin of solvency ofan authorised company to which subarticle (2) of that


article applies,

falls below such amount as may be prescribed by or determined inaccordance with regulations made for the purposes of that article,the company shall notify the competent authority and make good,to the satisfaction of the authority, any such deficiency withoutdelay, and in no case later than fifteen days from the day of suchnotification.

(2) For so long as the margin of solvency or the Malta marginof solvency of a company is less than that required to be maintainedas aforesaid-

(a) the company shall not assume any new risk of any kindwhatever;

(b) the Competent Authority may -

(i) in the case of a company whose head office is inMalta, restrict or prohibit the disposal of thecompany’s assets;

(ii) in the case of a company whose head office is ina country outside Malta, restrict or prohibit thedisposal of the company’s assets in Malta,

and, in each case, take any other measure it deems necessary tosafeguard the interests of the policyholders and creditors.

(3) Where a company is required by virtue of article 14(6) tomaintain separate margins of solvency in respect of long termbusiness and general business, subarticle (1) shall have effect as ifany reference to the margin of solvency or the Malta margin ofsolvency of the company were a reference to the margin in respectof either of the two kinds of business.

Guarantee fund to be maintained by authorised companies.Amended by:XVII. 2002.246.

16. (1) Subject to subarticle (5), a company authorised underthis Act shall maintain in Malta at all times a guarantee fund of anamount of assets equal to the greater of the minimum guaranteefund or the value of one-third of -

(a) in the case of a company whose head office is inMalta, the margin of solvency required to bemaintained by the company under article 14(1)thereunder;

(b) in the case of a company whose head office is in acountry outside Malta, the Malta margin of solvencyrequired to be maintained by the company underarticle 14(2).

(2) The amount of the guarantee fund required to be maintainedby this article shall be not less than an amount (the "minimumguarantee fund") as may be prescr ibed by or determined inaccordance with regulations made for the purposes of this article.

(3) In the case of a company which carries on both long termbusiness and general business, subarticle (1) shall have effect as ifthe requirements to maintain a guarantee fund were requirements tomaintain separate guarantee funds in respect of the two kinds ofbusiness (and accordingly as if the references in that subarticle to


assets, margin of solvency and Malta margin of solvency werereferences to assets, margin of solvency and Malta margin ofsolvency relating to the kind of business in question).

(4) The assets required to be maintained in Malta by or underth is Act shal l not be t ransfer red , wi thdrawn or in any wayencumbered without the permission of the competent authoritygiven in writing or until the company has ceased to carry on thebusiness it was authorised to carry on and proves to the satisfactionof the authority that it has no further liability. Such assets shall notbe attachable by any court.

(5) The provisions of this article shall not apply to -

(a) a company if it carries on business solely in or fromMalta and the business is restricted to reinsurance;

(b) a company whose head office is in Malta, if it carrieson business solely in or from a country outside Malta,and the business is restricted to reinsurance.

Technical provisions. General business: equalisation reserve.Amended by:XVII. 2002.247.

17. (1) A company authorised under this Act shall every yearestablish and maintain adequate technical provisions, includingmathematical provisions, in respect of the business it is authorisedto carry on in an amount to be prescribed by or determined inaccordance with regulations made for the purposes of article 20.

(2) A company authorised as aforesaid shall at all times holdunencumbered assets equal to the value of its technical provisionsand after making adequate provision for all its other liabilities.

(3) The assets covering the technical provisions shall takeaccount of the business and the classes or part classes of businesscarried on by a company in such a way as to secure the safety, yieldand marketability of its investments, which the company shallensure are diversified and adequately spread in accordance withregulations made for the purposes of article 63.

(4) The technical provisions must at all times be covered byequivalent and matching assets provided that, with the approval ofthe competent authority given in writing, a company may hold non-matching assets to covering a sum not exceeding an amount as maybe prescribed by or determined in accordance with regulationsmade for the purposes of article 63.

(5) For the purposes of this article, the expression "matchingassets" means the representat ion of underwri t ing l iabi l i t iesexpressed in a particular currency by assets expressed or realisablein the same currency.

(6) Subarticle (4), in so far as it refers to "matching assets",shall not apply to a company if its business in or from Malta isrestricted to reinsurance.

(7) Without prejudice to subarticle (1) and subject to subarticle(8), every company authorised to carry on general business of apresc r ibed desc r ip t ion sha l l main ta in , in accordance wi thregulat ions made for the purposes of this ar t icle, a reserve,hereinafter referred to as equalisation reserve, in respect of itsgeneral business of that description.


(8) Subarticle (7) shall not apply to such company authorisedas a foresa id as may be prescr ibed for the purposes of th i ssubarticle.

(9) Regulations made for the purposes of this article may, withrespect to an equalisation reserve, make provision -

(a) as to the circumstances in which, and the times atwhich, amounts are to be placed to, or taken from, anequalisation reserve;

(b) as to the determination of the amounts to be so placedor taken; and

(c) as to such other matters incidental to the maintenanceof an equalisation reserve as the Minister may, afterconsultation with the competent authority, considerexpedient.

Custody of assets required to be maintained in Malta.

18. (1) The competent authority may, with respect to assetswhich a company, other than a company whose business isrestricted to reinsurance, is required by or under this Act tomaintain in Malta, impose an additional requirement that the wholeor a specified proportion of such assets shall be deposited with andheld in custody for the company’s account by a person as may beprescribed by regulations made for the purposes of this articleunless that requirement i s o therwise imposed by any otherprovision of this Act; and the competent authority shall at all timeshave the right to demand from such person any information it mayrequire to ensure that the provisions of this article are beingcomplied with.

(2) Any requirement by or under this Act that assets of anykind or amount are to be maintained in Malta shall be satisfied ifsuch assets are maintained in such country outside Malta and insuch form and manner to the satisfaction of the competent authoritysubject to such regulations as may be prescribed for such purposeunder this Act.

(3) Any provision by or under this Act requiring a company tomaintain in Malta assets of any kind or amount may be satisfied bythe company if the company produces a security in a form andmanner to the satisfaction of the competent authority subject tosuch regulations as may be prescribed for such purpose under thisAct.

PART V

ACCOUNTS, ACTUARIAL INVESTIGATIONS AND FINANCIAL STATEMENTS

Financial year of authorised companies.

19. (1) Every company whose head office is in Maltaauthorised under this Act shall, not later than three months from thedate of a company’s authorisation, notify in writing the competentauthori ty of i ts f inancial year; and, fai l ing such notice, thecompany’s financial year shall terminate on the thirty-first day ofDecember of each year.

(2) No company as aforesaid shall alter its financial year unless


and until the competent authority has given its approval in writingon an application made to it in that behalf.

(3) Every company whose head office is in a country outsideMalta applying for authorisat ion under art icle 7 to carry onbusiness of insurance in or from Malta, shall notify in writing thecompetent authority of its financial year; and where an authorisedcompany as aforesaid alters its financial year it shall forthwithnotify in writing the competent authority of such change.

(4) For the purposes of this Act, financial year -

Cap. 386.

(a) in relation to an authorised company whose headoffice is in Malta, means an accounting period as isconstrued in accordance with articles 164 to 166 of theCompanies Act;

(b) in relation to an authorised company whose headoffice is in a country outside Malta, means anaccounting period as is construed in accordance withthe provisions of the laws of the country where thehead office of the company is situated governing theaccounting period of such companies.

Drawing up and publication of audited financial statement.Amended by:XVII. 2002.248.

20. (1) Subject to the following subarticles, every companyauthorised under this Act shall, not later than six months from theclosing of i ts f inancial year, or at any other t ime as may beauthorised in writing by the competent authority -

(a) forward to the competent authority;

(b) publish in abridged form in at least two local dailynewspapers of which one is published in the Malteselanguage and the other in the English language;

(c) exhibit in a conspicuous position in each of its offices,agencies and branches in Malta and keep so exhibitedthroughout the following twelve months,

a copy of its audited financial statements drawn up -

(i) in the case of a company whose head office is inMalta, in accordance with regulations made forthe purposes of this article; and

(ii) in the case of a company whose head office is ina country outside Malta, in accordance with theprovisions of the laws of the country where thehead office of the company is situated governingthe financial statements of such companies.

(1A) In each of the cases referred to in paragraphs (i) and (ii) insubarticle (1) the company shall provide a copy of its auditedfinancial statements to any person applying for such copy:

Provided that the company may charge such reasonable feesnot exceeding the administrative costs incurred in producing suchcopy.

(2) The form and content of the statements required to bepubl ished under subar t ic le (1)(b ) shal l be such as shal l be


prescribed by the regulations.

(3) In the case of a company whose head office is in Malta,subarticle (1)(c) shall apply as respects the company’s offices,agencies and branches in a country outside Malta in the samemanner and to the same extent as it applies to its offices, agenciesand branches in Malta.

Cap. 386.(4) In so far as the provisions of this article or of any regulation

made thereunder are inconsistent with the Companies Act, theprovisions of this article or of any regulation made thereunder shallprevail and the provisions of the said Act shall, to the extent of theinconsistency, not apply to authorised companies as aforesaid.

Appointment, duties and termination of appointment of auditors.

21. (1) Every company authorised under this Act shall everyyear appoint an approved auditor as auditor to the company whoseduty shall be to report on the financial statements of the companyexamined by him and on financial statements prepared by thecompany.

(2) If an authorised company fails to appoint an auditor asrequired by subarticle (1), or at any time fails to fill any vacancy inthe office of auditor, the competent authority shall have the powert o a p p o i n t a n a u d i t o r f o r t h a t c o m p a n y a n d s h a l l f i x t h eremuneration to be paid by that company to such auditor.

(3) The auditor’s report shall include a statement as to whetherthe various requirements of this Act and of any rules or regulationsmade thereunder, and of any insurance directive in respect of thecompany have been compl i ed w i th and obse rved and anyprovisions made for that purpose.

(4) Every auditor of an authorised company shall have the rightto demand such information or explanation as he deems necessaryin the performance of his duties from any officer or employee of, orany person under an appointment from, that company.

(5) An auditor shall immediately give notice in writing to thecompetent authority if -

(a) he resigns;

(b) he does not seek to be re-appointed; or

(c) he decides to qualify the audit report,

and, in the case of a resignation, the auditor shall specify thereasons for so doing.

(6) An authorised company shall give notice in writing to thecompetent authority immediately it receives notice of a resolutionintended to be put before the company’s annual general meeting toappoint as an auditor a person other than the retiring auditor orotherwise providing expressly that the retiring auditor shall not bereappointed.

(7) Where, for any reason whatever, the appointment of anauditor comes to an end, the authorised company shall, not laterthan fourteen days from the termination of such appointment, givenotice in writing to the competent authority stating reasons for such


termination.

(8) The competent authority may require an authorisedcompany to change its appointed auditor where, in the competentauthority’s opinion, such auditor is considered unfit for thisappointment, at any time during his term of office.

(9) Before requiring an authorised company to change itsappointed auditor in the circumstances mentioned in subarticle (8),the competent authority shall notify in writing its intention to thecompany and the auditor concerned stating reasons for requiringsuch change and giving the auditor the opportunity to submit inwriting within fourteen days from the date of serving of such noticereason why its appointment with the company should not beterminated.

Cap. 386.

(10) For the purposes of this Act, an approved auditor shall be aperson who is qualified to be an auditor in accordance with theCompanies Act, and holds the authorisation of the competentauthority issued to him in accordance with regulations made for thepurpose of this article.

(11) Notwithstanding anything contained in the foregoingsubarticles, the competent authority may, in the case of a companywhose head office is in a country outside Malta authorised asaforesaid, approve such alternative arrangements as it thinksreasonable and which do not materially detract from the mainobjects of this article, and where such arrangements have beencarried out, the provisions of this article shall not apply to theextent that they are replaced by such arrangements.

Cap. 386.

(12) Subject to the provisions of subarticle (10), in so far as theprovisions of this article are inconsistent with the provisions of theCompanies Act, the provisions of this article shall prevail, and theprovisions of the said Act shall, to the extent of the inconsistency,not apply to authorised companies as aforesaid.

Appointment of actuary by company with long term business.

22. (1) Every company authorised under this Act to carry onlong term business shall -

(a) within thirty days of beginning to carry on suchbusiness, appoint an approved actuary as actuary to thecompany;

(b) whenever the appointment comes to an end, withinthirty days of such termination, make a newappointment.

(2) A company making an appointment under subarticle (1)shall, within fourteen days, inform the competent authority inwriting stating that fact, the date of such appointment and the nameand qualifications of the person appointed; and if an appointmentunder that subarticle comes to an end, the company shall, withinfourteen days, inform the authority in writing stating that fact, thename of the person concerned and the reasons for such termination.

(3) If, on the expiry of any period specified in subarticle (1),the company fails to make the required appointment, the companyshall not effect and carry out any new long term contracts of


insurance until the appointment is made.

(4) Notwithstanding the provisions of subarticle (2), thecompetent authority may, within fourteen days of receiving a noticeof termination of an appointment of an approved actuary, request inwriting the approved actuary concerned to give in writing thereasons for such termination; and the actuary shall, within fourteendays, give reasons in writing.

(5) For the purposes of this Act, an approved actuary is aperson who -

(a) is a fellow of an institute of actuaries, or a fellow of afaculty of actuaries, or holds actuarial qualifications ofsimilar standing of an institute of repute recognised forsuch purposes by the competent authority; and

(b) holds the Authority’s authorisation to act as actuary toa company authorised to carry on long term business.

Periodic actuarial investigation of company with long term business.Amended by:XVII. 2002.249.

23. (1) Every company authorised under this Act to carry onlong term business -

(a) shall, at the close of its financial year, cause aninvestigation to be made into its financial condition inrespect of that business by the person who for the timebeing is its actuary under article 22(1); and

(b) when such an investigation has been made, or when atany other time an investigation into the financialcondition of the company in respect of its long termbusiness has been made with a view to the distributionof profits, or the results of which are made public,shall cause an abstract of the actuary’s report of theinvestigation to be made and such abstract to beavailable to the policyholders of the company forinspection at the offices of the company.

(2) An investigation to which subarticle (1)(b) relates shallinclude -

(a) a valuation of the liabilities of the companyattributable to its long term business; and

(b) a determination of any excess over those liabilities ofthe assets representing the fund or funds maintained bythe company in respect of that business and, where anyrights of any long term business policyholders toparticipate in profits relate to particular parts of such afund, a determination of any excess of assets overliabilities in respect of each of those parts.

(3) For the purposes of any investigation to which this articleapplies, the value of any assets and the amount of any liabilitiesshall be determined in accordance with any applicable valuationregulations.

(4) The form and content of any abstract under this article shallbe such as may be determined by an insurance directive made forthe purposes of this article.


(5) Where an investigation is made, the actuary’s report of theinvestigation shall be forwarded by the company concerned to thecompetent authority -

(a) with regard to an investigation made at the close of thecompany’s financial year, together with the auditedfinancial statements of the company required to beforwarded under article 20;

(b) with regard to an investigation made at any other time,not later than thirty days from the close of theinvestigation.

(6) Notwithstanding the provisions of subarticle (1), thecompetent authority may in writing, at any time, direct a companyauthorised as aforesaid to cause to be forwarded to it a valuation ofthe company’s liabilities outstanding at the date specified in thedirection on account of its long term business, together with astatement prepared by the actuary of the company concerned, in theform and content as the competent authority may by the insurancedirective determine.

(7) Subarticle (1)(b), subarticles (2) and (4), and subarticle(5)(b) shall not apply to a company if its business is restricted toreinsurance.

(8) Notwithstanding anything contained in any of the foregoingsubarticles, in the case of a company whose head office is in acountry outside Malta authorised to carry on long term business,the competent authority may approve such alternative arrangementsas it thinks reasonable and which do not materially detract from themain objects of this article, and where such arrangements havebeen carried out, the provisions of this article shall not apply to theextent that they are replaced by such arrangements.

Obligations of auditors and actuaries to the competent authority.Amended by:XVII. 2002.250.

24. (1) If, in his capacity as an auditor or an actuaryrespectively of an authorised company, or due to a direct request bythe competent authority made under this Act, an auditor or anactuary, as the case may be, becomes aware of any matter whichrelates to and may have a serious adverse effect upon the insured,the policyholder or any other interested person of the company, orof the branch in Malta of a company whose head office is in acountry outside Malta, he shall immediately inform the competentauthority through the company’s management, or if circumstancesso warrant, directly to the competent authority.

(2) For the purposes of subarticle (1), any matter which relatesto and may have a serious adverse effect includes any matterwhich:

(a) is likely to lead to a serious qualification, or refusal of,the auditor’s report on the accounts of the company; or

(b) gravely impairs the company's ability to continue as agoing concern; or

(c) may be prescribed by the Minister.

(3) An auditor or actuary, as the case may be, of an authorisedcompany shall likewise have a duty to report to the competent


authority any facts and decisions which relate to or have a seriousadverse effect upon the insured, the policyholder or any otherinterested person, relating to the company, or of the branch inMalta of a company whose head office is outside Malta, of whichhe becomes aware in his capacity as auditor of or actuary to acompany having close links, within the meaning of article 8.

PART VI

POWERS OF INTERVENTION

Automatic revocation of an authorisation.

25. An authorisation issued or held under this Act shallautomatically be revoked if the authorised company -

(a) does not commence to carry on business pursuant tothe authorisation within twelve months of its issue, orwithin such other period as may be specified in theauthorisation; or

(b) is declared bankrupt or goes into liquidation or makesa composition with its creditors or is otherwisedissolved; or

(c) has ceased to operate as a result of a merger withanother company carrying on business of insurance orfor any other reason whatsoever; or

(d) is a company whose head office is in a country outsideMalta, and the overseas regulatory authority in thecountry of registration, incorporation or constitutionwithdraw the authorisation from the company.

Power of the competent authority to suspend or revoke an authorisation.Amended by:XVII. 2002.251.

26. Without prejudice to anything contained in any otherprovision of this Act, the competent authority may at any timesuspend or revoke an authorisation issued or held under this Act if -

(a) any document or information accompanying anapplication for authorisation, or any information givenin connection therewith, is false, incorrect ormisleading in any material particular, or if theauthorised company has concealed, or conceals from,or fails to notify to the competent authority anydocument or information or change therein which itwas its duty to reveal or to notify under this Act andany rules or regulations made thereunder or anyinsurance directive; or

(b) the authorised company ceases to carry on the businessfor which the authorisation was issued; or

(c) the authorised company suspends payment or is aboutto suspend payment; or

(d) it considers that the authorised company does not fulfilor comply with the requirements of, or hascontravened, any of the provisions of this Act and anyrules or regulations made thereunder, or any insurancedirective, or has failed to satisfy or comply with anycondition to which it or the authorisation held by it issubject by virtue of or under this Act; or


(e) it considers that any officer who effectively controlsthe business the company is authorised to carry on isno longer a fit and proper person to ensure its soundand prudent management; or

(f) it receives a written request so to do from theauthorised company; or

(g) the authorised company no longer possesses therequired own funds; or

(h) the authorised company is likely to become unable tomeet its obligations or can no longer be relied upon tofulfil or satisfy its obligations towards insureds,policyholders, creditors or other interested persons; or

(i) close links within the meaning of article 8, existbetween the authorised company and another person,and the competent authority is prevented fromexercising its supervisory functions effectively eitherby reason of those close links or by reason of any law,regulation or administrative provision of a countryoutside Malta governing that other person, or byreason of difficulty in their enforcement.

Notification of suspension or revocation of an authorisation.

27. (1) Subject to the following provisions of this article,where the competent authority intends to suspend or revoke anauthorisation it shall give the company concerned notice in writingsetting out the reasons for its intention to do so.

(2) Every notice given under subarticle (1) shall state that thecompany concerned may, within such reasonable period after theservice thereof as may be stated in the notice (being a period of notless than forty-eight hours and not longer than fifteen days), makerepresentations in writing to the competent authority giving reasonswhy the authorisation should not be suspended or revoked and thecompetent authority shall consider any representations so madebefore arriving at a final decision.

(3) The competent authority shall notify in writing its finaldecision to the company concerned.

(4) An authorisation issued to a company whose head office isin a country outside Malta may only be revoked after consultationw i t h t h e o v e r s e a s r e g u l a t o r y a u t h o r i t y o f t h e c o u n t r y o fregistration, incorporation or constitution, unless the competentauthori ty decides that the matter is urgent or that there arecircumstances which make such prior consultation inappropriate.

(5) In the case of a suspension or a revocation of anauthorisation of a company whose head office is in Malta, thecompetent authority shall inform the overseas regulatory authorityof any state in which the company or its subsidiaries are carryingon the business of insurance.


Power of the competent authority to protect the public interest.Amended by:XVII. 2002.252.

28. (1) In any of the cases in which the competent authoritymay suspend or revoke an authorisation under article 26, thecompetent authority may, either in lieu of or in addition to any suchsuspension or revocation, and without prejudice to its powers tosuspend or revoke an authorisation, proceed in any one or more ofthe following manners:

(a) require the company forthwith to take such steps as thecompetent authority may consider necessary to rectifyor remedy the matter;

(b) appoint a person to advise the company in the properconduct of its business;

(c) appoint a person to take charge of the assets of thecompany, or any portion of them, for the purposes ofsafeguarding the interests of insureds, policyholders,creditors and shareholders of the company;

(d) appoint a person to assume control of the business ofthe company either to carry on that business or to carryout such other function or functions in respect of suchbusiness, or part thereof, as the competent authoritymay direct;

(e) require the company to dissolve and wind up itsbusiness or, in the case of a company whose headoffice is in a country outside Malta, to wind up itsbusiness in Malta;

(f) appoint a competent person to act as liquidator for thepurpose of winding up the affairs of the company;

(g) fix the remuneration to be paid by the company to anyperson appointed under this article;

(h) do such other act or require the doing of such otherthing as it may deem appropriate in the circumstances,

and having proceeded in any one or more of the manners aforesaid,the competent authority may further proceed in any one or more ofsuch manners, whether in addition thereto or in substitutiontherefor.

(2) Where a person is appointed by the competent authority -

(a) under subarticle (1)(b), it shall be the duty of thecompany to act in accordance with the advice given bysuch person unless and until the competent authority,on representation made to it, directs otherwise;

(b) under subarticle (1)(c), the company shall deliver tosuch person all the assets of which he is placed incharge, and all the powers, functions and duties of thecompany in respect of those assets, whetherexercisable by the company in general meeting, or bythe directors, or by any other person, including thelegal and judicial representation of the company, shallbe exercisable by and vest in the person appointedunder the said paragraph to the exclusion of any otherperson;


(c) under subarticle (1)(d), the company shall submit itsbusiness to the control of such person and shallprovide him with such facilities as he may require thecompany to provide him to carry on that business or tocarry out the functions assigned to him under the saidparagraph; and all the powers, functions and duties ofthe company, whether exercisable by the company ingeneral meeting, or by the directors, or by any otherperson, including the legal and judicial representationof the company in all matters, shall be exercisable byand vest in him to the exclusion of any other person;

(d) under subarticle (1)(f), such person shall be theliquidator of the company for all purposes of law to theexclusion of any other person.

(3) In the case of a company whose head office is in a countryoutside Malta, the branches and offices in Malta of that companyshall, if the competent authority so directs and to the extent it sodirects, be deemed to constitute a separate company.

(4) The competent authority may, where it feels is in the bestinterest of the public so to do, make or issue public statements ornotices giving warnings or information about any of the following:

(a) the suspension, revocation or restriction of anauthorisation;

(b) any action taken in terms of this article;

(c) the carrying out of business of insurance in anunsatisfactory manner and the persons carrying outsuch business;

(d) any other practice or matter which may be detrimentalto the interest of insureds, policyholders, creditors orother interested persons;

(e) the commission of an offence against this Act;

(f) the imposition by the competent authority of anadministrative penalty.

(5) The competent authority may require the companyconcerned to pay al l the expenses of , and incidental to , thepublication or issue of public statements or notices pursuant to thisarticle or such part thereof as it may deem appropriate; and any sumso due shall be recoverable by the competent authority in the samemanner as an administrative penalty imposed under this Act.

PART VII

SUPERVISION OF AUTHORISED COMPANIES

Power of the competent authority to require information.Amended by:XVII. 2002.253.

29. (1) Without prejudice to anything contained in any otherprovision of this Act which requires an authorised company tof u r n i s h t o t h e c o m p e t e n t a u t h o r i t y a n y i n f o r m a t i o n o rdocumentation, the competent authority may, by notice in writing,require any such company to -

(a) furnish to it, at such time and place and in such form as


it may specify, such information and documentation asit may require with respect to the business suchcompany is authorised to carry on; or with respect toany person with whom the company has close linkswithin the meaning of article 8;

(b) furnish to it any information or documentationaforesaid verified in such manner as it may specify;

(c) attend before it, or before a person appointed by it, atsuch time and place as it may specify, to answerquestions and provide information and documentationwith respect to any such business as aforesaid.

(2) The competent authority may take copies of any documentsfurnished or provided under this article or extracts from them.

(3) Where an authorised company required to provideinformation or documentation under this article does not have therelevant information or documentation, it shall disclose to thecompetent authority where, to the best of its knowledge, thatinformation or documentation is, and the competent authority mayrequire any person, whether indicated as aforesaid or not, whoappears to it to be in possession of that information or documen-tation, to provide it.

(4) A statement made and documentation provided inpursuance of any requirement under this article may be used inevidence against the person making the statement or providing thedocumentation as well as against any person to whom they relate.

Cap. 9.

(5) The provisions of this article shall not apply to informationor documentation which is privileged in accordance with theprovisions of article 642 of the Criminal Code.

(6) The power to require the production of documentationunder the provisions of this article shall be without prejudice to anyl i en o r cha rge c l a imed by any pe r son i n r e l a t i on t o suchdocumentation.

(7) Where the competent authority has appointed a personunder subarticle (1)(c), such person shall, for the purposes ofcarrying out his functions under his appointment, have all thepowers conferred on the competent authority by this article and arequirement made by him shall be deemed to be and have the sameforce and effect as a requirement of the competent authority.

Power of the competent authority to examine the affairs of authorised companies.Cap. 386.

30. (1) Without prejudice to the provisions of the CompaniesAct relating to the investigation of companies, the competentauthority may, whenever i t deems it necessary or expedient,appoint one or more inspectors to examine the affairs of anauthorised company and to report thereon to it.

(2) An inspector appointed under subarticle (1) -

(a) shall have and may exercise all the powers conferredon the competent authority by article 29, and anyrequirement made by him shall be deemed to be andhave the same force and effect as a requirement of thecompetent authority;


(b) may, and if so directed by the competent authorityshall, make interim reports and on the conclusion ofhis examination shall make a final report to the saidAuthority.

(3) The competent authority may forward to the companyconcerned a copy of any report made by an inspector in respect ofits affairs.

(4) Where the affairs of an authorised company are underexamination, it shall be the duty of all officers and agents of thecompany to produce to an inspector all books and documents of orrelating to the company and otherwise to give to an inspector allassistance in connection with the examination which they arereasonably able to give; and if an officer or an agent of thecompany refuses to produce any books or documents which it is hisduty under this article to produce, or refuses to answer any questionwhich is put to him by an inspector with respect to the affairs of thecompany, an inspector shall refer the matter to the competentauthority and the competent authority shall thereupon enquire intothe case and take appropriate action as it deems necessary.

(5) An inspector shall also be given access to any accounts,returns or other information relating to an authorised companywhose affairs are under examination which are in the possession orunder the control of the competent authority.

(6) The competent authority shall have the power to order thatall expenses of, and incidental to, an examination pursuant to thisarticle or such part thereof as it may deem appropriate, shall bepaid by the company concerned; and any sum so due shall berecoverable by the competent authority in the same manner as anadministrative penalty imposed under this Act.

Cap. 404.

(7) In this article, any reference to officers or to agents shallinclude a reference to past as well as present officers or agents andthe expression "agents", in relation to an authorised company, shallinclude an authorised insurance agent, an authorised insurancemanager, a person, other than an insurance agent or an insurancemanager, authorised to act for the company in the same manner andto the same extent as an insurance agent, an insurance sub-agentregistered under the Insurance Brokers and Other IntermediariesAct, the bankers, the auditors and, in the case of a companyauthorised to carry on long term business, the actuary, of thecompany and a person as may be prescribed by regulations madefor the purposes of article 18.

Right of entry to obtain information and documents.Cap. 386.

31. (1) Without prejudice to the provisions of the CompaniesAct, relating to the entry and search of premises, any officer,employee or agent of the competent authority, on producingevidence of his authority, may enter premises occupied by a personon whom a notice has been served under article 29 or whose affairsare being investigated under article 30, for the purpose of obtainingthere the information or documents required by that notice, orotherwise for the purpose of the examination, and of exercising anyof the powers conferred by the said articles.


(2) Where any officer, employee or agent of the competentauthority has reasonable cause to believe that if such notice as isreferred to in subarticle (1) were served it would not be compliedwith or that any documents to which it could relate would beremoved, tampered with or destroyed, such person may, onproducing evidence of his authority, enter any premises referred toin subarticle (1) for the purpose of obtaining there any informationor documents specified in the authority, being information ordocuments that could have been required under such notice as isreferred to in subarticle (1).

(3) For the purposes of any action taken under the provisions ofthis article, the competent authority may request the assistance ofthe Commissioner of Police, who may for such purpose exercisesuch powers as are vested in him for the prevention of offences andthe enforcement of law and order:

Provided that where an entry as is mentioned in this articleinvolves premises that are occupied for the purpose of habitation,such entry shall be carried out in the presence of an officer of thePolice of a rank not below that of inspector and shall moreover nottake place between nine in the evening and five in the morning.

Business statements.

32. (1) Subject to the following subarticles, an authorisedcompany which in any calendar year carr ies on business ofinsurance shall, in respect of the business of insurance so carried onby it, forward to the competent authority a statement relating to thatbus iness made out in the form, manner and conten t as thecompetent authority may by an insurance directive made for thepurpose of this article determine; and the date by which suchstatement shall be forwarded shall also be established by thatdirective.

(2) The statement required to be furnished under this articleshall be verified in the manner required by the insurance directive.

(3) The competent authority may at any time direct anauthorised company to forward to it such statement at such intervaland for such period as may be specified in the directive.

PART VIII

TRANSFER OF BUSINESS OF INSURANCE

Transfer of general business.

33. (1) Where it is proposed to carry out a scheme underwhich a company authorised under this Act ("the transferor"), is totransfer to another company, whether authorised thereunder or not("the transferee") all its rights and obligations under such generalbusiness policies, or general business policies of such descriptions,as may be specified in the scheme, and -

(a) where the transferor is a company whose head office isin Malta, the performance by it of the obligationsproposed to be transferred constitutes the carrying onof business of insurance in or from Malta or in or froma country outside Malta; or

(b) where the transferor is a company whose head office is


in a country outside Malta, the performance by it ofthe obligations proposed to be transferred constitutesbusiness of insurance in or from Malta,

the transferor shall apply to the competent authority for its approvalof the scheme.

(2) The competent authority shall not determine an applicationmade under subarticle (1) unless it is satisfied that -

(a) a notice approved by it for the purpose has beenpublished -

(i) in at least two local daily newspapers of whichone is published in the Maltese language and theother in the English language; and the text of thenotice shall be in Maltese in the Maltese dailyand in English in the English daily;

(ii) where the transferor is a company which carrieson business from Malta or in or from a countryoutside Malta and, as regards any policyincluded in the proposed transfer whichevidences a contract of insurance, the risk is arisk situated outside Malta, in two dailynewspapers in the country where the risk issituated;

(b) except in so far as the competent authority hasotherwise directed, a copy of the notice has been sentby the transferor to every policyholder affected by thescheme and every other person who claims an interestin a policy included in the proposed transfer and hasgiven notice of his claim to the transferor;

(c) copies of a statement setting out particulars of thetransfer and approved for the purpose by thecompetent authority have been available forinspection -

(i) at each of the branches, agencies and offices ofthe transferor in Malta;

(ii) where the transferor is a company which carrieson business from Malta or in or from a countryoutside Malta and, as regards any policyincluded in the proposed transfer whichevidences a contract of insurance, the risk is arisk situated outside Malta, at one or more placesin the country where the risk is situated,

for a period of not less than thirty days beginning witha date to be determined by the competent authority.

(3) The notice referred to in subarticle (2) shall include astatement that written representations concerning the transfer maybe sent to the competent authority within a period to be specifiedby the competent authority; and the competent authority shall notd e t e r m i n e t h e a p p l i c a t i o n u n t i l a f t e r c o n s i d e r i n g a n yrepresentations made to it before the specified day.


(4) Subject to subarticle (6), the competent authority shall notapprove a transfer on an application made under subarticle (1)unless it is satisfied that -

(a) the transferee is, or immediately after the approval willbe, authorised under article 7 to carry on generalbusiness of the class or classes or part classes to betransferred under the scheme;

(b) the transferee possesses, after taking the proposedtransfer into account, the margin or margins ofsolvency required to be maintained under this Act; and

(c) the transferee’s financial resources are, consequentialto the transfer, adequate to fulfil the other obligationsrequired of it by or under this Act.

(5) On determining an application made under subarticle (1),the competent authority shall -

(a) publish a notice of its decision in the Gazette and insuch other manner as it may think fit; and

(b) send a copy of that notice to the transferor, thetransferee and every person who made representationsin accordance with the notice referred to in subarticle(2),

and if it refuses the application it shall inform the transferor and thetransferee in writing of the reasons for its refusal.

(6) Where the transferor is a company which carries onbusiness from Malta or in or from a country outside Malta and, asregards any pol icy included in the proposed t ransfer whichevidences a contract of insurance, the risk is a risk situated outsideMalta, the competent authority shall not approve the transfer unlessit is satisfied -

(a) that the overseas regulatory authority in the countrywhere the risk is situated has been notified of theproposed transfer;

(b) either that the overseas regulatory authority hasconsented to the transfer or that the overseasregulatory authority has not refused its consent to thetransfer within the period of three months beginningwith the date of the notification.

Effect of approval under article 33.

34. (1) Subject to subarticle (2), a scheme giving effect to atransfer approved by the competent authority under article 33 shallbe effectual in law -

(a) to transfer to the transferee all the transferor’s rightsand obligations under the policies included in thetransfer scheme; and

(b) if the scheme so provides, to secure the continuationby or against the transferee of any legal proceedingsby or against the transferor which relate to those rightsor obligations,


notwithstanding the absence of any agreements or consents whichwould otherwise be necessary for it to be effectual in law for thosepurposes.

(2) Except in so far as the competent authority may otherwisedirect, a policyholder whose policy is included in such a schemeshall not be bound by the scheme unless he has been given writtennotice of its carrying out by the transferee.

Transfer of long term business.

35. (1) Where it is proposed to carry out a scheme underwhich the whole or part of the long term business carried on by acompany authorised under this Act ("the transferor company"), isto be transferred to another company whether authorised thereunderor not ("the transferee company"), and -

(a) where the transferor company is a company whosehead office is in Malta, the business proposed to betransferred is business carried on in or from Malta orin or from a country outside Malta;

(b) where the transferor company is a company whosehead office is in a country outside Malta, the businessproposed to be transferred is business carried on in orfrom Malta,

the transferor company or the transferee company shall, byapplication filed before the Financial Services Tribunal, requestapproval of the scheme. Approval by the Tribunal shall be inaccordance with the provisions of this article.

(2) The Tribunal shall not determine an application filed beforeit under subarticle (1) unless -

(a) the application is accompanied by a report on theterms of the scheme by an independent actuary; and

(b) the Tribunal is satisfied that the requirements ofsubarticle (3) have been complied with.

(3) The requirements referred to in subarticle (2)(b) are -

(a) a notice stating that the application has been made andgiving the addresses of the branches, agencies andoffices at which, and the period for which, copies ofthe documents mentioned in paragraph (d) will beavailable as required by that paragraph has beenpublished -

(i) in at least two local daily newspapers of whichone is published in the Maltese language and theother in the English language; and the text of thenotice shall be in Maltese in the Maltese dailyand in English in the English daily;

(ii) where the transferor company is a companywhich carries on business from Malta or in orfrom a country outside Malta and, as regards anypolicy included in the proposed transfer whichevidences a contract of insurance, a countryoutside Malta is the country of the commitment,


in two daily newspapers in that country;

(b) except in so far as the Tribunal has otherwise directed,a statement -

(i) setting out the terms of the scheme, and(ii) containing a summary of the report mentioned in

subarticle (2)(a) sufficient to indicate theopinion of the actuary on the likely effects of thescheme on the long term business policyholdersof the companies concerned,

has been sent to each of those policyholders and everyother person who claims an interest in a policyincluded in the proposed transfer and has given writtennotice of his claim to the transferor company;

(c) a copy of the application, of the report mentioned insubarticle (2)(a) and of any statement sent out underparagraph (b) of this subarticle has been served on thecompetent authority and that a period of not less thanthirty days has elapsed since the date of service; and

(d) copies of the application and of the report mentionedin subarticle (2)(a) have been open to inspection -

(i) at each of the branches, agencies and offices inMalta of the companies concerned;

(ii) where the transferor company is -(aa) a company whose head office is in Malta

which carries on business from Malta or inor from a country outside Malta, or

(bb) a company whose head office is in a countryoutside Malta which carries on businessfrom Malta,

and, as regards any policy included in the proposedtransfer which evidences a contract of insurance, acountry outside Malta is the country of thecommitment, at such place in that country as theTribunal has directed; for a period of not less thanthirty days beginning with a date to be determined bythe Tribunal; and that copies of the report have beenmade available for purchase from those offices andplaces during that period upon payment of such fee asmay be fixed by the Tribunal.

(4) On any application filed under subarticle (1) -

(a) the competent authority; and

(b) any policyholder who alleges that he would beadversely affected by the carrying out of the scheme,

shall be entitled to make written representations.

(5) Subject to subarticle (6), the Tribunal shall not approve atransfer on an application filed before it under subarticle (1) unlessit is satisfied that -

(a) the transferee company is, or immediately after the


approval will be, authorised under article 7 to carry onlong term business of the class or classes to betransferred under the scheme;

(b) the transferee company produces evidence that -

(i) after taking the transfer into account, itpossesses the margin or margins of solvencyrequired to be maintained under this Act; and

(ii) its financial resources are, consequential to thetransfer, adequate to fulfil the other obligationsrequired of it by or under this Act.

(6) Where the transferor company is a company which carrieson business from Malta or in or from a country outside Malta and,as regards any policy included in the proposed transfer whichevidences a contract of insurance, a country outside Malta is thecountry of the commitment, the Tribunal shall not approve thetransfer unless the competent authority certifies -

(a) that the overseas regulatory authority in that countryhas been notified; and

(b) either that the authority has consented to the scheme orthat the authority has not refused its consent to thescheme within the period of three months beginningwith the date of the notification.

(7) Where a scheme is approved by the Tribunal under thisarticle the transferee company shall, within ten days from the dateon which the approval is made or such longer period as thecompetent authority may allow, deposit two office copies of theapproval with the competent authority.

Provisions supplementary to article 35.

36. Where the Tribunal approves a scheme under article 35, thelong term business referred to in the application may be transferredto the t ransferee without any fur ther need of any documentevidencing the consent of the policyholder and of every otherperson who claims an interest in a policy included in the proposedtransfer and notwithstanding any opposition by the policyholderand every other person who claims an interest in a policy includedin the proposed transfer. The Tribunal may make provision for suchincidental , consequent ia l and supplementary mat ters as arenecessary to secure that the scheme shall be fully and effectivelycarried out; and, where such be the case, for the continuation by oragainst the transferee company of any legal proceedings pending byor against the transferor company which relate to the scheme.

Exemption under this Part.Amended by:XVII. 2002.254.

37. This Part of this Act shall not apply to business ofreinsurance.

PART IX

ACQUISITION AND DISPOSAL OF SHARES, WITHDRAWAL, DISSOLUTION AND WINDING UP

Participation in an authorised company.Amended by:XVII. 2002.255.

38. (1) Notwithstanding anything contained in any other law,the consent of the competent authority given in writing shall berequired before any person may lawfully -


(a) acquire, directly or indirectly, a qualifyingshareholding in an authorised company;

(b) increase, directly or indirectly, an existing holdingwhich is not a qualifying shareholding so as to cause itto become a qualifying shareholding in an authorisedcompany;

(c) increase, directly or indirectly, a qualifyingshareholding so as to cause it to equal or exceed,twenty per centum or thirty-three per centum or fiftyper centum or to cause the authorised company tobecome that person’s subsidiary;

(d) reduce, directly or indirectly, a qualifyingshareholding so as to cause it to fall below fifty percentum or thirty-three per centum or twenty percentum or to cause the authorised company to cease tobe that person’s subsidiary;

(e) reduce, directly or indirectly, a qualifyingshareholding so as to cause it to cease to be aqualifying shareholding;

(f) divest itself, directly or indirectly, of a qualifyingshareholding.

(2) Deleted by Act XVII. 2002.255.

(3) Subarticle (1) shall apply whether or not any of the relevantshares are shares listed on any Stock Exchange.

(4) It shall be the duty of an authorised company and of thedirectors thereof to notify the competent authority forthwith uponbecoming aware that any person intends to take any of the actionsset out in subarticle (1).

(5) Notwithstanding anything contained in any other law, theconsent of the competent authority given in writing shall berequired before any authorised company may lawfully -

(a) merge with any other company, whether authorisedunder this Act or not;

(b) undergo any reconstruction or division;

(c) increase or reduce its nominal or issued share capitalor effect any material change in voting rights.

(6) It shall be the duty of all directors and qualifyingshareholders of an authorised company to notify the competentauthority forthwith upon becoming aware that the company intendsto take any of the actions set out in subarticle (5).

(7) Any person intending to take any of the actions set out insubarticle (1) and any authorised company intending to take any ofthe actions set out in subarticle (5) shall notify the competentauthority in writing and the competent authority may issue, for thepurpose of this article, an insurance directive determining the formin which such notification shall take place and the informationrequired to be furnished to the competent authority with suchnotification; and the competent authority upon a notification by a


person intending to take any action set out in subarticle (1)(a) to(c), when, determining what action to take in accordance with thisarticle, upon such notification, determine whether such person is afit and proper person.

(8) Within three months of receipt of such notification orreceipt of such information as the competent authori ty maylawfully require, whichever be the later, the competent authorityshall issue a notice -

(a) granting unconditional consent to the taking of theaction; or

(b) granting consent to the taking of the action subject tosuch conditions as the competent authority may deemappropriate; or

(c) refusing consent to the taking of the action,

and if it refuses to grant consent it shall inform the person or theauthorised company concerned in writing of the reason for itsrefusal.

(9) If any person or any authorised company takes or intends totake any action set out in subarticles (1) and (5) without obtainingthe consent of the competent authority, then, without prejudice toany other penalty which may be imposed under this Act, thecompetent authority shall have the power to make an order -

(a) restraining the person or company from taking, orcontinuing with, the action;

(b) declaring the action to be void and of no effect;

(c) requiring the person or company to take such steps asmay be necessary to restore the position existingimmediately before the action was taken;

(d) restraining the person or company from exercising anyrights which the action would, if lawful, haveconferred upon them, including the right to receive anypayment or to exercise any voting rights attaching tothe shares acquired;

(e) restraining the person or company from taking anysimilar action or any other action within the categoriesset out in subarticles (1) and (5).

(10) In the case of a company whose head office is in a countryoutside Malta authorised under this Act to carry on in or fromMalta the business of insurance, the provisions of this article shallapply to the extent only of requiring the company to give to thecompetent authority, not later than thirty days from such change oroccurrence, as the case may be, the information therein referred to.

(11) Without prejudice to any other provision of this Act, wherethe inf luence exercised by any person holding a qual i fyingshareholding is, or is likely to , operate against the sound andprudent management of an authorised company, the competentauthority may exercise any of its powers under this Act, includingthe power to issue directives as it may deem reasonable in the


circumstances.

Companies ceasing to carry on business.Amended by:XVII. 2002.256.

39. (1) Subject to the following provisions of this article, if anauthorised company intends to cease either wholly or partly tocarry on the business it is authorised to carry on, such companyshall, not later than six months before the date on which it intendsto cease to carry on such business, give notice thereof in writing tothe competent authority and the company shall comply with anyp r o v i s i o n o f t h i s A c t t h a t m a y b e r e q u i r e d o f i t i n s u c hcircumstances.

(2) Where an authorised company gives notice to thecompetent authority under subarticle (1), the competent authority -

(a) shall require the company to -

(i) give publicity to the matter, amongst itspolicyholders and in the press in the form andmanner as may be determined by an insurancedirective made for the purpose of this article;

(ii) discharge all its liabilities to its policyholdersand creditors in a manner acceptable to thecompetent authority;

(iii) appoint a person which shall service or, as thecase may be, run-off such business; and

(b) may require the company to -

(i) ascertain that its technical provisions arecovered by equivalent and matching assets;

(ii) ascertain that such assets are of the categoriesdetermined by any applicable insurancedirective.

(3) Subarticle (2)(b) shall not apply to a company if itsbusiness is restricted to reinsurance.

(4) The competent authority shall, not later than thirty daysbefore the proposed date on which a company as aforesaid intendsto cease to carry on the business it is authorised to carry on, issue apermit to the company concerned -

(a) authorising it to cease to carry on such business and toservice or run-off that business, as from a specifieddate;

(b) specifying the conditions under which such service orrun-off shall be carried out; and

(c) authorising a person to carry out such service or run-off.

Companies carrying out servicing or run-off of business of insurance.

40. Every company issued under article 39 with a permitauthorising it to cease to carry on the business it is authorised tocarry on shall not, as from the date specified in the permit ("thespecif ied date") , ef fect and carry out any new contracts ofinsurance in the business mentioned in the permit but shall -

(a) in the case of long term business, service or cause theperson named in the permit to service on its behalf;


(b) in the case of general business run-off or cause theperson named in the permit to run-off on its behalf,

contracts of insurance effected and carried out by it before thespecified date.

Dissolution and winding up of authorised companiesAmended by:XVII. 2002.257.

Cap. 386.

41. (1) Without prejudice to the provisions contained inarticle 42 and subject to the following provisions of this article, anycompany authorised to carry on the business of insurance shall -

(a) in the case of a company whose head office is inMalta, dissolve and consequentially wind up under andin accordance with the Companies Act; and

(b) in the case of a company whose head office is in acountry outside Malta, dissolve and wind up under andin accordance with the provisions of the laws of thecountry where the head office of such company issituated governing the dissolution and winding up ofsuch companies.

(2) Where it appears to the competent authority that anauthorised company is, for any reason whatever, likely to dissolveand wind up, or has given notice of dissolving and winding up, or isbeing dissolved and wound up, the competent authority shall -

(a) in the case of a company whose head office is inMalta, prohibit the free disposal of the assets of thecompany whether such assets are situated in Malta orin country outside Malta; and

(b) in the case of a company whose head office is in acountry outside Malta, prohibit the free disposal of theassets of the company situated in Malta or in any othercountry if such assets relate to the company’s businessin Malta,

if such prohibition has not been imposed on the company by virtueof or under any other provision of this Act.

(3) Notwithstanding the provisions of any other law, the assetsof a company which are prohibited under subarticle (2) or by virtueof or under any other provision of this Act to be freely disposed ofshall be available only for meeting the liabilities of the companyattributable to its business of insurance in Malta:

Provided that debts and other liabilities arising out ofcontracts of insurance attributable to its business of insurance inMalta shall rank before any other claim against such assets.

(4) Where the value of the assets mentioned in subarticle (3)exceeds the amount of the liabilities mentioned in that subarticlethe restriction imposed by that subarticle shall not apply to so muchof those assets as represents the excess.

(5) In so far as the provisions of this article are inconsistentwith the provisions of any other law, the provisions of this articleshall prevail, and the provisions of any other law shall, to the extentof the inconsistency, not apply to such companies.

(6) The Minister may, after consultation with the competent


authority, make regulations in respect of the winding-up or re-organisation of companies whose head office is in Malta, includingtheir branches, if any, and of branches of companies whose headoffice is outside of Malta, and different provisions may be made fordifferent cases or classes of cases, and account shall be taken ofMalta’s international commitments in this regard. Such regulationsmay provide for the implementation of detailed re-organisationmeasures and procedures, including the following matters: thepublication and submission of information in such language orlanguages and in such newspapers or other publications as may beprescribed, the submission of information to creditors, and themanner and procedure thereof, the notification to creditors and theprocedure for the submiss ion of c la ims or representa t ions ,measures for the protection of the rights of creditors and other thirdparties, including set-off arrangements; consultation between thecompetent authority and any other regulatory, administrative orjudicial authorities in Malta and outside Malta with competenceover the winding-up or re-organisation of such companies or ofbranches thereof; the publication of decisions relating to suchwinding-up or re-organisation procedures; the establishment ofrules governing the applicability of the proper or applicable lawand other issues of conflict of laws.

Dissolution and winding up of authorised companies with long term business.

42. (1) No company whose head office is in Malta authorisedunder this Act to carry on long term business shall be dissolved andconsequentially wound up voluntarily.

(2) Without prejudice to the provisions contained in article 41,in the event of a company as aforesaid being dissolved and woundup -

(a) the assets representing the technical provisionsmaintained by the company in respect of its long termbusiness shall be available only for meeting theliabilities of the company attributable to that business;

(b) the other assets of the company shall be available onlyfor meeting the liabilities of the company attributableto its other business.

(3) Where the value of the assets mentioned in either subarticle(2)(a) or (2)(b) exceeds the amount of the liabilities mentioned ineither paragraph the restriction imposed by that subarticle shall notapply to so much of those assets as represents the excess.

PART X

CONDUCT OF BUSINESS OF INSURANCE

Changes in documentation or information.Amended by:XVII. 2002.258.

43. (1) The holder of an authorisation issued under this Act tocarry on the business of insurance and the holder of a permit issuedthereunder to service or run-off that business shall notify in writingt h e c o m p e t e n t a u t h o r i t y o f a n y m a t e r i a l c h a n g e s i n t h edocumentation provided or required to be provided by or under thisAct and any rules or regulations made thereunder, or any insurancedirective, as soon as the holder becomes aware of such changes.

(2) Without prejudice to article 38, a company whose head


office is in Malta authorised under this Act shall -

(a) before making any addition or alteration to thememorandum or articles of association or otherinstrument constituting the company, submit in writingto the competent authority particulars of the proposedaddition or alteration for its prior consent; and no suchaddition or alteration shall be made or shall beregistered, or shall take effect, whether it is registeredor not, unless and until the competent authority hassignified its consent in writing; and

(b) inform the competent authority of the names of thepersons holding a qualifying shareholding in thecompany and the percentage of such holding; and thecompetent authority may, by an insurance directivemade for the purposes of this article, determine theform, manner and content of the information to beforwarded to it and the date by which such informationshall be forwarded shall also be established by thatdirective.

(3) Without prejudice to the foregoing provisions of thisarticle, an authorised company shall notify the competent authorityon a continuous basis, with any change or circumstances whichmay give rise to the existence of close links within the meaning ofarticle 8.

Statutory notice by authorised companies in relation to long term policy.

44. (1) No company authorised under this Act to carry on longterm business shall enter into a contract of insurance the effectingof which constitutes the carrying on of long term business, otherthan a contract falling within class III of the Second Schedule,unless such company either -

(a) has served on the other party to the contract by meansas may be prescribed a statutory notice in relation tothat contract; or

(b) does so at the time when the contract is entered into.

(2) Regulations under this article may be made with respect toany matter related to a statutory notice; and the regulations mayexempt f rom any requi rement con t rac t s as may there in beprescribed.

(3) For the purposes of this article a statutory notice is a noticewhich -

(a) contains such matters (and no others) and is in suchform as may be prescribed and complies with suchrequirements as may be prescribed for securing thatthe notice is easily intelligible; and

(b) has annexed to it a form of notice of cancellation of adescription as may be prescribed for serving by meansas may be prescribed a notice of cancellation on theauthorised company.


Linked long term policies.

45. Regulations may be made, as respects the matters as maytherein be prescribed, in relation to contracts of insurance theeffecting of which constitutes the carrying on of long term businessand which -

(a) are entered into by a company whose head office is inMalta authorised under this Act to carry on long termbusiness; and

(b) are contracts under which the benefits payable to thepolicyholder are wholly or partly to be determined byreference to the value of, or the income from, propertyof any description (whether or not specified in thecontract) or by reference to fluctuations in, or in anindex of, the value of property of any description(whether or not so specified).

Contracts of insurance not voidable by insurer notwithstanding a breach of this Act or of the Insurance Brokers and Other Intermediaries Act.Cap. 404.

46. No contract of insurance shall be held void or voidable byan insurer by reason only that, at the time the contract is enteredinto, there is a breach of any provision of this Act or of theInsurance Brokers and Other Intermediaries Act, (in this articlereferred to as "the Act") and of any rules or regulations made underthis Act or under the Act or of any insurance directive issued invirtue of this Act or any insurance intermediaries directive issuedin virtue of the Act.

Contracts to be expressed in a specified language.Amended by:XVII. 2002.259.

47. (1) The competent authority may by an insurance directivemade for the purpose of this article determine the language inwhich a contract of insurance relating to a risk which is a risksituated in Malta or to a commitment where Malta is the country ofthe commitment of a class or classes or part classes of business asmay therein be specified is to be expressed.

(2) In the absence of any such insurance directive, the contractshall be expressed in the English language.

(3) The provisions of this article shall not apply to a companywhose business in or from Malta is restricted to reinsurance.

Insurance advertisements.Amended by:XVII. 2002.259.

48. (1) No company authorised under this Act shall issue orcause to be issued in Malta any advertisement or carry out or causeto be carried in Malta any promotional activity related to thebusiness of insurance which misleads, or directly or by implicationis likely to mislead, or deceive any prospective policyholder, or theinsurance sector in general, or the general public with respect to itsassets or corporate structure or financial standing or authorisationor any other material respect:

Provided that, in the case of a company whose head officeis in Malta, the provisions of this subarticle shall also apply withrespect to -

(a) an advertisement issued or caused to be issued; and

(b) a promotional activity as aforesaid carried out orcaused to be carried out,

from Malta or in or from a country outside Malta.

(2) The competent authority may by an insurance directive


made for the purposes of this article determine the form and contentof insurance advertisements and make different provision inrelation to insurance advertisements of different classes or partclasses or descriptions; and the manner in which any promotionalactivity as aforesaid shall be carried out or caused to be carried out.

(3) The provisions of subarticle (2) shall not apply to acompany if its business is restricted to reinsurance.

(4) Where a company issues or causes to be issued anadvert isement or carries out or causes to be carried out anypromotional activity which is in breach of or does not comply withany of the provisions of subarticle (1) or (2), the competentauthority may issue an order directing the company -

(a) to withdraw, wholly or partly, the advertisement orpromotional activity; or

(b) to amend any particular of the advertisement orpromotional activity; or

(c) to do such other thing as it deems appropriate in thecircumstances.

(5) If a company refuses or fails to comply with any orderissued by the competent authority under subarticle (4) or refuses orfails to comply with such order within the time specified therein,without prejudice to any penalty which the company may incurunder this Act, the competent authority shall have the power toenforce, at the expense of the company concerned, the order issuedby it under that subarticle.

PART XI

PROTECTION AND COMPENSATION FUND

Establishment of the Protection and Compensation Fund.Amended by:XVII. 2002.260.

49. There shall be established a fund, with such legalpersonality or otherwise, as may be prescribed, to be known and inthis Act referred to as the "Protection and Compensation Fund" -

(a) for the payment of any claims in respect of riskssituated in Malta and of commitments where Malta isthe country of the commitment as may be prescribedagainst a company authorised to carry on business ofinsurance in Malta, remaining unpaid by reason of theinsolvency of such company, subject to suchlimitations, restrictions and exclusions as may beprescribed; and

(b) for the payment of compensation to victims of roadtraffic accidents as may be prescribed subject to suchlimitations and restrictions as may be prescribed.

Contributions to the Fund.

50. (1) The Fund shall consist of all contributions made to itunder this Act and any rules and regulations made thereunder, andof all other assets and revenues pertaining to it.

(2) All companies authorised under this Act to carry onbusiness of insurance in Malta shall contribute to the Fund in suchamounts and to such limitations as shall be prescribed and different


amounts and limitations may be prescribed with respect to differentkinds of business of insurance or different classes or part classesthereof, or different kinds of authorised companies, or in view ofother different circumstances.

Management of the Fund.

51. The Protection and Compensation Fund shall be managedand otherwise dealt with in accordance with regulations made forthe purposes of this Act:

Provided that such regulations shall ensure that paymentsmade into the Fund by companies authorised to carry on long termbusiness shall be utilised for compensation with respect to longte rm bus iness and sha l l be t rea ted separa te ly and u t i l i sedexclusively for compensation with respect to long term business,and payments made into the Fund by companies authorised to carryon general business shall also be treated separately and shall beutilised exclusively for compensation with respect to generalbusiness:

Provided further that no payment shall be made from theFund to any person who is a shareholder in the insolvent companyand holds twenty per centum or more of the issued shares of suchcompany.

Prescription in respect of claims for payment out of the Fund.

52. No claim for payment of compensation shall be made outof the Fund unless such claim is made -

(a) as respects a claim under article 49(a), within twoyears from the date the name of the company is struckoff the register or such company is otherwisedefinitely wound up;

(b) as respects a claim under paragraph (b) of that article,within two years from the date of occurrence of theaccident relating to that claim.

Exemptions from income tax.Substituted by:XVII. 2002.261.

53. All contributions made to the Protection and CompensationFund and any income of any funds belonging to the Fund shall beexempted from any liability for the payment of income tax underany law for the time being in force.

Exemption under this Part.Amended by:XVII. 2002.262.

54. This Part of this Act shall not apply to -

(a) business of reinsurance;

(b) in relation to the purposes of the Fund under article49(a) -

(i) business of insurance carried on by a member ofLloyd’s or of a recognised insurance body if thegoverning body of Lloyd’s or of such otherrecognised insurance body, as the case may be,gives a written undertaking or any form ofguarantee acceptable to the competent authorityto meet all claims against any of its members, ina manner being not less favourable than that asmay be prescribed under article 49(a) in theevent of the insolvency of any of its members;

(ii) business of insurance restricted to any one class


or part class carried on by a company and inrespect of which, in the event of the insolvencyof the company, payment out of the Fund to meetclaims against the company falls within suchexclusions as may be prescribed.

PART XII

GENERAL PROVISIONS

Co-operation in supervisory duties and sharing of information.Substituted by:XVII. 2002.263.

55. (1) The competent authority may exercise the followingpowers at the request of or for the purposes of assisting an overseasregulatory authority:

(a) the power to impose, revoke or vary conditions on thegrant of an authorisation pursuant to the provisions ofarticle 7(6);

(b) the power to revoke or suspend an authorisation underarticle 26;

(c) the power to take any action under article 28, in lieu ofor in addition to any suspension or revocation of anauthorisation;

(d) the power to require information and documentationunder article 29;

(e) the power to appoint inspectors under article 30;

(f) the power of entry to obtain information anddocumentation under article 31; and

(g) the power to communicate to the overseas regulatoryauthority information in its possession, whether suchinformation is the result of any of the above powers orotherwise.

(2) The competent authority shall exercise powers by virtue ofthis article:

(a) where the assistance is requested by the overseasregulatory authority for the purposes of the exercise ofone or more of its regulatory functions; or

(b) where so required within the terms of Malta’sinternational commitments; or

(c) where so required within the terms of undertakingsassumed in bilateral or multilateral agreements for theexchange of information and other forms ofcollaboration with overseas regulatory authoritiesincluding a request under a memorandum ofunderstanding concluded with the competent authority.

(3) There shall be meetings between an authorised company, itsapproved auditors, and, in the case of a company authorised tocar ry on long te rm bus iness , i t s approved ac tuary and thecompetent authori ty on a bilateral or a mult i lateral basis ascircumstances may warrant. Such meetings may be called by any ofthe parties, and shall in each case be chaired by the competentauthority.


Communication by auditors, etc., with the competent authority.

56. (1) No duty (including the duty of professional secrecy) towhich -

(a) an auditor or an actuary of a company; or

(b) a person appointed to make a report under article30(1),

may be subject, shall be regarded as contravened by reason of hiscommunicating in good faith to the competent authority, whether ornot in response to a request made by it, any information or opinionon a matter to which this article applies and which is relevant toany function of the competent authority under this Act.

(2) In relation to an auditor or an actuary of an authorisedcompany, this article applies to any matter falling within article 24.

(3) In relation to a person appointed to make a report underarticle 30(1), this article applies to any matter of which he becomesaware in his capacity as the person making the report which relatesto the business or affairs of the company in relation to which hisreport is made.

(4) If it appears to the competent authority that any accountantsor class of accountants who are persons to whom subarticle (1)applies are not subject to satisfactory rules made or guidelinesissued by a professional body specifying circumstances in whichmatters are to be communicated to the competent authority asmentioned in that subarticle, the competent authority may, afterconsultation with such bodies as appear to the competent authorityto represent the interests of accountants and authorised companies,make rules for the purposes of this article, applying to thoseaccountants and specifying such circumstances; and it shall be theduty of an accountant to whom the rules apply to communicate amatter to the competent authority in the circumstances specified bythe rules.

The Financial Services Tribunal.Amended by:XVII. 2002.264.Cap. 330.

57. (1) For the purpose of this Act, the term "FinancialServices Tribunal" means the tribunal referred to in article 21 ofthe Mal ta F inanc ia l Se rv ices Author i ty Ac t , and the t e rm"Tribunal" shall be construed accordingly:

Cap. 330.Provided that for the purpose of proceedings arising under

this Act the members appointed under article 21(4) of the MaltaFinancial Services Authority Act, shall be substituted by persons tobe appointed by the Minister under this Act and who, in hisopinion, possess the necessary expertise and experience in thebusiness of insurance; and the provisions of article 21(5) to (7) ofthe said Act shall apply to the persons appointed pursuant to thisproviso in the same manner and to the same extent as they apply tothe members mentioned in article 21(2) of the said Act.

(2) The Financial Services Tribunal shall, in addition to thefunctions and powers assigned to it under article 58, have thefunction and power to decide applications for transfer of long termbusiness filed before it under this Act.

(3) Upon determining an application for transfer of long termbusiness, the Tribunal shall have the power to order the payment of


costs and expenses by any party to the application.

Cap. 330. (4) The provisions of article 21 of the Malta Financial ServicesAuthority Act and of any regulations made thereunder shall, exceptin so far as any of them is incompatible with the provisions of thisarticle or of article 35 or 58, apply to applications for transfer oflong term business and appeals made to the Financial ServicesTribunal under this Act:

Cap. 330.

Provided that regulations made under subarticle (13) of thesaid article 21 may distinguish between procedures made for thepurposes of the provisions of this Act and procedures made for thepurposes of the provis ions of the Mal ta Financia l ServicesAuthority Act.

(5) The Minister may, for the purposes of this article, subject toa r t i c l e 35 , make r egu la t ions gove rn ing the p rocedure fo rdetermining an application for transfer of long term business filedunder that article, provided that in the absence of such regulationsthe Tribunal shall regulate its own procedure.

Appeals. 58. (1) Subject to the provisions of this article, any personwho is aggrieved by a decision of the competent authority -

(a) to refuse to issue an authorisation under articles 7, 13or 21;

(b) to impose any condition in an authorisation issued orheld under articles 7, 13 or 21;

(c) to revoke an authorisation under article 26, or underany regulation made under this Act;

(d) to refuse an application for transfer of general businessunder article 33;

(e) to issue any notice or make any order under article 38;

(f) to impose an administrative penalty in respect ofinfringements as may be prescribed under article 67,

may appeal against the decision to the Financial Services Tribunalwhich shall have exclusive competence to hear appeals on thematters listed in this subarticle.

(2) An appeal under this article shall lie only on any of thefollowing grounds -

(a) that the competent authority has wrongly applied anyof the provisions of this Act; or

(b) that the decision of the competent authority constitutesan abuse of discretion or is manifestly unfair, providedthat the discretion of the competent authority may not,so long as it has been exercised properly, be queriedby the Tribunal.

(3) An appeal made under this article shall not suspend theoperation of any decision from which the appeal is made except inthe case of an appeal from a decision as is mentioned in subarticle(1)(f).


Confidentiality.Amended by:XVII. 2002.265.

59. (1) Nothing in this Act shall authorise the competentauthority to enquire or cause an enquiry to be made in an authorisedcompany into the affairs of any individual policyholder of theauthorised company except -

(a) for the purpose of ensuring compliance with any of theprovisions of this or of any other Act; or

(b) where the policyholder’s risk is large within the termsof the large risks regulations to be prescribed underarticle 64 and it believes that such a risk can be athreat to that company or to the insurance sector ingeneral.

(2) Subject to the provisions of subarticle (3), informationobtained by any person for the purposes of, or pursuant to, any ofthe provisions of this Act, or of any rules or regulations madethereunder, or of any insurance directive, or in the discharge of anyfunctions under any of the said provisions, or from an overseasregulatory authority, shall be treated as confidential and protectedby the duty of professional secrecy, and shall not be disclosed toany other person, not being a person who may lawfully obtain thatinformation for the purposes of, or pursuant to, the provisions ofthis Act, or of any rules and regulations made thereunder or of anyinsurance directive except with the consent of the person fromwhom the information was obtained, provided the informationrelates solely to that person.

(3) The provisions of subarticle (2) shall not preclude thedisclosure of information -

(a) with a view to the institution of, or otherwise for thepurposes of, criminal proceedings or of anyproceedings by the competent authority before anycourt under this Act;

(b) with a view to enabling or assisting the competentauthority in the performance or discharge of any of itsfunctions under this Act;

(c) which has been made available to the public by virtueof being disclosed on any circumstances in which, orfor any purpose for which, disclosure is not precludedby this article;

(d) in a summary or collection of information formed insuch a way as not to enable the identity of any personto whom the information relates to be ascertained;

(e) to an auditor where such disclosure would assist theauditor in the exercise of his functions under articles21 and 24;

(f) to an actuary where such disclosure would assist theactuary in the exercise of his functions under article23;

Cap. 345.(g) to the Central Bank of Malta or to the Listing

Authority under the Financial Markets Act, where suchinformation is required by the Bank or the Listing


Authority in the exercise of their respective functionsin terms of law;

(h) in response to a request from, or for the purpose ofassisting, an overseas regulatory authority pursuant toarticle 55;

(i) to such other local or overseas regulatory, judicial orenforcement authorities where such disclosure isrequired or requested for the pursuance of seriousregulatory concerns or the deception, prevention ofprosecution of criminal offences;

(j) in civil or commercial proceedings in relation to thebankruptcy or compulsory winding up of an authorisedcompany provided such information does not concernthird parties involved in attempts to rescue suchcompany, and to such overseas bodies responsible forthe liquidation and bankruptcy of a person holding anauthorisation or an equivalent licence from anoverseas regulatory authority or for other similarprocedures.

(4) No person, including past and present officers or agents ofan authorised company, shall disclose any information relating tothe affairs of a company or of a policyholder of a company whichhe has acquired in the performance of his duties or the exercise ofhis functions under this Act except -

(a) when authorised to do so under any of the provisionsof this Act;

(b) for the purpose of the performance of his duties or theexercise of his functions;

(c) when lawfully required to do so by any court or undera provision of any law.

(5) In this article, any reference to officers or agents has thesame meaning as is assigned to it in article 30(7).

Cap. 373.

(6) When an officer or an employee of an authorised companyhas reason to believe that a transaction or a proposed transactioncould involve money laundering, he shall act in accordance withregulations laid down under the Prevention of Money LaunderingAct and any guidel ines i ssued by the competent au thor i ty .Compliance with the provis ions of th is subar t ic le shal l notconstitute a breach of confidentiality.

Communication of confidential information.Cap. 377.Cap. 9.

60. (1) Notwithstanding the provisions of the ProfessionalSecrecy Act, article 257 of the Criminal Code shall not affect orprevent the exchange of information about policies, policyholdersor potential policyholders -

(a) amongst companies authorised to carry on the businessof insurance ("insurers");

Cap. 404.(b) amongst companies or persons registered or enrolled

under the Insurance Brokers and Other IntermediariesAct ("intermediaries");


(c) between insurers and intermediaries;

(d) between insurers, or intermediaries, or insurers andintermediaries, and the Commissioner of Police,

provided that such exchange is compatible with or reasonablyrequired for the purpose of preventing, detecting or suppressinginsurance fraud.

(2) For the purposes of this article, "insurers" includes theauthorised insurance agents and insurance managers of the insurers.

Service of notices, etc.

61. A notice or other document to be given or served under thisAct or any rules or regulations made thereunder shall be deemed tohave been duly given or served on a person if -

(a) it has been delivered to him; or

(b) it has been left at the address furnished by him to thecompetent authority, or at his last known address; or

(c) it has been sent to him by post or by telefax at any ofthe aforesaid addresses; or

(d) in the case of a commercial partnership registered inMalta, it has been delivered, sent by post or by telefax,or left at the registered office, or the last knownregistered office, of that commercial partnership; or

(e) in the case of any other body of persons, whethercorporate or unincorporate, it has been given or servedin any of the manners aforesaid to or on an officer, or aclerk of that body or to or on the person designated bythat body under article 11(1)(d)(i) or paragraph 4.1 ofthe First Schedule, as the case may be;

and the expression "officer", in relation to a body of persons shallinclude an authorised insurance agent, an authorised insurancemanager, or a person, other than an insurance agent or an insurancemanager, authorised to act for that body of persons in the samemanner and to the same extent as an insurance agent.

Continuance of companies carrying on business of insurance, insurance manager or insurance broker.Amended by:XVII. 2002.266.Cap. 386.

Cap. 386.

62. (1) Notwithstanding the provisions of the Companies Act,regulations may be made under this Act providing for -

(a) a body corporate, registered, incorporated orconstituted in a country outside Malta, which is similarin nature to a company as known under the laws ofMalta and which would, if it were such a company,qualify to be authorised under this Act as a companycarrying on business of insurance, to be continued as acompany carrying on business of insurance under theCompanies Act and under this Act; and

(b) a company carrying on business of insuranceauthorised under this Act to be continued as a bodycorporate registered, incorporated or constituted underthe laws of a country outside Malta, in either case bycomplying with the regulations;

Cap. 386.and the Companies Act shall, in respect of such bodies corporate or


companies carrying on business of insurance, have effectaccordingly.

(2) Regulations under this article may provide that continuanceas aforesaid may only take place if -

(a) it is within the power of such body or company so tocontinue;

(b) the continuance is, in either case, approved in suchmanner as may be prescribed,

and the regulations may further provide that the continuance of acompany carrying on business of insurance as a body corporateunder a foreign jurisdiction shall not take place unless -

(i) such continuance (or similar process, includingconversion) is permitted by the law of suchforeign jurisdiction and is in accordance withsuch provisions thereof as may bring about suchcontinuance (or similar process); and

(ii) such continuance (or similar process) willoperate the continuation of the corporateexistence of the company as, or its conversioninto, a body corporate which will continue toretain or will succeed to all assets, rights andliabilities of the company.

(3) (a) The provisions of the foregoing subarticles shall alsoapply, mutatis mutandis to -

(i) companies authorised to act as an insurancemanager; and

Cap. 404.(ii) companies enrolled to carry on the business of

insurance broking under the Insurance Brokersand Other Intermediaries Act, and accordinglyreferences in this article to "authorised" and to"business of insurance" shall be deemed toinclude references to "enrolled" and "business ofinsurance broking" respectively.

(b) In this subarticle reference to the "company" shallinclude reference to a "partnership en commandite" orto a similar or equivalent body corporate the capital ofwhich is divided into shares.

Valuation regulations.

63. (1) Regulations may be made with respect to thedetermination of the value of assets and the amount of liabilities inany case in which the value or amount is required by any provisionof th i s Act to be de te rmined in accordance wi th va lua t ionregulations.

(2) Without prejudice to the generality of subarticle (1),regulations under this article may provide that, for any specifiedpurpose, assets or liabilities of any specified class or descriptionshall be left out of account or shall be taken into account only to aspecified extent.

(3) Regulations under this article may make different provision


in relation to different cases or circumstances.

Minister’s power to make regulations.Amended by:XVII. 2002.267.

64. (1) The Minister may, after consultation with thecompetent authority, make rules or regulations to give effect to theprovisions of this Act and to amend or revoke any schedule theretoand may amend or revoke such rules or regulations; and withoutprejudice to the generality of the foregoing, the Minister may, bysuch rules or regulations, in particular, make provision in respect ofany one or more of the following matters:

(a) any matter relating to or connected with the businessof insurance or contracts of insurance;

(b) the requirements, duties or conditions to be observedby any company authorised under this Act for thesound and prudent management of its activities;

(c) the fees and duties to be levied in respect of any matterprovided for by or under this Act or any rules orregulations made under this article;

(d) the categories of assets required to be maintainedunder this Act;

(e) the determination and regulation of large risks;

(f) any matter relating to or connected with any provisioncontained in the Schedules;

(g) any matter that may or is to be prescribed under anyprovision of this Act;

(h) any matter incidental to or connected with any of theabove;

(i) the penalties or other punishments to which personscontravening or failing to comply with any provisionof any regulation made as aforesaid shall becomeliable, being penalties not exceeding five thousand liri,in respect of any offence and in respect of a continuingoffence of a further penalty not exceeding one hundredliri for each day during which the offence continues.

(2) Except where any regulation made under this Act providesfor a lesser penalty, any person acting in contravention of or failingto comply with or otherwise observe any such regulation shall bel iable to a penalty of not less than one hundred l i r i and notexceeding five thousand liri, in respect of each offence and in thecase of a continuing offence to a further penalty not exceeding onehundred liri for each day during which the offence continues.

(3) The Minister may, after consulting the competent authority,make regulations exempting any person or any class or classes orpart classes of business of insurance, from all or any of theprovis ions of th is Act or of any ru les or regula t ions madethereunder, subject to such conditions or requirements includingthe requirement of other forms of authorisation and notificationprocedures as may be prescribed.

(4) Rules or regulations made under this article may make suchexemptions, conditions or modifications as may be specified


therein in respect of different cases, circumstances or purposes andmay give the competent authority such power of adaptation of therules and regulations as may be specified therein.

(5) The exercise of any of the powers assigned under thisarticle shall be subject to any obligations or restrictions arisingfrom Malta’s international commitments.

(6) Rules and regulations made under this Act and anyamendment or revocation of such rules and regulations, may bepublished in the English language only.

Application of Exchange Control Act and exemption under Duty on Documents and Transfers Act.Cap. 233.Cap. 364.

65. (1) The Exchange Control Act shall not apply to businessof insurance carried on by an authorised company with an insuredwho is a person not resident in Malta for the purposes of the saidAct.

(2) No duty shall be chargeable under the Duty on Documentsand Transfers Act, or under any enactment replacing that law, onany contract of insurance relating to a risk situated outside Malta.

Exclusion of liability.

66. The competent authority and any member, officer oremployee of the competent authority, and any body established bythis Act, and any member, officer or employee of that body, andany other person appointed to perform a function under this Act orany rules or regulations made thereunder, shall not be liable indamages for anything done or omitted to be done in the dischargeor purported discharge of any functions under this Act or any rulesor regulations aforesaid, unless the act or omission is shown tohave been done or omitted to be done in bad faith.

Offences and penalties.

67. (1) Any person who contravenes or fails to comply withany of the provisions of this Act shall be guilty of an offence.

(2) Any person -

(a) who, for the purpose of obtaining the issue of anauthorisation under this Act or any rules or regulationsmade thereunder, furnishes information or makes astatement or a declaration which he knows to beinaccurate, false or misleading in any materialparticular, or recklessly furnishes information ormakes a statement or a declaration which is inaccurate,false or misleading in any material particular; or

(b) who is knowingly a party to, or procures or aids andabets, any contravention of any provision of this Actor any rules or regulations made thereunder or anyinsurance directive; or

(c) who intentionally obstructs a person exercising rightsconferred by this Act or any rules or regulations madethereunder; or

(d) who contravenes or fails to comply with any condition,limitation, requirement, directive or order made orgiven under any of the provisions of this Act or of anyrules or regulations made thereunder or any insurancedirective; or


(e) who being a director, a controller, an officer or anemployee of a company -

(i) fails to take all reasonable steps to securecompliance by the company with any of theprovisions of this Act or of any rules orregulations made thereunder, or any authori-sation or permit issued thereunder, or anyinsurance directive; or

(ii) fails to take reasonable steps to ensure thecorrectness of the statements made or otherinformation given under any of the provisionsaforesaid; or

(iii) removes, destroys, conceals or fraudulentlyalters any book, document or other paper withintent to avoid detection of the commission of anoffence under any of the provisions aforesaid,

shall be guilty of an offence.

(3) For the purposes of subarticle (2)(e), the expression"officer", in relation to a company, shall include an authorisedinsurance agent, an authorised insurance manager, or a person,other than an insurance agent or an insurance manager, authorisedto act for the company in the same manner and to the same extentas an insurance agent.

(4) The Minister shall make regulations under this articleprescribing penalties for offences against this Act, and suchregulations may -

(a) prescribe penalties which are enforceable byprosecution in the courts of Malta;

(b) prescribe different penalties for contraventions ofdifferent provisions of this Act;

(c) prescribe penalties calculated in accordance with theduration of the commission of the offence,

unless such penalties are otherwise imposed under article 64.

(5) The penalties prescribed by the regulations made undersubarticle (4) -

(a) in the case of imprisonment, shall not provide for asentence of imprisonment greater than two years;

(b) in the case of a fine imposed after a prosecution in thecourts of Malta, shall not provide for a fine (multa) ofless than one hundred liri or greater than fifty thousandliri.

(6) The Minister may by the regulations made under this articleprovide for administrative penalties in respect of infringements, asmay be prescribed, which may be imposed and recovered by thecompe ten t au tho r i ty wi thou t r ecour se to a cour t hea r ing ;administrative penalties shall be due to the competent authority as acivil debt:

Provided that an administrative penalty may not be greater


than a financial penalty of five thousand liri in respect of anyinfringement and, in respect of a continuing infringement, a furtherpenalty not exceeding fifty liri for each day during which theinfringement continues.

Proceedings for an offence under this Act.

68. (1) No proceedings for an offence under this Act and anyrules or regulations made thereunder other than an infringement towhich art icle 67(6) applies shall be commenced without thesanction of the Attorney General.

(2) The provisions of this Act and any rules or regulationsmade thereunder shall not affect any criminal proceedings that maybe competent under any other law.

Savings.

Cap. 290.

69. (1) Subject to subarticle (4), every licence issued or otheraction whatever taken or commenced under the Insurance BusinessAct* (in this article referred to as "the Act") shall continue in forceand to be valid as if such licence were issued or other action weretaken or commenced under this Act.

(2) Every company licensed under the Act to carry on businessof insurance either as principal or as agent shall, not later than theappointed date , conform with the provis ions of th is Act orotherwise cease to carry on the business it was licensed to carry on,and shall until the appointed date or until it conforms with theprovisions of this Act, whichever is the earlier, continue to begoverned by the provisions of the Act. For the purpose of thisarticle "appointed date" means a day being six months after the dateof the coming into force of this Act.

(3) Where a company ceases to carry on business of insuranceeither as principal or as agent on grounds that such company didnot, on the appointed date, conform with the provisions of this Act,tha t company sha l l be deemed to have g iven no t ice to thecompetent authority under article 39 on the appointed date to ceaseto carry on the business i t was l icensed to carry on, on theappointed date, and to have been issued with a permit by thecompetent authority under that article on the appointed date tocease to carry on such business on the appointed date and to servicethat business as from that date. The competent authority mayimpose such conditions with regard to the servicing of that businessas it may deem proper.

Cap. 404.

(4) Every licence issued or renewed or other action whatevertaken or commenced under the Act in so far as i t applies toinsurance brokers and insurance salesmen, shall continue in forceand to be valid as if such licence were a certificate of enrolmentissued or as if such other action were action taken or commencedunder the Insurance Brokers and Other Intermediaries Act.

(5) For the purposes of this article "licence" includes anauthority, permit, approval and appointment.

Cap. 249.(6) Without prejudice to the provisions of article 12 of the

Interpretation Act, all regulations, orders and other instruments

*Repealed by this Act.


which were kept in force by the Act and all regulations, orders andother instruments made under the Act, and any agreement andarrangement which were made in virtue of the Act, any regulation,order or other instrument shall, if and as in force immediatelybefore the commencement of this article, be deemed to have beenmade under or in virtue of this Act and shall continue in force andmay be amended, a l tered, repealed or o therwise deal t wi thaccordingly.

(7) All references in any enactment and in any instrument orother document to the Act, or any provision thereof, shall, in so faras applicable, be read and construed as a reference to this Act or tothe corresponding provision thereof.

(8) The assets and the liabilities of the Security Fundestablished by the Act shall upon the coming into force of this Actbe transferred to the Protection and Compensation Fund establishedby article 49 without the need of any formality other than this Act.

Cap. 330.

(9) The provisions of this article shall not apply to insuranceoffshore companies registered under the Malta Financial ServicesAuthority Act until such time as the Minister may by order in theGazette establish.


(Article 2)

PROVISIONS RELATING TO LLOYD’S

1. In this Schedule "Lloyd’s" means the society and corporation incorporatedby Lloyd’s Act, 1871, of the United Kingdom, and regulated by or under Lloyd’sActs, 1871 to 1982, of the United Kingdom or any other law from time to timeamending or re-enacting the same;

"article" means article of the Act;

"syndicate" means a member or group of members of Lloyd’s underwritingbusiness of insurance at Lloyd’s through the agency of a managing agent to which aparticular syndicate number is assigned by or under the authority of the Council ofLloyd’s.

2. The definition of "insurance agent" set out below shall apply in substitutionfor the definition of that term contained in article 2(1) -

"insurance agent", in relation to Lloyd’s, means a person authorised as such underarticle 13 appointed by or on behalf of a member of Lloyd’s to be its coverholder inMalta in respect of business of insurance with authority to enter into contracts ofinsurance on behalf of that member under the terms of a binding authori tyagreement.

2.1 For the purposes of this paragraph "binding authority agreement" means anagreement between a member of Lloyd’s or a person acting on its behalf and acoverholder under which the coverholder may, in accordance with the terms thereof,accept risks or commitments on behalf of that member of Lloyd’s;

"coverholder" means a person authorised under a binding authority agreement toaccept or to issue documents related to contracts of insurance evidencing theacceptance of risks or commitments on behalf of a member of Lloyd’s granting suchauthority pursuant to such agreement.

3. Article 8(1)(c), (d) and (f) shall not apply to Lloyd’s; the requirements ofparagraphs (c) and (d), in so far as they apply, may, if the competent authority sodirects, apply to a member of Lloyd’s desirous of carrying on, or carrying on, thebusiness of insurance in or from Malta.

4. Article 11(1)(a) shall -

(a) in relation to article 8(1), apply subject to paragraph 3 of this Schedule;and

(b) in relation to article 14, be construed in accordance with paragraph 5 ofthis Schedule.

4.1 Lloyd’s shall at all times have a representative in Malta who shall beresident in Malta and who shall be the representative in Malta of Lloyd’s and of eachof its members.

4.2 The representative shall for the purposes of this Act be authorised to actgenerally as judicial representative of, and accept service of any document on behalfof, Lloyd’s and of each of its members and to file any judicial acts in the registry ofany court or similar authority in Malta on behalf of Lloyd’s or any of its members;article 11(1)(d)(i), (ii) and (iv) and article 12(a), (b) and (c) shall not otherwiseapply to Lloyd’s or any of its underwriting members. Article 11(1)(d)(iii) shall not

Amended by:XVII. 2002.268.

FIRST SCHEDULE


apply to Lloyd’s but shall only apply to its underwriting members.

4.3 The representative shall be designated by a letter addressed to the competentauthority by the chairman of Lloyd’s.

5. The members of Lloyd’s taken together shall be deemed to comply with therequirements of article 14 if, when forwarding the financial statements under theprovisions of this Act, they forward to the competent authority -

(a) a certified copy of the global returns relating to the business ofinsurance carried on by the members of Lloyd’s prepared and furnishedby them to the overseas regulatory authority in accordance with the lawof the country in which they are regulated; and

(b) a certificate signed by the chairman of Lloyd’s and by the authorityreferred to in sub-paragraph (a) of this paragraph, that the members ofLloyd’s have, in respect of the preceding year, complied with provisionsof the law relating to financial resources applicable to them in thecountry aforesaid.

6. Pursuant to article 16(1)(b), for the purpose of constituting the requiredguarantee fund, the Malta margin of solvency shall apply to the members of Lloyd’staken together and shall be determined in accordance with the regulations made forthe purpose of article 14 by reference to the aggregate business carried on in or fromMalta by those members as if they were required under subarticle (2) of that articleto maintain the Malta margin of solvency.

7. Article 20(1)(c) shall not apply to Lloyd’s and its members; however, a copyof Lloyd’s members global accounts is to be made available for public inspection atthe office of its representative and copies of such accounts are available for purchasetherefrom.

8. Articles 33 to 36 shall apply in relation to transfers to and from members ofLloyd’s if, and only if, the conditions specified in paragraph 8.1 of this Schedule aresatisfied.

8.1 The conditions referred to in paragraph 8 of this Schedule are -

(a) that the transfer is not one where both the transferor and the transfereeare members of Lloyd’s;

(b) that the Council of Lloyd’s has by resolution authorised one person toact in connection with the transfer for the members of Lloyd’sconcerned as transferor or transferee;

(c) that a copy of the resolution has been given to the competent authority.

8.2 Where articles 33 and 34 or articles 35 and 36 apply in relation to a transferto or from members of Lloyd’s, they shall apply as if anything done in connectionwith the transfer by the person authorised in accordance with sub-paragraph (b) ofparagraph 8.1 of this Schedule had been done by the members for whom he acted.

9. The provisions of article 38 shall not apply to Lloyd’s.

10. Notwithstanding that policies of insurance are underwritten by members ofLloyd’s with several liability and notwithstanding the provisions of this or any otherlaw, the assets which are required to be maintained in Malta by the members ofLloyd’s under the provisions of the Act shall guarantee the liabilities of all themembers of Lloyd’s attributable to their business of insurance in Malta.


SECOND SCHEDULE

(Article 5)

LONG TERM BUSINESS

l. In this Schedule, "insurance directive" means the insurance directive madeunder and for the purposes of article 5.

2. Classes of Long Term Business

Number Class Description

I Life and annuity Ef fec t i ng and ca r ry ing ou t con t r ac t s o finsurance on human life or contracts to payannuities on human life, but excluding (ineach case) contracts within class III of thisSchedule.

II Marriage and birth Ef fec t i ng and ca r ry ing ou t con t r ac t s o finsurance to provide a sum on marriage or onthe birth of a child, being contracts expressedto be in effect for a period as may be specifiedby the insurance directive, but excluding (ineach case) contracts within class III of thisSchedule.

III Linked long term Ef fec t i ng and ca r ry ing ou t con t r ac t s o finsurance on human life or contracts to payannuities on human life or contracts to providea sum on marriage or on the birth of a childwhere the benefits are wholly or partly to bedetermined by reference to the value of, or theincome from, property of any description(whether or not specified in the contracts) orby reference to fluctuations in, or in an indexof, the value of property of any description(whether or not so specified).

IV Permanent health E f f ec t i ng and ca r ry ing ou t con t r ac t s o finsurance providing specified benefits againstrisks of persons becoming incapacitated inconsequence of sustaining injury as a result ofan accident or of an accident of a specifiedc l a s s o r o f s i cknes s o r i n f i rmi ty , be ingcontracts that -

(a) are expressed to be in effect for aperiod as may be specified by theinsurance directive, or until thenormal retirement age for thepersons concerned, or without limitof time, and


Number Class Description

(b) either are not expressed to beterminable by the insurer, or areexpressed to be so terminable onlyin special circumstances mentionedin the contract.

V Tontines Effecting and carrying out tontines.

VI Capital redemption Effecting and carrying out capital redemptioncontracts.

VII P e n s i o n f u n dmanagement

Effecting and carrying out -

(a) contracts to manage the investmentsof pension funds, or

(b) contracts or the kind mentioned inparagraph (a) above that arecombined with contracts ofinsurance covering eitherconservation of capital or paymentof a minimum interest.

VIII C o l l e c t i v einsurance

Effecting and carrying out contracts of a kindas may be specified by the insurance directive.

IX Social insurance Effecting and carrying out contracts of a kindas may be specified by the insurance directive.


THIRD SCHEDULE

(Articles 5 and 7)

GENERAL BUSINESS

PART I - CLASSES

Number Class

1 Accident (including industrial injury and occupational diseases)

(a) fixed pecuniary benefits;

(b) benefits in the nature of indemnity;

(c) combinations of the two;

(d) injury to passengers.

2 Sickness

(a) fixed pecuniary benefits;

(b) benefits in the nature of indemnity;

(c) combination of the two.

3 Land vehicles (other than railway rolling stock)

All damage to or loss of:

(a) land motor vehicles;

(b) land vehicles other than motor vehicles.

4 Railway rolling stock

All damage to or loss of railway rolling stock.

5 Aircraft

All damage to or loss of aircraft.

6 Ships (sea, lake and river and canal vessels)

All damage to or loss of:

(a) river and canal vessels;

(b) lake vessels;

(c) sea vessels.

7 Goods in transit (including merchandise, baggage, and all othergoods)

All damage to or loss of goods in transit, or baggage, irrespective ofthe form of transport.

8 Fire and natural forces

All damage to or loss of property (other than property included inclasses 3, 4, 5, 6 and 7) due to:

(a) fire;

(b) explosion

(c) storm;


Number Class

(d) natural forces other than storm;

(e) nuclear energy;

(f) land subsidence.

9 Other damage to property

All damage to or loss of property (other than property included inclasses 3, 4, 5, 6 and 7) due to hail or frost, and any event such astheft, other than those falling within class 8.

10 Motor vehicle liability

All liability arising out of the use of motor vehicles operating on theland (including carrier’s liability).

11 Aircraft liability

All liability arising out of the use of aircraft (including carrier’sliability).

12 Liability for ships (sea, lake and river and canal vessels)

All liability arising out of the use of ships, vessels or boats on thesea, lakes, rivers or canals (including carrier’s liability).

13 General liability

All liability other than those falling within classes 10, 11 and 12.

14 Credit

(a) insolvency (general);

(b) export credit;

(c) instalment credit;

(d) mortgages;

(e) agricultural credit.

15 Suretyship

(a) suretyship (direct);

(b) suretyship (indirect).

16 Miscellaneous financial loss

(a) employment risks;

(b) insufficiency of income (general);

(c) bad weather;

(d) loss of benefits;

(e) continuing general expenses;

(f) unforeseen trading expenses;

(g) loss of market value;

(h) loss of rent or revenue;


PART II - GROUPS OF CLASSES

Number Class

(i) indirect trading losses other than those specified above;

(j) other financial loss (non-trading);

(k) other financial loss (not specified in (j) above).

17 Legal expenses

Legal expenses (including costs of litigation).

18 Assistance

(a) assistance for persons who get into difficulties whiletravelling, while away from home or while away from theirpermanent residence;

(b) assistance in other circumstances.

Number Description Composition

1 Accident and Health Classes 1 and 2

2 Motor Classes 1 (d), 3, 7 and 10

3 Marine and Transport Classes 1 (d), 4, 6, 7 and 12

4 Aviation Classes 1 (d), 5, 7 and 11

5 Fire and other Damage toProperty

Classes 8 and 9

6 Liability Classes 10, 11, 12 and 13

7 Credit and Suretyship Classes 14 and 15

8 General All classes


(Article 13)

PROVISIONS RELATING TO INSURANCE AGENTS AND MANAGERS

1. In this Schedule, "article" means article of this Act.

PART I - AUTHORISATION REQUIREMENTS

2. The provisions referred to in article 13(3) are those set out in the followingparagraphs in this Part of this Schedule.

3. A person desirous of acting as an insurance agent of an authorised companyor as an insurance manager shall make an application in writing in that behalf in suchform and manner as the competent authority may from time to time determine.

3.1 The applicant is a limited liability company or a partnership en commandite,the capital of which is divided into shares, formed and registered in Malta inaccordance with the Companies Act:

Provided that, in the case of an applicant which is a partnership encommandi te , the p rov i s ions o f th i s Schedule sha l l app ly sub jec t to suchmodifications as the competent authority may from time to time determine, whichmodifications shall not materially detract from the main objects of the provisions somodified.

3.2 The company’s objects are limited to operations arising directly frombusiness of insurance and matters and functions connected therewith or ancillarythereto, to the exclusion of all other commercial business other than, in the case ofan insurance agent, business determined by the insurance directive made for thepurposes of article 13.

3.3 The applicant discloses to the satisfaction of the competent authority suchinformation as the competent authority has requested of it in relation to persons whowill, upon the authorisation of the company, have any proprietary, financial or otherinterest in, or in connection with, that company.

3.4 All qualifying shareholders, controllers and all persons who will effectivelymanage the affairs or carry out the operations appropriate to the application are fitand proper persons to ensure its sound and prudent management.

3.5 The company’s own funds, whether in Maltese liri or in other currenciesacceptable to the competent authority are, at all times, not less than such amountappropriate for the kind of business to be carried on by the company as may bedetermined by an insurance directive made for the purpose under this Act, and suchown funds shall at all times be unencumbered.

3.6 The applicant has at all times in its favour a policy of professional indemnityinsurance acceptable to the competent authority, indemnifying it, or any personemployed by it, or otherwise acting for it, to such amount, in such manner and inrespect of such matters as the competent authority may, from time to t ime,determine.

3.7 The applicant submits to the satisfaction of the competent authority ascheme of operations appropriate to the application which shall include theparticulars or proof as may be determined by the insurance directive made for thepurpose of article 13.

3.8 Subject to paragraph 3.9 in this Schedule, the applicant produces proof to

FOURTH SCHEDULE Amended by:XVII. 2002.269.


the satisfaction of the competent authority that it holds an appointment in writingsigned by a senior officer of the company for which the applicant desires to actdesignating applicant to act in the name and on behalf of the company, or solely onbehalf of the company, in the capacity specified in the appointment and in respect ofmatters and under the conditions specified in that appointment.

3.9 Where an application is for authorisation to act as an insurance manager, theappointment referred to in paragraph 3.8 in this Schedule shall not constitute aprerequisite condition for issuing an authorisation in that behalf provided that theauthorised person shall not act for any company unless and until it produces proof tothe satisfaction of the competent authority that it holds an appointment in writingfrom the company concerned to act on its behalf.

PART II - APPLICATIONS OF CERTAIN ARTICLES

4. Article 7 shall apply subject to the following provisions of this paragraph:

(a) subarticles (1), (2), (5) and (8) thereof shall not apply;

(b) subarticle (7) thereof shall apply as if reference to subarticle (8) thereinwhere not made and the period prescribed therein were a period of threemonths.

4.1 Article 8(1) and articles 9 to 12 and 14 to 18 shall not apply.

4.2 Article 19 and article 43(2) shall apply as if reference to a "company whosehead office is in Malta" where a reference to a "limited liability company or apartnership en commandite, the capital of which is divided into shares constituted inMalta in accordance with the Companies Act".

4.3 Article 20 shall not apply and the following provision shall apply insubstitution therefor:

"Every company authorised under this Act to act as an insurance agentor an insurance manager shall, not later than four months from the dateof its financial year, or at any other time as may exceptionally beauthorised in writing by the competent authority, forward to thecompetent authority a copy of its audited financial statements drawn upin accordance with the Companies Act.".

4.4 Articles 22 and 23 shall not apply.

4.5 Article 24 shall apply to the extent that it refers only to an auditor.

4.6 Article 25(d) shall not apply.

4.7 Article 27(4) and (5) shall not apply.

4.8 Articles 33 to 37 shall not apply.

4.9. Article 38(10) shall not apply.

4.10 Article 39 shall apply subject to the following provisions of this paragraph:

(a) subarticle (1) shall apply as if a holder of an authorisation whichintended to cease to act as an insurance agent or as an insurancemanager of an authorised company were required to give, not later thanthree months before the date on which it intended to cease to act in thecapacity it was authorised to act, notice in writing of its intention to thecompetent authority, and the holder were required to comply with anydirective issued to it by the competent authority;


(b) subarticles (2), (3) and (4) thereof shall not apply.

4.11 Article 41 shall apply as if a holder of an authorisation were required only todissolve and consequently wind up under and in accordance with the Companies Act.

4.12 Articles 42 and 45, article 48(3) and articles 49 to 54 shall not apply.

4.13 Article 58(1) shall apply subject to the following provisions of thisparagraph:

(a) paragraphs (a) and (b) thereof shall apply to the extent that they referonly to article 13;

(b) paragraph (d) thereof shall not apply.

4.14 Articles 62 and 63 shall not apply.

PART III - SUPPLEMENTARY REQUIREMENTS

5. Every authorised insurance agent or insurance manager shall keep moneysheld by it in a fiduciary capacity separate from its own moneys and shall, in respectof those moneys, maintain separate accounts in accordance with requirementsdetermined by the insurance directive made for the purposes of article 13.

5.1 No person shall have or obtain any recourse or right against moneysstanding to the credit of the account referred in paragraph 5 of this Part of thisSchedule in respect of a claim or right against an insurance agent or an insurancemanager until all proper claims against those moneys have been satisfied.

5.2 An insurance agent or an insurance manager shall effect a fidelity bond in aspecified form, as respects its business of insurance, in such circumstances, to suchvalue, in such manner and under such conditions as may be determined by theinsurance directive made for the purposes of article 13.

5.3 The bond referred to in paragraph 5.2 in this Part of this Schedule shallprovide that in the event of an insurance agent’s or insurance manager’s inability orfailure to meet its financial obligations in relation to any sums of money received byit from, or on behalf of, its clients, a sum of money will become available to a personnominated or approved by the competent authority, to be applied for the benefit ofany client of the agent or of the manager who has incurred loss or liability because ofthe inability or failure of the agent or of the manager to meet such financialobligations.

5.4 The provisions in this Part of this Schedule shall not apply to a companyauthorised to act as an insurance manager for so long as the company holds noappointment from any company for so acting.

5.5 For the purposes of this Part of this Schedule, "client" -

(a) in relation to an insurance agent, means a person who contacts or iscontacted by, the insurance agent with a view to arranging a contract ofinsurance with an authorised company carrying on business of insurancethrough the agent or, who seeks assistance from, or is assisted by, theagent in the administration and performance of such contract,particularly in the event of a claim;

(b) in relation to an insurance manager -

(i) means a company which contacts, or is contacted by, theinsurance manager with a view to accepting an appointment fromthe company to manage any part of its business, or to exercise


managerial functions therein, or to be responsible for maintainingaccounts or other records of such company, or for entering intocontracts of insurance on behalf of such company under the termsof the appointment; or

(ii) means a person who contacts, or is contacted by, the insurancemanager with a view to arranging a contract of insurance with anauthorised company carrying on business of insurance through themanager or, who seeks assistance from, or is assisted by, themanager in the administration and performance of such contract,particularly in the event of a claim.