ATT Nru. XVII ta' 1-1981 ACT Na. XVII of 1981 AN ACT .enacted by the Parliament ATT maħruġ b'liġi

A

Suppliment tal·Gazzetta tal-Gvem ta' Malta Nru. 13,853, 5 ta' Ġunju, 1981

Taqsima A

MALTA

ATT Nru. XVII ta' 1-1981

ACT Na. XVII of 1981

AN ACT .enacted by the Parliament

ATT maħruġ

b'liġi

miN-Parlament

of Maha.

ta' Malta.

AN ACT to regulate the business of

A TT biex j�kkontro1Ja u jirregola l-im­

priża ta' l-assigurazzjoni u biex jip­

insurance and to provi de for matter

con.nected therewith or ancillary

provdi għal ħwejjeġ li għandhom

thereto.

x'jaqsmu magħha jew huma anċillari

għaliha.

A

ATT TA' L·1981 DWAR L·IMPRIżA TA� L·ASSIGURAZZJONI

1981. (2) This Act shall come into force on such date as the

Minister responsib1e for finance, may, by notice in the Gazette, appoint

and different dates may be so appointed for different provisions or

different purposes of this Act.

(l)

In this Act, unless the context otherwise requires -

"agent" in respect of the business of insurance includes any

person acting in the name, or on beha1f, or as representative, of

another person;

"business of insurance" means the making or proposing to

make, whether as principal or as agent, any contract of insurance

or re-insurance, and includes any business carried on in connection

therewith or as anci11ary thereto or which is generally recognised

as insurance;

"company" includes a local company and a foreign company;

"contract of insurance" means an agreement in which one

party agrees, for a consideration, to pay to or for the account of

another party or to beneficiaries, a sum of money or other conside­

ration, whether by way of indemnity against 10ss, damage or

1iability or otherwise, on the happening of a specified event with

respect to which there is an element of uncertainty as to when or

whether it will take place;

"Court" means the Commercial Court;

"director" includes any person occupying the position of a

director of a company, by whatsoever name he may be called,

empowered to carry out substantially the same functions in relation

to the direction of the company as those carried out by a director,

and, in respect of a company registered or incorporated outside

Malta, inc1udes a member of a local board and the agent of that

company;

"foreign company" means a body corporate similar in nature

to a limited liability company which is registered or incorporated

in and under the law of any country outside Malta and which has

complied with the provisions of any law for the time being in force

in Malta applicable to such company, and inc1udes an association

of individual underwriters approved by the Minister for the pur­

poses of this Act;

"inspector" means a person appointed as such by the Minister

under section 18 of this Act;

"insurance broker" has the meaning assigned to it by parag·

raph (b) of subsection (6) of section 23 of this Act;

"insurance rates" has the meaning assigned to it by subsection

(4) of section 25 of this Act;

"insurance salesman" has the meaning assigned to it by parag­

raph (a) of subsection (6) of section 23 of this Act;

"insured" means the party to whom, or on whose account, or

to whose beneficiaries, a sum of money or other consideration is

payable under a contract of insurance on the happening of a

specified 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 a specified event;

"licence" in relation to the' business of insurance, means a

licence granted under this Act; and "licencee" shaH be construed

accordingly;

"Jocal company" means a limited liability company constituted

and registered in Malta in accordance with the law for the time

being in force in Malta;

"Minister" means the Minister responsible for finance, and,

to the extent of the authority given, inc1udes any person authorised

by the said Minister in that behalf;

"officer" in relation to a company, inc1udes

a

director,

a

manager and a' secretary;

"premium" means the consideration payable under a contract

of insurance;

"prescribed" means prescribed by regulations under this Act;

"re-insurance" is a contract whereby an insurer insures the risk

insured by him, or part of such risk, with another insurer.

(2) Where a f o r e i gn company does not transact in Malta any

part of the business of insurance other than that of re-insurance placed

with it by a lice ns ed company, the provisions of this Act shaH not apply

to it except to the extent that they specifically apply to re-insurance and

to the extent that may be from time to time 80 prescribed.

(1) Subject to the following provisions of this section,

no

business of insurance shan be transacted in Malta except e i th er

-

directIy, by a company which is in possession of a licence

(a)

currently operative granted by the Minister under this Act author­

ising sueD company to carry on that business; or

(b) as agent of a foreign company authorised as aforesaid,

by a Ioeal company which is itself in possession of a licence

currently operative granted by the Minister under this Act author­

i s ing it to act as agent of the former company; or

(c) in respect of re-insurance ceded by a licensed company,

by a foreign company approved by the Minister for the purposes of

this Act under such conditions and for such period as the Minister

rnay from time to time impose or determine or as may be prescribed,

and in respect of which such an approva] is currently operative.

(2) No company shall transact in M a l t a any part of the

business of insurance which it is not specifically or generaUy licensed

to transact; nor shaH it transaet in Malta the business of life and non-life,

or general, insurance unless it is specificaHy so authorised by the licence.

(3) Where a Ioeal company is licensed to transaet the busi­

ness of insurance solely and exclusively outside Malta, the Minister may,

subject to such conditions and for s u ch period as he may from time to

time impose or determine, exempt suclil company from all or any one

Dr mo r e of the provisions of this Act, and may also at any time revoke

Of v a r y any exemption so given.

(4) Vifhere a company is earrying on the business of insur­

ance in Malta on the date of the coming into force of this section a n d

applie s or, as the case may r e q u i r e both principal and agent apply, for

,

a licence within the time and otherwise in conformity with the pro­

visions of this Act, or where a person, other than a company, is carry­

ing on the business of insurance in Malta, on the date of the coming

into force of th1S section and form� a company and app1ies, or, as the

case may require, both principal and agent form a company and apply

for a licence within t h e time and otherwise in conformity with the

provisions o·f this Act, then subsection (l) of this section shall not

apply t o such company 01' pe r son unless and until the N.l.inister informs

the said company of person that the provisions of that subsection

apply or refuses to grant the licence applied for, whichever is the earlier

datc.

(5) In the event of doubt as to w h e t h er the business of

insurance is or is not being transacted, or is or is not being transacted

in Malta, the matter shall be determined by the Minister and his deci�

sion there on shall be final and conc1usive for all purposes of law.

(6) Any person who contravenes any of the provisions of

subsection (l) of this section, and any person who is knowingly a

party to., or aids or abets any such contravention, shaH be liable in

respect of each offence to a penalty of not less than one hundred

pounds and not exceeding one thousand pounds and in the case of a

continuing offence to a further pena1ty not exceeding one hundred

pounds for each day during which the offence continues.

(l) Every company Of othe r person carrying on the business Application

of i nsu ran ce in M a l t a on the da te o f the co m ing in to force of section 3 for a

licence.

y

of this Act which p r opose s to continue to carr on sueh business shall,

within three 1110nths after that date, in the c as e o f a company, apply in

wri ting to the Minis te r for a li c enc e under this Act and, in the case

of a person other than a c om p a n y , form a company and apply in

wfiting to the M in ist er for a licence u n d er t11is Act, indicating whether

the licence ap p l ied for is to earry on the business as principal or as

a g ent and, in the latter case, the n a m e 01' names of the p r i nci p al, and

the class or cl a ss es of insurance business a ppli e d for.

(2) Any company desirous of comm enc in g the business of

i nsurance in Malta after the d atc of the co ming into force of section 3

of this Act shall, bcfore commeneing any such business, apply in

w ri t i ng to the Minister for a lic e nce under this Act, indicating whether

the ]icence applied for is to c a r ry on the b usines s as principal 01' as

agent, and in the l at t e r case the name or n a me s of the principal, and

t he class or c1asses of ins urance business applied for.

(3) All appli c at i ons for a l i ce nce shall be accornpanied by a

copy of the memorandum and a r tic l e s of a s s o c iati on Of other i n s tru

­

ment wherehy the company is constituted, i n c o rp o r a t in g all additions

or alterations thereto, du 1y ce r t i fie d by a declaration made by a s eni o r

officer of the company, and, if the company is curr en t1y carrying on

the business of i ns u r a n c e whether in Malta or elsewhere, the applicatiol1

,

shaH be accompanied by a copy of its latest audited balance sheet or

other financial statement showing the affairs of the company.

(4) An app 1 icant for a licence shall forthwith no t if y the

Minister, in \vriting, of any addit i on or a lt e r a tion to the memorandum

01' art i cl e s of association 01" othe r instrument mentioned in subsection

(3) of this section and of any change in any other information givell to

the Minister, giving particulars of any such a dd it i on, a1teration or

other ch an g e

.

(5) In considering an application for a l i c e nce, the Minister

may reguire the compan y to give him such information and in sueh

manner as he may deem fit.

(1) No lic e nce to carry on the business of

insurance as

principal shall be g ranted 01' he1d under thi s Act unless

-

(a) in the case of a 10ca1 c o mpany , its p aid up .share capital

is not less tharr two million pounds an d the company has, at all

times, unimpaired assets equa1 at least to tha t amount;

(b) in the case of a foreign company, the company has and

undertakes to keep, to the satisfaction of the Minister, in Malta at

all times during the continuance of the licence and out of its own

fund s unimpaired assets amounting to not 1ess than forty per

,

centum (40 %) of its gross premium income in Malta in the pre­

ceding ealendar year after deducting thefefrom the amount of

re-insurance c eded by the company d ur i n g that year under sub­

se c t i o n (3) o f seclioJ1 15 of this Act, Of fifty thousand pounds

whichever is the higher amount in respe c t of non-life business and,

in respect of life b us i n e ss unimpaired assets amounting to not less

,

thall thirty and no! more than seventy-five per centum (75 %)

<IS the MInister may from timc to time by order determine of such

patt of the life insurance fund rcquired to be kept by the company

under this Act as relates to tbe company's bus iness in Malta.

(2) No licence to carry on the business of insurance as an

agent shall be granted or held under this Act unless the company is a

local company whose head office is situated in Malta and unless its

unimpaired share capital is not less than twenty-five thousand pounds.

Subject

to the

provisions

of this

Act, the

Minister

(3)

may -

(a) if he is of opinion that it is not desirable in the public

interest that a licence should be granted, or that it should not be

granted for all the classes of business app1ied for, and after

reporting the matter to the Pfime Minister, refuse to grant a

licence or restrict the licence to one or more c1asses of business,

and he need not give reasons for so acting;

(b) subject any licence granted by him to such limitations

and conditions as he may from time to time deem fit to impose.

(1) A licensed company shall, before making any addition 01'

alteration to the memorandum or articles of association or other instru­

ment constituting the company, submit to the Minister particulars in

writing of the proposed addition or a1teration for his prior approva l

and no such addition or a1teration shall be made unless and until the

Minister has signified his approva l in writing

Provided that in respect of a foreign company the provisions

of this subseetion shall not apply where the Minister has approved alter­

native arrangements which do not detraet materially from the objects of

this subseetion, and sueh arrangemcnts have been earried out.

(2) Where in eonsequenee of the transfer of any share or

shares in a licensed local company, the shares, held by or for persons

not resident in Malta would in the aggregate exceed twenty per centum

of the share capital of the company or, if such aggregate holding already

exceeds that pereentage, in the ease of any transfer or propos;:!d transfer

of shares to non-residents, the company shall inform the Millister of

any sueh transfer or proposed transfer, and, notwithstanding anything

eontained in any other law, or in the memorandum or articles of the

company or other instrument whereby it is constituted, 110 sueh transfer

shall be registered by the company, and no sueh transfer shall take

effect, whether it is registered or not by the eompany, unless and until

the Minister has significd his approval in writing on an application made

in that behalf.

(3) A licensed eompany shall inform the Minister of any

proposed arrangement or agreement for the sale or disposal of its

business, whether by amalgamation or otherwise, or of any proposal

for reeonstruetion, and submit them for his approval; and no such

arrangement, agreement or proposaI shall be earried into effeet, or

have effect, unless and until the Minister has signified his approval in

writing on an application made in that behalf.

For the purposes of subsection (2) of this seetion -

(4)

(a)

the expression "a person not resident in Malta" and

the expression "non-resident" include a foreign company and a

Iocal company control1ed by persons not resident in Malta, in­

cluding a company, wherever registered, which is itse1f so con­

trolled; and

(b)

"share" means a share earrying voting

rights, and

"share capital" shaH be construed accordingly.

(5) Any company which fails to comply with any of the

provisions of this section shall, without prejudice to any other provi­

sion of this Act. be liable in respect of each offence to a penalty not

exceeding ten thousand pounds and in the case of a continuing offence

to a further penalty not exceeding one hundred pounds for each day

during which the offence continues.

( 1) Subject to the provisions of subsection (2) of this section.

Revocation

or Suspension

the Minister may revoke or suspend a licence -

of licence.

(a) if any document or information accompanying ·an appli­

cation for a licence or any information given in connection

therewith is false in any materjal particular. or if the holder of a

licence has concealed or conceals from the Minister, Of faiIs to

notify to him, any document or information or any change therein

which it was his duty to reveal or to notify under this Act; or

(b) if the holder ceases to carry on the business for which

the licence was granted, or suspends payment. or is declared

bankrupt. or goes iuto liquidation. or makes a composition with

his creditors or is otherwise dissolved; or

(c) if the holder fails to comply with any of the eonditions

of the licence or with any of the provisions of sections 8, 9, 100),

12, 13, 14, 15 and 16 of this Aet; or

(d) if the holder carrying on the business of insurance, fai1s

observe sueh conduct as may be prescribed; or

to

(e) if the holder cannot hold a licence under subsection (1)

or (2) of section 5 of this Act; or

(f) in the cifC1umstances and in the manner

set out

in

section 20 of this Act.

(2) Before revoking any licence, .the Minister shall notify

his intention to take such action to the holder thereof and shall give

the company an opportunity to submit reason why its licence should

not be revoked.

( 1) Every loca1 company licensed to carry on the business

Reserve and

other funds to

of insurance as principal shall maintain a reserve fund and shall, out

be kept by

of it8 net profits of each year and before any dividend on any of its

insurance

shares is declared, transfer to its reserve fund a sum equal to not less

companies.

than twenty-five per centum of such profits whenever the amount of

the reserve fund is less than the paid-up share eapital of the eompany.

(2) Every foreign company licensed to earry on the business

of insurance shall keep in Malta, and invest in such manner as the

Minister may permit, the unimpaired assets referred to in paragraph (b)

of subsecti011 ( 1) of section 5 of this Act; and the funds so kept and

invested shall not be transferred, withdrawn or in any way impaired

without the authority of the Minister given in writing or unti1 the

eompany has eeased to carry on business in Malta and proves to the

satisfaction of the Minister that it has no further liabi1ity in Malta.

Margin of

( l ) Every company licensed to carry on the business of

solvency.

insurance as principal, other than an association of individual under-

writers, shall at all times keep a margin of solvency sufficient for the

purpose of the business of insurance for which it is licensed.

A company shall. be deemed not to keep a margin of

(2)

solvency -

where the compHny is licensecl to ca rr y on a n y class of

(a)

insuran c e business other than that of life insurance iI the val u e

of its assets in respect of the c1asses of i nsu r an c e business it is

l ice ns ed to carry on cl oes not exceecl the amo u n t of its liabilities

in respect of those c lass e s of b us in e s s by -

(i) o ne hundred thollsaucl pouncls oran e q ui v alent sum

in other currency, or

fifteen pe r centU11l

(ii)

of its premium income in its

last p r e c edi n g financial year,

whichever is the greater amount;

where the c o m pa n y is l ic en s e cl to ca r ry on life insurance

(b)

b u si n ess o n ly, if its liabilities under unmatured life policies exce e d

the amo u nt of its life insurance fund;

(c) where the company is licensecl to carry on any class of

i ns u r ance busi n ess i nc l u d in g life insu ran ce, lf --

,

in respect of its life ins ura n c e business it cl oes not

(i)

s atisfy the m a r g i n of solvency required by paragraph (b) of

this subsection, or

in r e s pe ct of all other c 1 a s se s of insurance b usiness

(ii)

it does not satisfy the m a rgin o f solvency reql1ired by para­

graph (a) of t hi s subsection.

(3) In c a 1 cul a ti n g the margin of solvency r eq u i r e d by para­

g,raph (a) a n d sub-paragraph (ii) of pa r ag r a ph (c) of s ub sec t ion (2) of

this section

-

all c o nti n g e nt or prospective liabilities of the company,

(a)

other than liabilities in respec t of share capital, shall be taken into

account in determining the amount of the liabilities of the com­

pany;

tbe company's premium income, other than life insur­

(b)

ance premium income, in any financial year shall be assessed at

the net amount, a f t e r deducting any prem i u m paid by the com­

pany in re-insurance, of the premiums received by the company

in its last preceding financial year in respect of all insurance

business, other than l i f e insurance, cal'ried on by it d u ring that

year.

(4) Whenever the margin of solvency of any company is less

than tha t req u i r e d to be kept by it by this section, the company sball

rnake good any such deficiency without delay, and in no case later than

fifteen days from the receipt of all o r de r of the Minister to that effect,

and to the satisfaction of the Minister.

(5) For so long as the margin of solvency of a c o mp any is

less than that required by this section, the company shall not assume

any new risk of an y kind whatsoever; and any person who contravenes

any of the provisions of this subsection or of subsection (4) of this

section, shall be liable, in respect of each offence, to a penaIty not

exceed i ng t en th o u s a nd pou n d s and in the case of a c o n tin u i ng offence

,

to a f u r ther penaIty not exceeding one hundred pounds for each day

during which the offence continues.

(6) Where the licensed company is an association of indivi·

underwriters, the association shall furnish annual1y to th e

dual

Minister

-

(a) a certified copy of the returns relating to the insurance

business carried on by the members of the association prepared and

f ur ni s h e d b y it, to the appropriate authority, i n accordance with

t he laws of that country in wh i c h it is registered or i nco r p o ra te d ;

a n d

(b) a certificate signed by the Chairman of the ass o ciati o n

and by the a uthori t y refened to in paragraph (a) of this s u b sect i o n

,

that the members of the association have, in respect of the p r e ce d

­

i ng year, complied with the provisions of the law appl i ca bl e to

them in the c ou n tr y aforesaid.

(1) No local company licensed to carry on the business of Payment of

insurance as principal shalI dec1are or distribute or pay any dividend on dividends.

its shares, or any inte1'est on moneys received in advance of calls of any

of its shares, except from p r of i ts which the auditors of the company

have certified in a statement delivered to the M iniste r to be remaining

on hand after retaining unimpaired -

(a)

the enti re paid-up share capital;

(b) the margin of solvency required to be kept by section 9

of this Act;

(c) the r ese r v e funds r e quir ed to be kept by it by section 13

of this Act;

a sum sufficient to pay all net losses and all liabilities.

(d)

(2) All dividends and inte1'est decla1'ed, distributed or paid

by a company to which subsection (l) of this sec t ion applies shall bc

notified to the Minister with1n fjfteen da ys from an y such dec1aration,

di s t rib u ti on 01' pay me nt

.

(3) Any decla r ati o n distribution 01' payment made in contra­

,

vention of a ny of the p 1' o visi o n s of this section shall be nulI and voicJ

and an y sum so received or c r ed i t e d shall be refunded to the company

without deIay with interest at the rate of eight per ce n tum

.

(l) In determining the financial position of a licensed com-

pany acting a s principal no account shall be taken of non-admissible

assets.

The non-admissible assets of a licensed company are -

(2)

Goodwill, trade names and other li k e intangible assets;

(a)

(b) prepaid or deferred charges

for expenses and commis-

sions paid by the company;

(c) ad v a n c e s to directors

(other thall policy 10ans) which

a1'e not adequately s e c ur e d or which have not been p r evi o u s ly

authorised by the Minister, and advances to employees, agents and

other persons which are not adequately secured;

(d) any interest in any of its own shares either directly 01'

thr ough the owne r s h i p by the company of an interest in another

c o m p a n y 01' b u s i n e s s unit, unless previously approved by the Minis­

ter;

any toan of ot h e r debt secured by its own shares;

(e)

(0 credits r e s ul tin g from cheques, drafts, notes or other bi1Is

of e x ch a nge returned unpaid;

any pr oh ibited in v e st m e n t ;

(g)

any other asset tha t is so prescribed.

(h)

(3) In determining the f i na n c i a l position of a 1icensed com­

pany, all investments and othe1' assets shall be v a l ued in accordance

with the p r o vi s io n s of this Act 01' as may be prescr ib ed

.

(l) A liCellsed company actlng as principal sha11 not make

any investment or enter into any transaction which is a prohibited invest­

ment or a prohibited transaction.

(2)

The fol1owing

are prohibited

investments

or transac-

tions

(a) loans to any one person in excess of twenty-five per cen­

tum of the total admissible assets of the company as certified by

its auditors in the 1ast published accounts;

(b)

10ans against the security of the company's own shares;

loans which are not adequate1y secured or which are not

(c)

secured as may be prescribed;

(d)

investments in equities or other shares, or in debentures

or bonds, in or of any one company or institution, in excess of ten

per centum, 01' such other applicable percentage as the Minister

may, from time to time, and either generally or specifically or by

refcrence to a c1ass, approve, of the total admissible assets of the

company as certified by the auditors of the company in its 1ast pub­

lished accounts;

(e)

investments in immovable or movable property prohi­

bited by regulations made under this Act or made in excess of

the amounts prescribed;

(f)

investments in foreign currencies, or in assets expressed

in such currencies, in ex cess of such amounts and in C'ontravention

of such provisions as may be prescribed;

(g)

any

other

investment

or

transaction

as

may

be

prescribed.

(3) Any prohibited investment and any proħibited transac­

tion made or entered into by a licensed company sha11 be nu11 and

void, and it sha11 be the duty of the company to take such steps as may

be necessary to restore the "status quo ante".

( 1 ) Every company licensed to carry on the business of life

insurance as principal sha11 every year establish its reserve liability in

respect of such business in an amount equal to the aggregate net value of

all policies, additions thereto, unpaid dividends and all other obligations

outstanding on the 31st day of December of the immediate1y pr:eceding

year.

(2)

The valuation to be made for the purposes of subsection

(1 ) of this section sha11 be made upon the net premium basis and

according to the standard adopted by the company and stated in its

annual report, being a standard complying with such requirements and

other provisions as may be prescribed.

(3)

Every company licensed as aforesaid shaH at all times

hold unimpaired assets equal to the net value of its reserve liability

and after making adequate provision for all its other liabilities.

(4) Every company licensed to carry on the business of

insurance as principal. other than a company carrying on the business

of life insurance exc1usively, sha11, in respect of all business of insur­

ance other than life insurance, maintain a reserve for unearned pre­

miums on its policies currently in force, and such premiums shall be

charged as a 1ia bi1ity in any determina tion of the financial position of

the company.

(5)

The reserve required to be maintained by subsection (4)

of this section shaH be eqllal to forty per cenWm of the gross premiums

after deducting thcrefrom the amount of rc-insurance ceded by the com­

pany during that year under sub-section (3) of section 15 of this Act,

less any returns and cancellations. received on policies Of risks which

are still to 1ast beyond the financial year.

(1) No licensed co m pa n y acting as principal shall, in respect Limit of

of its business otber than life insurance, r e ta in any r i s k on any one sub- single risk.

ject of insurance in an amount exceeding twenty per centum of net worth

of t he company.

For the purposes of this section

(2)

-

(a)

"subject of insurance" includes all properties or risks

insured by the same insurer that are customarily considered by

non-life underwriters to be subject to 10ss or damage from the

same occurrence of any hazard insured against;

(b)

re-insurance ceded as authorised by this Act shall be

deducted in detenr.ining the risk reta in ed;

(c)

in respect of surety risks, deduction shall also be made

of the amount assumed by any o t h e r licensed company and the

value of any security hypothecated, pledged or he1d subject to the

surety's control or for the surety's protection.

(l) A licenscd company acting as principal may accept re-

Re- insurance.

insurance o nl y of such risks, and may retain r i s ks thereon only within

sl1ch limits, as it may otherwise lawfully insure.

(2) A licensed company a c t i n g as principal sha11 not cede by

way of re-insurance any p a r t of a n y risk assumed as part of the business

carriecl on by it in Malta except either lo a company licensed to carry

on the business of insurance as principal Of to a company approved by the

Minister under paragraph (c) of subsection (1) of section 3 of this Act

and in respect of which such an approva! is current1y operative.

(3) The Minister may by order in writing require a licensed

company acting as principal to cede to any licensed Iocal company

named in the order such percentage not exceeding thirty per centum, of

the risk insured and situated in Malta as is stated in the order.

(4) No company licensed to carry on the business of life

insurance as principal sha11 re-insure its whole risk on any individual

life or joint lives 01' substantially all of its insurance in force, without

having first ap p 1ied for and obtained the l\lIinister's permission in

writing.

( l) Every loea1 company licensed under this Act to carry Financial year

on the business of insurance as principal or as agent shall terminate and publication

of accounts.

its financial year on the thirty·first day of Decemher of every year, and

shall, not later than four months from the closing of its financial

year -

forwaFd to the Minister; and

(a)

publish in two local daily newspapers of which one is

(b)

published in the Maltese language and the other is in the English

language; and

(c)

exhibit in a conspicuous position in each of its offices

and branches in Malta and keep so exhibited throughout the fol­

lowing twelve months,

a copy of its total ba1ance sheet and profit and loss account for that

financial year giving the exact condition of its affairs at the c10se of

that year and such details as may be prescribed and made out in the

prescribed form or otherwise in a form a pproved by the Miriister and

giving the details required by him

Provided that paragraphs (b) and (c) of this subsection shall not

apply to a company licensed to carry on the business of insurance as

agent.

(2) Every foreign company 1icensed under this Act to carry

on the business of insurance as principal shall, not later than six

months from the c10sing of its financial year -

forward to the Minister; and

(a)

(b) publish in two local daily newspapers of which one is

published in the Maltese language and the other in the English

language; and

(c) exhibit in a conspicuous position in each of its offices

and branches in Malta and keep so exhibited throughout the fol­

lowing twelve months,

copy of its total balance sheet and profit and loss account for tha t

a

financial year giving the exact condition of its affairs at the close of

that year, and every such balance sheet and profit and 10ss account

shall be accompanied by a statement relating to its business in Malta

made out in the prescribed form and giving the prescribed details or

otherwise made out in a form approved by the Minister and giving

the details required by him.

(3) Every company licensed to carry on the business of

insurance as agent shall, not later than six months from the closing of

the financial year of its principal, exhibit in a conspicuous position in

each of its offices and keep so exhibited throughout the following

twelve months a copy of every balance sheet, profit and loss account

and statement required by this section to be forwarded by each of its

principals to the Ministers.

(4) Every such balance sheet, profit and loss account and

statement shall be certified by a person who is an approved auditor in

accordance with section 17 of this Act.

(5) The copy of any balance sheet, profit and 10ss account

or statement forwarded to the Minister shall be accompanied by an

auditor's report drawn up by the approved auditor certifying the

balance sheet, account or statement to which the report refers.

(6) Any company which contravenes any of the provisions

of this section shall be liable in respect of each 'Offence to a penalty

not exceeding one thousand pounds and to a further penalty not

exceeding one hundred pounds for each day during which the offence

subsists.

(1) Every licensed company shall each year appoint an

approved auditor or auditors whose duty shall be to report on the

accounts of the company examined by them and on every ba1ance sheet

and profit and 10ss account, and on any statement re1ating to the com­

pany's business in Malta, prepared by the company.

(2) If a licensed company fails to appoint an auditor as

required by subsection (1) of this section or at any time fails to filI

any vacancy in the office of an auditor, the Minister shall have power

to appoint an auditor for that company and shall fix the remuneration

to be paid by the company to such audi tor.

(3) The auditors' report shan c onta i n a statement as to the

following matters

(a)

whether they ha"ie obtained all the information and

explanations which to the best of their knowledge and beIief were

necessary for the purpose of thelT audit;

(b)

whether, in their opinion, proper books of account have

been kept by the company, so far as appears from their examina­

tion of those books, and proper returns adequate for the purposes

of their audit have been received from branches not visited by

them;

(c)

whether the company's balance sheet and profit and 1088

account, or the statement dealt with by the report are in agreement

with the books of account and returns;

(d)

whether, in their opinion and to the best of their know­

ledge and according to the explanations given to them, the said

accounts give the information required by any law which may

from time to time be in force in the manner so required and give

a true and fair view, in the oase of the balance sheet of the com­

pany's affairs at the end of its financial year, in the case of the

profit and loss account, of the profit and 10ss for the financial

year, and in the case cf a statement of the company's business in

Malta, of that business for the financial year;

whether the various requirements of this Act in respect of

(e)

the company have been camplied with and observed, and any

provisions made for that purpose.

(4) Every audi tor of a licensed company shall have a right

of access at all times to the books and accounts and other documents

of the company and shall be entitled to require from any officer of the

company such information and explanations as he thinks necessary for

the performance of the duties of the auditors.

(5) For the purpose of this Act, an approved auditor is a

person qualified under the laws for the time being in force to act as an

auditor for the company and holds the Minister's authorisation to act

as an audi tor of an insurance company.

(6) Notwithstanding any of the provisions of the foregolng

subsections, the Minister may. in the case of a foreign company, approve

such alternative arrangements as he thinks reasonable and which do not

materially detract from the main objects of this section, and where such

arrangements have been carried out the provisions of this section shall

not apply to the extent that they are replaced by such arrangements.

(7) In so far as the provisions of this section are inconsistent

with the provisions of the Commercial Partnerships Ordinance, 1962,

the provisions of tbis section shall prevaiI, and the provisions of the

said Ordinance shall, to the extent of the inconsistency, not apply to

licensed companies.

( l ) The Minister may appoint one or more competent

Examination

of the

inspectors to examine the affairs of companies licensed to carry on the

affairs of a

business of insurance at 811ch intervals or times as he may from time

licensed

to time direct, and to report tbereon.

company.

(2) It shall be the duty of all officers and agents of a licensed

company under examination to produce to an inspector all books and

documents of or relating to the company and otherwise to give to an

inspector all assistance in connection with the examination wbich they

are reasonably able to gi ve; and if an officer or agent of the company

refuses to produce any book or document which it is his duty under this

section to produce, or refuses to answer any question which is put to

ħim by an inspector with respect to the affairs of the c ompany, an

inspector may by means of an application refer the matter to the Court

and the Court shall thereupon enquire into the case, and after ħaving

heard the evidence produced and the submissions made with respect to

the case, punish the offender in like manner as if he had been guilty

of contempt of the Court.

(3) In this section, any reference to officers or to agents shall

inc1ude a reference to past as well as present officers or agents and the

expression "agents" in relation to a licensed company shall inc1ude the

bankers and the auditors of the company.

(4) An inspector shall a1so be given access to any accounts,

retums or other information relating to a licensed company which are in

the possession or under the control of the Minister.

(1) An inspector may, and if sa directed by the Minister

shall, make interim reports to the Minister, and on the conc1usion of the

examination he sha11 make a fina1 report.

(2) The Minister shall forward to the company a copy of any

report made by an inspector concerning its affairs.

(3) The Minister sha11 have power to order that all expenses

of, and incidental to, an examination, or such part thereof as he may

deem appropriate, shall be paid by the company concemed: and any

sum so due shalI be recoverable by the Govemment as a civil debt due

to it.

Notwithstanding anything conta;n�d in sections 17 and 18 of

this Act, where a licensed companv considers it likely to be unable to

meet its obligations. or that it is about to susIJend payment, or where

the company has suspended payments, it shaH forthwith inform the

Minister in writing of such fact.

(t) If, 1;vhether from a report made under section 18 of this

Act or otherwise, it appears to the Minister that a l1censed company is

conducting its business in a manner which is detrimentaI or hazardous

to the public or to its policy holders or that any of the facts mentioned

in section 20 of this Act are li.kely to harypen or exist w he t h er or not the

company has informed the Minister under that section, or that the com­

pany has contravened or failed to comply with any of the provisions of

this Act or of any regulation made thereunder, and the contravention is,

in the opinion of the Minister, such as to warrant action under this sec­

tion. the Minister may suspend or revoke any licence issued under this

Act, and no new business shall thereafter be Gone by such company, or

for such company by its agents or a n y other person, unless and until

such suspension is revoked or the licence has been restored by the

Minister

Provided that the Minister shall not revoke a licence unless he has

first given the holder an opportunity to make representations why the

licence should not be revoked.

(2) In any of the cases in VJhich the Minister may suspend

or revoke a licence under subsection (l) of this section, the Minister

may. either in lieu of or in addition to any such suspension or revoca­

tion. and without prejudice to hi s powers to suspend Of revoke a licence,

proceed in any one or more of the follcwing manners;

(a) require the company forthwith to take such steps as he

may consider necessary to rectify or remedy the matter;

(b) appoint a person

advlse the company in the proper

to

conduct of its business;

(c) appoint a person to take charge of the assets of the com­

pany, or any portion of them, for the purpose of safeguarding the

interests of policy holders, creditors and shareholders of the com­

pany;

(d) appoint a person to assume control of the business of the

company and either to carry on that business or to carry out such

other function or functions in respect of such business, or part there­

of, as the Minister may direct;

(e) require the company to 'wind up its business or to wind

up its business in Malta;

(f) appoint a person to act as liquidator for the purpose of

winding up the affairs of the company;

(g) fix the rernuneration to be paid by the company to any

person appointed under this section;

(h) do such other act or require the doing of such other thing

as he may deem appropriate in the circumstances;

and having proceeded in any one Of more of the manners aforesaid, the

Minister may further proceed in any one or more of such manners,

whether in addition thereto or in substitution therefor.

Where a person is appointed by the Minister --

(3)

(a) under paragraph (b) of subsection (1) of this section, it

shall be the duty of the company to act in accordance with the

advice given by such person unless and until the Minister, on repre­

sentations made to him, directs otherwise;

(b) under paragraph (C) of subsection (1) of this section, the

company shall deliver to such person all the assets of which he is

placed in charge, and all the powers, functions and duties of the

company in respect of those assets, whether exercisable by the com­

pany in general meeting, or by the directors, or by any other per­

son, including the legal and judicial representation of the company,

shall be exercisable by and vest in the person appointed under the

said paragraph to the excIusion of any other person;

(c)

under paragraph (d) of subsection (1) of this section, the

company shall submit its business to the control of such person and

shall provide him with such facilities as he may require the com­

pany to provide him to carry on that business or to carry out the

functions assigned to him under the said paragraph; and all the

Qowers, functions and duties of the company, whether exercisable

by the company in general meeting, or by the directors or by any

other person, inc1uding the legal and judicial representation of the

company in all matters, shall be exercisable by and vest in him to

the exclusion of any other person;

(d) under paragraph (f) of subsection (1) of this section, such

person shall be the 1iquidator of the company for all purposes of

law to the exclusion of any other person.

(4) Any company or other person which fails to comply with

any of the provisions of this section or with any requirement made

thereunder and any person who in any way obstructs a person appointed

under subsection (2) of this section in the performance of any of his

functions, powers or duties under this section, shall be liable in respect

of each offence to a penalty not exceeding one thousand pounds and

in the case of a co n t inuing offence to a further pen a 1 t Y not exceeding

o ne hundred pounds for every d ay du ring ',,\lhieh the offence con ti n u e s .

(5) In respect of a for e ign company the offices a n d branches

in Malta of th a t company shall, if the Minister s o directs and to the

extent he so directs, be deemed to con s titut e a separate company.

(1) A company shall not volontarily cease to carry on the

business it is 1 ice n s e d to carry on except with the permissi o n of the

Minister giv en on an application made to him in sHeh manner as may

be prescribed and except in compliance 'with such conditions as the

Minister may deem proper to impose.

(2) Th e Minister shall not give permission under subsection

(1) of this section u n le s s -

the prescribed fee has been p a id ; and

(a)

(b) he has first given such publicity to the a p plic a ti o n and

any relevant facts concerning it as he may deem a . pp r op ri a te or as

may be prescribed; and

(c) the company has discharged all its liabilities in Malta to

its policy holders and creditors, whether th r o u g h payment, re­

i n s ura n ce 01' otherwise, in manner acce p ta b ! e to the Minister.

(3) Any company wh i ch fails to compiy with any of the

pro vi s i o ns of t11is section or with any cond it:on impo:;ed th e r�u n der,

shall be liable in respect of each o ffence to a p e n a 1ty TIot ex c e e ding ten

thousand pounds.

(1) No company licensed to carry on the busin e s s of i n s u r ­

ance in Malta, whether as pr i ncipal or as agent, shaB pay a co m missio n

or other com pe n s a t i on t o a n y person for servic:es given in ob taining

insurance business unless such person is authorised by the Minister to

act as i n s u r a nc e broker or as an insunmee salesman, or is otherwise

authorised by the Minister under regulations made under this Act t o

act i n s uch other capacity a s entit1es 111m t o receive pay m e nt as afore­

said.

(2), No person shall act as an in s urance broker or insurance

salesman unless he is in po ss e ssi o n of an authority from th e Minister

currently operative to aet in that capacity.

(3) No authority shall be i s s ued under this s ec tion except on

an application made in such manner and containing such inf o rma t i on

as may be prescribed or as the Minister may oth e rwis e require and

unless it is accorn p a nied by the prescribed fee, and, in the ease of an

ap plica ti on to act as i nsur a n c e salesman, unless the application is

approved and countersigned by the oompany for which the a p pl i can t

desires to aet.

(4) The Minister shall not grant an authority to act as an

insurance broker .to any person unless such person is a Ioeal company

and has in i ts favour a eon tr a ct o f insuranc e aceept a b l e to the Minister

indemnifying it a gainst any liability it, or any person employed by it or

otherwise acting for it, may i n c u r as a result of any negligent a e t , error

or omission in the conduct of its business a s an insurance broker for

an amount not l ess than two hunor e d and fift y thousand pounds or

such h igh e r sum as the Minister may deem adequate in co n s id e rati o n of

the nature of t h e business to be transacted; and any authority granted

by the M in ist e r under this section shaH ceasc to be operative as soon as

the person in whose favour it was g7cmtcd cec;.scs to be a company or is

no longer eovered by an i nd e m n i ty insurance asaforesaid.

(5) Subject to the provisions of this A c t the Minister m ay

,

grant or refuse to grant, or renew or refuse to renew. an authority

under this section, and if he refuses to grant or to renew such authority.

he shall not be required to give reasons for so acting. The Minister may

also grant or renew an authority granted or renewed under this section

to any condition or restrictions he may deem appropriate. Unless other­

wise stated in the authority, an authority granted or renewed under this

section shall rernain operative until the 31st D ec e m b er of the year in

which it is granted or renewed.

(6)

Any person who -

for any commission or other c om pe ns a ti on or thing o f

(a)

value whatsoever, solicits or obtains insurance on behalf of an

insurance company or transmits for any person o t h e r than himself

on application for a poli c y or contract of insu r a n c e to or from such

company, or offers or assumes to act in the negotiating of such

insurance, shall be an insurance salesman fo r the purposes of this

Act;

for any commission or other compensation or thing of

(b)

value whatsoever, acts or aids in any manner in so l i c i t i n g . negotiat­

ing, or procuring the making of any insurance contract or in p1acing

risk or taking ou t insurance, on behalf of an insured person or a

person to be insured. other than himself, shall be an insurance

broker for the purposes of this Act.

(7) Any person acting in contravention of a ny of the provi­

sions of this section or of any authority granted thereunder shall be

1iable in respect of each offence to a penalty not exceeding one thousand

pounds and in the case of a continuing offence to a further penalty not

exceeding fifty pounds for each day during which the offence continues.

(1) An authority granted under section 23 o f this Act may Suspension or

be suspended or revokeċ by the Minister if, the person authorised

revocation of

-

authority

in applying for the licence has given any fa1se or incor­

(a)

granted

rect information in any material particu1ar or has c on c ea l ed any under

information which was material to the application. or has obtained section 23.

otherwise the licence by fraud 01' misrepresentation;

ceases to act as a broker or s alesman, as th e case may be.

(b)

01' suspends payment or is declared bankrupt, or rnakes a co mposi­

tion with his creditors, Of in the C2.se of a cornpany, if it goes into

liquidation or is otherwise dissolved;

(c) has failed to c o m ply with any of the p r ovisi ons of this

Act or any regu1ations made thereunder or w i t h the terms or con­

ditions of his authority;

(d) has shown incompetence in the conduct of his activities

under the authority or has in any manner acted fraudulently, or

dishonestly or otherwise in such manner as to cease to be trust­

worthy, and in particular but without prejudice to the g en e ra lity

of the foregoing, if -

he has misappropriated or converted to his own use

(i)

or illegal1y withhe1d moneys held or required to be held in a

fiduciary ca pacity;

he has rnaterial1y rnisrepresented the terms or con­

(ii)

ditions of policies or contracts of insurance which he seeks to

sell or ba s s o l d

.

(2) An a u t h o j t y granted under section 23 of this Act shall

not be revoked by the l\t'l inis !er unless t h e pers-on to whom it was

granted has first bcen give n an opportunity to make representations

why it should not be revoked.

(l) The Mininster may make regulations to control and

regulate any matter relating to or connected with the business of

insurance and otherwise to give better effect to any one or mo.re of

the provisions and purposes of t hi s Act, [[nd in particular, but without

prejudice to the g e ner a Iity of the foregoing, the Minister may by such

regulations control, regulate, or otherwise make provision in respect

of, any one or more of the f o llowing m atters -

any actjvity r e l a ti n g to or connected with the business

(a)

of insurance i nc 1 u ding the r equi re ment of any authority, licence

or permission for such activity, and the terms, conditions, suspen­

sion and revocation thereof;

(b)

the code of conduct to be observed by any person

licensed, authorised Of otherwise given permission under this Act

or any regulations made theretmder;

(c)

any matter relating to or connected with the business

of insur an ce and p olici e s or contract of insurance. including sur­

veys, surveil1ances and adjus!ments of claims under any such

contrac t or policy, and the fixing of insurance rates;

(d)

actuaries and actuarial s er vi c e s, and the persons or

organisations that may act in such capacity;

(e) the requirements, duties, conditions or other obligations

to be observed by insurance compani e s and any person licensed

or authorised under this Act or any regulation made thereunder,

for the proper and better conduct of their activities;

any matter re l atin g to or connected with the Security

(f)

Fund established under section 26 of this Act;

any matter that may or is to be presc r i be d 01' prohibited

(g)

under any of the pwvisions of this Act;

(h)

the fees to be levied in respect of any matter provided for

by 01' under this Act or any regulations made under this section;

(i)

the penalties Of other punishments to which persons

contravening or failing to co m ply with any provision of any

regulation made as aforesaid shaB become liable, being penalties

not in excess of one thousand pounds in respect of any offence

and in respect of a con.tinuing

exceeding one hundred pounds for each day during which the

offence continues.

(2) The M iniste r may also by regulations under tbis sec­

tion extend and make applicable any of the provisions of this Act to

any activity wbich in his opinion ought, in the public interest, to be

regulated by such provisions.

(3) Except where any regulation made under this section

provides for a lesser penalty, any person acting in contravention of or

failing to comply with or otherwise observe any such regulation shall

be 1iable to a penalty not exceeding one thousand pounds in respect of

each offence and in the case of a continuing offence to a further penal­

ty not exceeding one hundred pounds for each day during which the

offence continues.

(4) In this section, and for the p urpo s e s of any regulations

made t h ere un d e f , "insurance rates" means t h e ratio of the premium

to the amaunt i n s a re d and inc1udes, as the context may require, either

t h e consideration t o be paid Dr charged for in s ur a n c e contracts, includ­

ing su r e t y bonds, or the ele;nents and factofs fOfming the basis of the

determinati.on ar a p pl i c a t i o n of the same, or both.

(1) There sħall be established a fund, to be known and is in

this Act referred to as t he "Security Fund", for the payment of any

c1aims agai ns t an i n s u ranc e company lieensed to earry on the business

of i n su r anc e in Malta remaining unpaid by r eason of the insolvency of

sueh eompany, and for sueh other purposes r elat i n g to insurance, inc1ud-

ing compensaiion t o victims of traffic accidents, as may be prescribed,

subjeet to sueh limitations and restrictions as may be prescribed.

(2) The Security Fund shall e o n s i st of all payments made to

it under this Act and any regulations made t her eu n der and of all other

,

assets and re ve n u e s pe r t ainin g to it.

(3) All eompanies licensed to c a n : y on t h e business of in­

su r an ce in Malta shall contribute to the S ec uri t y Fund in sueh amounts

as sh a ll be prescribed, and different a m o un t s may be so due by com­

panies doing different kinds of insurance busi ne ss

.

(4) The Security Fund shall be administered and otherwise

dealt with in a c c ord a nce with regulations made under section 25 of this

Aet

Provided that separate treatment shaH be g i v e n to payments

made into the fund by life insurance companies, which sha11 be utilized

exclusively for disbursements that refer to life insurance companies, and

to p aym e nts made into the fl!nd by non-life in su r an ce companies, which

sh a ll be utilized exclusively for disbursements that r e f e r to such non-life

insurance companies

Provided furthe1' tha t no pa y m e n t shall be made from the

S e cu rity Fund t o any person who o w n s or controls, direc1ly or indirectly.

t wen ty fiv e per centum or more of the v o t i n g shares or rights of the

-

insolvent insurer.

Offences by

A ny person \vho being a director or manager or similar officer

directors and

of a c o m pan y

-

managers.

ia]s to t ak e all r ea s on a bl e steps to seeure compliance by

(a)

t h e eompany with any of the pr o v i s i on s of t h is Act or of any regu­

lati o n s made therel1nder or of any licence, a u th o ri t y or permission

issued t he r eu nder ; or

(b) fails to take all reasonable steps to ensure the correctness

of the statements made Of 0111e1' inform:ltion given under any of the

provisions aforesaid,

shall be liable in r e spect of eaeh o ffen c e and without prejudice to any

,

other pe n alty due under this Act Of any regulations thereunder, to a

p en alty not e xc ee di ng five thousand p o un d s or, on conviction by the

.

,

Court of Magistratcs of J udicial P ol ie e to a f i ne (multa) not exceeding

,

ten thousand pounds or to impri son men t not exeeeding one year or to

both such fine and imprisonment.

(l) Subject to the provisions of su bsec t io n (2) of this section, Recovery of

all penalties under t h i s Aet shall, at the instanee of the Attorney General penalties.

by w r it of summons in the Commereial Court, be fixed by the Court

and be recoverable as a civil debt due to t he Government.

(2) W h e r e the Attomey General gives n ot i ce in writing to

any person that such person has become liable to a penalty under this

Act, specifying the nature of the offence and indi c ati ng an am o un t as

due by way of penalty in r e s p ec t of that offence, and the pe r s o n to

whom the notice is given does not, by an objection in writing delivered

to the Attorney General, object to the notice within the time (being not

less than flfteen days from the g i v i ng of the notice) specified there in for

the payment of the amount aforesaid, or agrees to pay, or in fact pays,

such amount, the person to whom the notice is given shaH be deemed

to all pu rp o s e s to have incum�d a penal ty under this Act and the amount

indicated as aforesaid as due by way of penalty shall be deemed for all

purp os es to be the penalty due and payable under this Act in r es pect

of the offence specified therein.

Passed by the House of Representatives at S,itting No. 506 of the 2nd June, 1981.

C. AGIUS

Speaker

C. MIFSUD

Clerk to the House of Representatives

Ippubblikat mit-Taqsima

tat-Taghrif -

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the IlIfarmalian Divisiol1

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Kastilja

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al the

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