  INSURANCE BUSINESS  g 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 Financial
Statements 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. h   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 any
form of advertising, whether done verbally or in writing, and,
without prejudice to the generality of the foregoing, includes
advertising in a publication, the display of notices, signs, labels or
showcards, by means of letters, circulars, prospectuses, catalogues,
price lists or other documents, by an exhibition of pictures or
photographic or cinematographic films, by way of sound
broadcasting or television, by the distribution of recordings or in
any other manner, and references to the issue of an advertisement
shall be construed accordingly;
"approved actuary" and "actuary" have the meaning assigned to
them by article 22(5);
"approved auditor" and "auditor" have the meaning assigned to
them by article 21(10);
"authorisation", in relation to business of insurance, or to a
matter connected therewith or ancillary thereto, means an
authorisation or a deemed authorisation under this Act, and
"authorised" shall be construed accordingly;
"body corporate" means any entity having a legal personality
distinct from that of its members;
"branch" means premises of the company, other then its head
office, from which the business of insurance is carried on;
"business of insurance" means the effecting and carrying out of
contracts of insurance of such class or classes of long term business
or class or classes or part classes of general business as
respectively specified in the Second Schedule and Part I of the
Third Schedule, and, without prejudice to anything contained in
any other law, includes -
( a ) the effecting and carrying out, by a person not carrying
on business of banking, of -
(i) contracts for fidelity bonds, performance bonds,
administration bonds, bail bonds or customs
bonds or similar contracts of guarantee, being
contracts effected by way of business (and not
merely incidentally to some other business
carried on by the person effecting them) in
return 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 investments
of pension funds, the expression "a person not carrying
on business of banking" includes "a person not
carrying on investment services";
  INSURANCE BUSINESS  g CAP. 403.  3
( b ) any business carried on in connection with or ancillary
to business of insurance;
( c ) unless otherwise specified, business of reinsurance;
"commitment" means a commitment represented by any one or
more of the kinds of classes of long term business contained in the
Second Schedule;
"company" includes a company whose head office is in Malta or
in a country outside Malta;
Cap. 386.
"company whose head office is in Malta" means a limited
liability company formed and registered in Malta in accordance
with the Companies Act;
"company whose head office is in a country outside Malta"
means a company registered, incorporated or constituted outside
Malta under the laws of any country provided that such company
has complied with the provisions of any law which may from time
to time be in force in Malta relating thereto, and includes, subject
to the provisions contained in the First Schedule, Lloyd’s and any
other recognised insurance body recognised by the competent
authority for the purposes of this Act and each member of Lloyd’s
and of any such other recognised insurance body;
"competent authority" means the body established under article
3(2);
"conditions" includes obligations and restrictions;
"contract of insurance" and "contract", in relation to business of
insurance, mean an agreement in which an insurer agrees, for a
consideration, to pay to or for the account of the insured a sum of
money or other consideration, whether by way of indemnity against
loss, damage or liability 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;
"control", in relation to a body corporate, is the power to
determine the financial and operating policies of the body
corporate;
"controller", in relation to a body corporate, is a person who,
alone or together with others, exercises control of the body
corporate;
"country of the commitment" means any country where the
policyholder has his habitual residence or, if the policyholder is a
legal person, the country where the latter’s establishment, to which
the 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 individual
occupying the position of a director of the company, by whatever
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 whose head
office is in a country outside Malta, includes a member of a local
  4  CAP. 403. h   INSURANCE BUSINESS 
board, an agent and the person designated as the representative of
that company for the purpose of sub-paragraph (i) of paragraph ( d )
of article 11(1);
"establishment" means the head office, agency, or branch of an
undertaking and includes any permanent presence of an
undertaking in Malta, even if that presence does not take the form
of a branch or agency but consists merely of an office managed by
the undertaking’s own staff or by an independent person who has
express or implied authority to act for the undertaking;
"financial year" shall be construed in accordance with article
19(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 article
16(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 competent
authority under article 30(1);
"insurance agent", in relation to a company, means a person
authorised as such under article 13 appointed by the company to be
its agent in respect of business of insurance with authority to enter
into contracts of insurance on behalf of the company under the
terms of the appointment;
"insurance directive" means a directive in respect of the business
of insurance issued by the competent authority in virtue of article
4(3);
"insurance manager" means a person authorised as such under
article 13 whose activities consist of accepting an appointment
from:
( a ) an insurer to manage any part of its business, or to
exercise managerial functions therein, or to be
responsible for maintaining accounts or other records
of such insurer, and, in this context, "management"
includes authority to enter into contracts of insurance
on behalf of the insurer under the terms of the
appointment; and
Cap. 404. ( b ) an insurance broker authorised under the Insurance
Brokers and Other Intermediaries Act, to manage any
part of its business, or to exercise managerial functions
therein, or to be responsible for maintaining accounts
or other records of such insurance broker;
"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
  INSURANCE BUSINESS  g CAP. 403.  5
to pay a sum of money or other consideration on the happening of a
specified event;
Cap. 370.
"investment services licence" 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 article
5(1);
"Malta’s international commitments" means Malta’s
commitments, responsibilities and obligations arising out of
membership or of affiliation to or relationship with any
international global or regional organisation or grouping of
countries or out of any treaty, convention or other international
agreement however called, whether bilateral or multilateral, to
which Malta is a party;
"margin of solvency" and "Malta margin of solvency" shall be
construed 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 with
article 6(3);
"officer", in relation to a company, includes a director, partner,
manager or company secretary or any person effectively acting in
such capacity whether formally appointed or not;
"overseas regulatory authority" means an authority which in a
country 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 insurance
directive made by the competent authority for the purposes of this
Act to determine the amount of, and the components which make
up, the company’s own funds;
"policy", in relation to business of insurance, means and includes
a 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 the
legal holder of the policy for securing the contract with the insurer;
"premium" means the consideration paid or payable by an
insured under a contract of insurance;
"prescribed" means prescribed by rules or regulations made
under this Act;
"qualifying shareholding" means a direct or indirect holding in a
company which represents ten per centum or more of the share
capital issued by such company or of the voting rights attaching to
such share capital or which makes it possible to exercise a
significant influence over the management of the company, and
  6  CAP. 403. h   INSURANCE BUSINESS 
"qualifying shareholder" shall be construed accordingly;
"recognised insurance body" means any society, corporation or
body (howsoever constituted) established and recognised under the
law of a country outside Malta the members of which, by virtue of
such membership, are entitled to carry on the business of insurance
in that country subject to the rules and regulations and any
limitations from time to time established or imposed by such
society, corporation or body and which is recognised for the
purposes 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 to
buildings or to buildings and their contents, in so far as
the 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 of
any type, any risk related to any vehicles registered in
Malta;
( c ) in the case where the insurance relates to travel or
holiday risks, whatever the class concerned, any risk
related to travel or holiday if the policy covering the
risk is of a duration of four months or less and the
policy is taken out in Malta;
( d ) in the case where the insurance relates to any risk of
any kind, other than a risk specified in the foregoing
paragraph ( a ), ( b ) or ( c ), any risk of any such kind if
the policyholder has his habitual residence in Malta or,
where the policyholder is a legal person if the
establishment, to which the contract relates, is situated
in Malta;
"risk situated outside Malta" means a risk which is not a risk
situated 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, shall
be 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.
  INSURANCE BUSINESS  g CAP. 403.  7
Cap. 404.
(2) ( a ) The competent authority may by order recognise
Lloyd’s as a recognised insurance body for the
purposes of this Act and, upon such recognition, each
member of Lloyd’s shall be deemed to be authorised,
subject to such restrictions as may be set out in the
order to carry on in or from Malta, either through an
authorised insurance agent acting for such a member,
or with an insurance broker (acting on behalf of an
insured person or a person to be insured) authorised
under the Insurance Brokers and Other Intermediaries
Act, such business of insurance as in accordance with
the rules and regulations of Lloyd’s and any law
applicable thereto such member is permitted to carry
on.
( b ) The provisions of the First Schedule shall apply to
Lloyd’s and each of its members; and this Act shall,
subject to the provisions of the said Schedule, apply to
Lloyd’s and each of its members in the same manner
and to the same extent as it applies to an authorised
company.
Cap. 12.
Organization and Civil Procedure, it shall be sufficient
in any judicial act (other than an application for the
issue of any precautionary or executive warrant) filed
by or against members of Lloyd’s in connection with a
policy underwritten by them to file the act in the name
of the Lloyd’s representative in Malta as
representative of those members; provided the act
contains a statement that it is being filed in connection
with a policy of insurance underwritten by members of
Lloyd’s and giving particulars of the number reference
and date of the policy in respect of which the act is
filed, the identifying number of each of the syndicates
subscribing thereto and, where known, the names of
the members of Lloyd’s comprising those syndicates.
The Lloyd’s representative shall within forty-five
days after the filing by him of the judicial act, or of its
service on him, as the case may be, file a note in the
records of the judicial act filed as aforesaid containing
a list of the names of the members comprising the
syndicates subscribing to the policy and any such note
shall be deemed to be an integral part of the judgment
or decree emanating from the court subsequent to the
judicial act and such judgment or decree shall be
binding on the members whose names are listed in the
note in the same manner as it would so have bound
them if they had been named as parties to the said
judicial act:
Provided that the Lloyd’s representatives shall
not be bound to file any such note following the filing
of any judicial act where particulars of the names of
the members of Lloyd’s comprising those syndicates
  8  CAP. 403. h   INSURANCE BUSINESS 
are already contained in the act or where any such note
has already been filed in the records of the case.
( d ) The competent authority may by order extend
paragraphs ( a ) and ( c ) and the provisions of the First
Schedule to a recognised insurance body, other than
Lloyd’s, as may from time to time be recognised by it
and to the members of any such body, subject to such
modifications and additions as it may deem necessary.
( e ) Any order made under this article may be revoked or
amended by a subsequent order of the competent
authority and the provisions of article 58 shall  mutatis
mutandis  apply to a revocation or amendment of any
such 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 the
powers conferred upon him by this Act to ensure compliance by
persons authorised to carry on the business of insurance with the
provisions of this Act and any rules or regulations made thereunder
and with such conditions as may from time to time be specified in
the respective authorisation.
(2) The Minister shall by order in the Gazette *  appoint a body
to be the competent authority for the purposes of this Act to carry
out the functions of the competent authority under this Act and to
perform such other functions as the Minister may consider
appropriate 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 carry
out the functions assigned to it by or under this Act and to ensure
that persons authorised to carry on the business of insurance in or
from Malta comply with the provisions of this Act and of any rules
or regulations made thereunder, with any insurance directive made
by the competent authority in virtue of this Act and of any rules or
regulations made thereunder and with the conditions specified in
their respective authorisation.
(2) When considering whether to grant or refuse to grant an
authorisation under this Act, the competent authority shall, in
particular, have regard to:
( a ) the protection of insured persons, policy holders and
the general public;
( b ) the protection of the reputation of Malta, taking into
account Malta's international commitments; and 
( c ) the promotion of competition and choice.
* See  Legal Notice 190 of 1998.
  INSURANCE BUSINESS  g CAP. 403.  9
(3) The competent authority may make insurance directives as
may be required for carrying into effect any of the provisions of
this Act and of any rules or regulations made thereunder. The
competent authority may amend or revoke such insurance
directives.
(4) Insurance directives and any amendment or revocation
thereof shall be officially communicated to the persons concerned
and be open to public inspection at the offices of the competent
authority at all times during the normal working hours of the
authority.
(5) Insurance directives imposing an obligation or requirement
on the public shall be made by regulations in accordance with
article 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), for
the purposes of this Act, business of insurance is divided into long
term business and general business; and -
"long term business" means business of insurance of any of
the classes specified in the Second Schedule, and
"general business" means business of insurance of any of
the classes specified in Part I of the Third Schedule.
(2) For the purposes of this Act, the effecting and carrying out
of a contract of insurance whose principal object is within one class
of business of insurance, but which contains related and subsidiary
provisions within another class or classes, shall be taken to
constitute the carrying on of business of insurance of the first-
mentioned class, and no other, if subarticle (3) or (4) applies to the
contract.
(3) This subarticle applies to a contract whose principal object
is within any class of long term business but which contains
subsidiary provisions within general business class 1 or 2 if the
company is authorised under article 7 to carry on long term
business class 1.
(4) This subarticle applies to a contract whose principal object
is within one of the classes of general business but which contains
subsidiary provisions within another of those classes, not being
class 14, 15 or 17:
Provided that the risk included in class 17 shall be deemed
to be an ancillary risk of class 18 if the conditions of subarticle (5)
are satisfied and where the main risk relates solely to the assistance
provided to persons in difficulty while travelling or away from
their home or permanent residence, and the risk included in class
17 shall also be deemed an ancillary risk where it concerns disputes
or risks arising out of or in connection with, the use of seagoing
vessels and the conditions of the said subarticle are satisfied.
(5) The conditions referred to in subarticle (4) are the
  10  CAP. 403. h   INSURANCE BUSINESS 
following:
( a ) that the risks to be insured are connected with the
principal risk;
( b ) that these risks concern the object which is covered
under the principal risk; and 
( c ) that they are covered by the contract insuring the
principal risk.
(6) The Minister may, after consultation with the competent
authority, make rules or regulations determining the class or classes
of long term business and the class or classes or part classes of
general business that may be effected and carried out under this
Act.
(7) The competent authority may, by an insurance directive
made for the purpose of this article, determine that long term
business contracts of insurance as may be specified be of a kind as
may be specified or be expressed to be in effect for a period as may
be specified.
(8) The competent authority may, by an insurance directive
made for the purposes of this article, provide that general business
contracts of insurance of a kind specified in the directive contain
such conditions or include such requirements or arrangements as
may 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 carrying
on, in or from Malta business of insurance unless authorised by the
competent authority.
(2) Without prejudice to subarticle (1), no company whose
head office is in Malta shall carry on, nor hold itself out as carrying
on, business of insurance in or from a country outside Malta, unless
authorised by the competent authority.
(3) Subarticles (1) and (2) shall not apply to a mutual
association if such mutual association satisfies such requirements
as 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 of
class III contained in the Second Schedule, and the person
providing such contracts holds a valid investment services licence
under 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 that
business, 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 a
company whose head office is in Malta or is issued in or from
Malta by a person having a place of business in Malta, the
provisions of this subarticle shall not apply with regard to the
person issuing the instrument.
(5) The Minister, acting on the advice of the competent
authority, may make regulations under this article -
( a ) declaring certain services and activities ancillary to or
  INSURANCE BUSINESS  g CAP. 403.  11
connected with business of insurance as not
constituting business of insurance for any or all of the
purposes of this Act;
( b ) prescribing the persons who may carry out such
services and activities and the persons to or for whom
such services and activities may be rendered;
( c ) providing for any matter incidental to or connected
with the above, and for the better carrying out of the
provisions of this subarticle.
(6) In the event of a doubt as to whether an activity constitutes
business of insurance, or whether business of insurance is or is not
being carried on in or from Malta, the matter shall be conclusively
determined 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 to
carry on under this Act - 
( a ) in the case of a company whose head office is in
Malta, in or from Malta or in or from a country outside
Malta;
( b ) in the case of a company whose head office is in a
country outside Malta, in or from Malta,
such of the classes of business of insurance specified in the Second
or Third Schedule, or such parts of those classes, as may be
specified in the authorisation.
(2) An authorisation under this article may be restricted to
business of reinsurance; and a company may not carry on business
of reinsurance by virtue of an authorisation under this article unless
the authorisation expressly extends to such business.
(3) The competent authority shall have the power to require
any company to provide such information as it may deem necessary
for the purpose of determining an application for authorisation.
(4) An authorisation under this article shall only be issued if
the competent authority is satisfied, on the basis of the information
required to be submitted under this Act and any information
received by it, that the authorisation ought to be granted.
(5) An authorisation issued under this article may identify
classes or part classes of general business by referring to the
appropriate groups specified in Part II of the Third Schedule.
(6) Subject to the provisions of this Act, the competent
authority may subject an authorisation issued or held under this
article to such conditions as it may from time to time deem fit to
impose.
(7) Subject to subarticle (8), the competent authority shall
determine an application for authorisation under this article within
six months of receiving the information required to be submitted
under this Act; and if it refuses to issue the authorisation it shall
inform the applicant in writing of the reasons for the refusal.
(8) Where the authorisation sought is one restricted to
  12  CAP. 403. h   INSURANCE BUSINESS 
reinsurance, the period prescribed by subarticle (7) shall be of three
months.
(9) On the issue to a company of an authorisation under this
article, any previous authorisation of that company under this
article shall lapse.
Authorisation 
requirements.
Amended by:
XVII. 2002.242.
8. (1) The competent authority shall not issue an
authorisation under article 7 unless it is satisfied that -
( a ) an application for authorisation is made in writing by a
company in such form and manner as the competent
authority may from time to time determine;
( b ) the company’s objects are limited to business of
insurance and operations arising directly therefrom, to
the exclusion of all other commercial business;
( c ) the company has disclosed to the satisfaction of the
competent authority such information as the competent
authority has requested of it in relation to persons who
will, upon the authorisation of the company, have any
proprietary, financial or other interest in, or in
connection with, that company;
( d ) all qualifying shareholders, controllers and all persons
who will effectively direct the business of insurance
are fit and proper persons to ensure its sound and
prudent management;
( e ) the company has submitted to the satisfaction of the
competent authority a scheme of operations which
shall include the particulars or proof as may be
determined by an insurance directive made for the
purpose of this article;
( f ) the company’s own funds, whether in Maltese liri or in
other currencies acceptable to the competent authority
are, at all times, not less than such amount appropriate
for the kind of business to be carried on, or being
carried on, by the company, as may be determined by
an insurance directive made for the purposes of this
Act; and such own funds are unencumbered at all
times.
(2) Where close links exist between a company applying for
authorisation and any other person, the competent authority shall:
( a ) only issue an authorisation if it considers that such
close links do not prevent it from effectively
exercising its supervisory functions; and 
( b ) refuse to issue such authorisation if it considers that
the laws, regulations or administrative provisions of
any country, other than Malta, governing any person
with whom the company has close links, or their
enforcement, prevent it from effectively exercising its
supervisory functions.
(3) The competent authority may, from time to time, by means
  INSURANCE BUSINESS  g CAP. 403.  13
of an insurance directive issued under this Act define the
circumstances in which close links are to be regarded as existing
between 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 shall
not, under article 7, authorise a company to carry on both long term
business and general business unless - 
( a ) the long term business is restricted to reinsurance; or
( b ) the general business carried on by the company is
restricted to classes 1 and 2 of Part I of the Third
Schedule (accident and sickness) or to any class or part
of a class of business within that group.
(2) Without prejudice to the provisions of subarticle (3), the
provisions this article shall not apply to a company which holds an
authorisation to carry on both long term business and general
business under thi Act as in force immediately before the coming
into force of subarticle (1) until such time as the Minister may by
Order in the Gazette establish.
(3) A company authorised as aforesaid shall, in respect of long
term business and general business, be managed separately in a
manner as may be determined by an insurance directive made for
the purpose of this article.
Applicants with 
head office in 
Malta.
Amended by:
XVII. 2002.244.
10. (1) The competent authority shall not issue an
authorisation under article 7 to a company whose head office is in
Malta, nor shall the competent authority permit such company to
hold the authorisation issued thereunder, unless it is satisfied that -
( a ) the company has fulfilled or complied with the
requirements of articles 8 and 14 and, where
appropriate, of article 9; and
( b ) where the authorisation sought or held is one not
restricted to reinsurance, the company submits proof
that the minimum guarantee fund required to be
maintained under article 16 has been deposited with
and held in custody for its account by a person as may
be prescribed under article 18.
(2) A company authorised as aforesaid may, with the approval
of 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 insurance
agent.
(3) Except with the written consent of the competent authority,
no company authorised as aforesaid may open a branch, agency or
set up or acquire any subsidiary in any country outside Malta.
  14  CAP. 403. h   INSURANCE BUSINESS 
Applicants with 
head office outside 
Malta.
Amended by:
XVII. 2002.245.
11. (1) The competent authority shall not issue an
authorisation under article 7 to a company whose head office is in a
country outside Malta, nor shall the competent authority permit
such company to hold the authorisation issued thereunder, unless it
is satisfied that -
( a ) the company has fulfilled or complied with the
requirements of articles 8 and 14, and, where
appropriate, of article 9;
( b ) the company is permitted in the country where its head
office is situated to carry on the business of insurance
which forms the object of the application;
( c ) the company maintains in Malta at all times assets of
such kind and amount as may be prescribed by or
determined in accordance with regulations made for
the purposes of this Act; and, where the authorisation
sought or held is one not restricted to reinsurance, the
whole or a specified proportion of such assets as may
be prescribed or determined is deposited with and held
in custody for the company’s account by a person as
may be prescribed under article 18;
( d ) the company has in Malta at all times:
(i) a representative fulfilling the requirements of
article 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 in
a country outside Malta, the business of insurance shall be carried
out from such branch by a person fulfilling the following
requirements of this subarticle:
( a ) the person must be an individual resident in Malta or
an authorised insurance manager who has been
designated by the company for the purpose of this
article;
( b ) where the person is an individual -
(i) the person must not be the approved auditor, or a
partner or an employee of the approved auditor,
of the company;
(ii) the person possesses the qualifications and
fulfils or complies with the requirements
determined by an insurance directive made for
the purpose of this article; and
(iii) the person is fit and proper to ensure its sound
and prudent management.
General 
representatives.
12. The requirements referred to in article 11(1)( d )(l) are those
set out in the following provisions of this article:
( a ) the representative must be a person resident in Malta
who has been designated as the company’s
  INSURANCE BUSINESS  g CAP. 403.  15
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 the
company;
( c ) the representative must not be the approved auditor, or
a partner or an employee of the approved auditor, of
the company;
( d ) if the representative is not an individual, it must be a
company whose head office is in Malta and must itself
have an individual representative resident in Malta
who is authorised to act generally, and to accept
service of any document, on behalf of the company, in
its capacity as representative of the company.
Insurance agents 
and managers.
13. (1) No person shall act as an insurance agent of an
authorised company or as an insurance manager unless authorised
by the competent authority.
(2) The competent authority may authorise a person to act as an
insurance agent of an authorised company or as an insurance
manager.
(3) Subject to the provisions of subarticles (4) and (5), the
competent authority shall not issue an authorisation under this
article to a person nor shall the competent authority permit such
person to hold the authorisation issued thereunder, unless it is
satisfied that such person fulfils or complies with the requirements
set out in Part I of the Fourth Schedule appropriate to the
application.
(4) The provisions of this Act shall apply with respect to an
authorisation to be issued, or issued, or held under this article, and
the holder thereof, subject to the provisions set out in Part II of the
Fourth Schedule.
(5) The holder of an authorisation issued or held under this
article is also subject to the requirements set out in Part III of the
Fourth Schedule.
(6) The competent authority shall, by an insurance directive
made for the purposes of this article, determine matters required to
be determined under any provision contained in the Fourth
Schedule.
PART IV 
CONDITIONS FOR CARRYING ON BUSINESS 
OF INSURANCE
Margins of 
solvency.
14. (1) A company whose head office is in Malta authorised
under this Act shall maintain at all times a margin of solvency of
such amount as may be prescribed by or determined in accordance
with regulations made for the purposes of this article.
(2) Subject to subarticle (3), a company whose head office is in
a country outside Malta authorised under this Act shall maintain at
all times -
  16  CAP. 403. h   INSURANCE BUSINESS 
( a ) a margin of solvency, and
( b ) a Malta margin of solvency,
of such amounts as may be prescribed by or determined in
accordance with the regulations made for the purposes of this
article.
(3) Subarticle (2)( b ) shall not apply to a company if its
business in Malta is restricted to reinsurance.
(4) Without prejudice to article 15, a company authorised as
aforesaid which fails to comply with subarticle (1) or (2) -
( a ) shall submit to the competent authority a plan for the
restoration of a sound financial position; and
( b ) shall propose modifications to the plan (or the plan as
previously modified) if the competent authority
considers it inadequate; and
( c ) shall give effect to a plan acceptable to the competent
authority.
(5) For the purposes of this Act -
( a ) the margin of solvency of an authorised company is
the excess of the value of its assets, over the amount of
its liabilities, that value and amount being determined
in accordance with any applicable valuation
regulations;
( b ) the Malta margin of solvency of an authorised
company is the value of assets of the company
representing the margin of solvency required to be
maintained by it under subarticle (2).
(6) In the case of an authorised company which carries on both
long 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 business
in or from Malta, the requirement to maintain a Malta
margin of solvency,
were requirements to maintain separate margins in respect of the
two kinds of business (and accordingly as if the reference in
subarticle (5)( a ) to assets and liabilities were a reference to assets
and liabilities relating to the kind of business in question).
(7) In applying subarticle (5), the amount of the company’s
liabilities shall be taken to be increased by the amount of any
reserve maintained under article 17(7).
Failure to 
minimum margin 
of solvency.
15. (1) If -
( a ) the margin of solvency of an authorised company to
which article 14(1) applies, or
( b ) the margin of solvency or Malta margin of solvency of
an authorised company to which subarticle (2) of that
  INSURANCE BUSINESS  g CAP. 403.  17
article applies,
falls below such amount as may be prescribed by or determined in
accordance 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 without
delay, and in no case later than fifteen days from the day of such
notification.
(2) For so long as the margin of solvency or the Malta margin
of solvency of a company is less than that required to be maintained
as aforesaid-
( a ) the company shall not assume any new risk of any kind
whatever;
( b ) the Competent Authority may -
(i) in the case of a company whose head office is in
Malta, restrict or prohibit the disposal of the
company’s assets;
(ii) in the case of a company whose head office is in
a country outside Malta, restrict or prohibit the
disposal of the company’s assets in Malta,
and, in each case, take any other measure it deems necessary to
safeguard the interests of the policyholders and creditors.
(3) Where a company is required by virtue of article 14(6) to
maintain separate margins of solvency in respect of long term
business and general business, subarticle (1) shall have effect as if
any reference to the margin of solvency or the Malta margin of
solvency of the company were a reference to the margin in respect
of 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 under
this Act shall maintain in Malta at all times a guarantee fund of an
amount of assets equal to the greater of the minimum guarantee
fund or the value of one-third of -
( a ) in the case of a company whose head office is in
Malta, the margin of solvency required to be
maintained by the company under article 14(1)
thereunder;
( b ) in the case of a company whose head office is in a
country outside Malta, the Malta margin of solvency
required to be maintained by the company under
article 14(2).
(2) The amount of the guarantee fund required to be maintained
by this article shall be not less than an amount (the "minimum
guarantee fund") as may be prescribed by or determined in
accordance with regulations made for the purposes of this article.
(3) In the case of a company which carries on both long term
business and general business, subarticle (1) shall have effect as if
the requirements to maintain a guarantee fund were requirements to
maintain separate guarantee funds in respect of the two kinds of
business (and accordingly as if the references in that subarticle to
  18  CAP. 403. h   INSURANCE BUSINESS 
assets, margin of solvency and Malta margin of solvency were
references to assets, margin of solvency and Malta margin of
solvency relating to the kind of business in question).
(4) The assets required to be maintained in Malta by or under
this Act shall not be transferred, withdrawn or in any way
encumbered without the permission of the competent authority
given in writing or until the company has ceased to carry on the
business it was authorised to carry on and proves to the satisfaction
of the authority that it has no further liability. Such assets shall not
be 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 from
Malta and the business is restricted to reinsurance;
( b ) a company whose head office is in Malta, if it carries
on 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 year
establish and maintain adequate technical provisions, including
mathematical provisions, in respect of the business it is authorised
to carry on in an amount to be prescribed by or determined in
accordance with regulations made for the purposes of article 20.
(2) A company authorised as aforesaid shall at all times hold
unencumbered assets equal to the value of its technical provisions
and after making adequate provision for all its other liabilities.
(3) The assets covering the technical provisions shall take
account of the business and the classes or part classes of business
carried on by a company in such a way as to secure the safety, yield
and marketability of its investments, which the company shall
ensure are diversified and adequately spread in accordance with
regulations made for the purposes of article 63.
(4) The technical provisions must at all times be covered by
equivalent and matching assets provided that, with the approval of
the competent authority given in writing, a company may hold non-
matching assets to covering a sum not exceeding an amount as may
be prescribed by or determined in accordance with regulations
made for the purposes of article 63.
(5) For the purposes of this article, the expression "matching
assets" means the representation of underwriting liabilities
expressed in a particular currency by assets expressed or realisable
in 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 is
restricted to reinsurance.
(7) Without prejudice to subarticle (1) and subject to subarticle
(8), every company authorised to carry on general business of a
prescribed description shall maintain, in accordance with
regulations made for the purposes of this article, a reserve,
hereinafter referred to as equalisation reserve, in respect of its
general business of that description.
  INSURANCE BUSINESS  g CAP. 403.  19
(8) Subarticle (7) shall not apply to such company authorised
as aforesaid as may be prescribed for the purposes of this
subarticle.
(9) Regulations made for the purposes of this article may, with
respect to an equalisation reserve, make provision -
( a ) as to the circumstances in which, and the times at
which, amounts are to be placed to, or taken from, an
equalisation reserve;
( b ) as to the determination of the amounts to be so placed
or taken; and
( c ) as to such other matters incidental to the maintenance
of an equalisation reserve as the Minister may, after
consultation with the competent authority, consider
expedient.
Custody of assets 
required to be 
maintained in 
Malta.
18. (1) The competent authority may, with respect to assets
which a company, other than a company whose business is
restricted to reinsurance, is required by or under this Act to
maintain in Malta, impose an additional requirement that the whole
or a specified proportion of such assets shall be deposited with and
held in custody for the company’s account by a person as may be
prescribed by regulations made for the purposes of this article
unless that requirement is otherwise imposed by any other
provision of this Act; and the competent authority shall at all times
have the right to demand from such person any information it may
require to ensure that the provisions of this article are being
complied with.
(2) Any requirement by or under this Act that assets of any
kind or amount are to be maintained in Malta shall be satisfied if
such assets are maintained in such country outside Malta and in
such form and manner to the satisfaction of the competent authority
subject to such regulations as may be prescribed for such purpose
under this Act.
(3) Any provision by or under this Act requiring a company to
maintain in Malta assets of any kind or amount may be satisfied by
the company if the company produces a security in a form and
manner to the satisfaction of the competent authority subject to
such regulations as may be prescribed for such purpose under this
Act.
PART V 
ACCOUNTS, ACTUARIAL INVESTIGATIONS AND 
FINANCIAL STATEMENTS
Financial year of 
authorised 
companies.
19. (1) Every company whose head office is in Malta
authorised under this Act shall, not later than three months from the
date of a company’s authorisation, notify in writing the competent
authority of its financial year; and, failing such notice, the
company’s financial year shall terminate on the thirty-first day of
December of each year.
(2) No company as aforesaid shall alter its financial year unless
  20  CAP. 403. h   INSURANCE BUSINESS 
and until the competent authority has given its approval in writing
on an application made to it in that behalf.
(3) Every company whose head office is in a country outside
Malta applying for authorisation under article 7 to carry on
business of insurance in or from Malta, shall notify in writing the
competent authority of its financial year; and where an authorised
company as aforesaid alters its financial year it shall forthwith
notify 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 head
office is in Malta, means an accounting period as is
construed in accordance with articles 164 to 166 of the
Companies Act;
( b ) in relation to an authorised company whose head
office is in a country outside Malta, means an
accounting period as is construed in accordance with
the provisions of the laws of the country where the
head office of the company is situated governing the
accounting 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 company
authorised under this Act shall, not later than six months from the
closing of its financial year, or at any other time as may be
authorised in writing by the competent authority -
( a ) forward to the competent authority;
( b ) publish in abridged form in at least two local daily
newspapers of which one is published in the Maltese
language 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 exhibited
throughout the following twelve months,
a copy of its audited financial statements drawn up -
(i) in the case of a company whose head office is in
Malta, in accordance with regulations made for
the purposes of this article; and
(ii) in the case of a company whose head office is in
a country outside Malta, in accordance with the
provisions of the laws of the country where the
head office of the company is situated governing
the financial statements of such companies.
(1A) In each of the cases referred to in paragraphs (i) and (ii) in
subarticle (1) the company shall provide a copy of its audited
financial statements to any person applying for such copy:
Provided that the company may charge such reasonable fees
not exceeding the administrative costs incurred in producing such
copy.
(2) The form and content of the statements required to be
published under subarticle (1)( b ) shall be such as shall be
  INSURANCE BUSINESS  g CAP. 403.  21
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 same
manner and to the same extent as it applies to its offices, agencies
and 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, the
provisions of this article or of any regulation made thereunder shall
prevail and the provisions of the said Act shall, to the extent of the
inconsistency, not apply to authorised companies as aforesaid.
Appointment, 
duties and 
termination of 
appointment of 
auditors.
21. (1) Every company authorised under this Act shall every
year appoint an approved auditor as auditor to the company whose
duty shall be to report on the financial statements of the company
examined by him and on financial statements prepared by the
company.
(2) If an authorised company fails to appoint an auditor as
required by subarticle (1), or at any time fails to fill any vacancy in
the office of auditor, the competent authority shall have the power
to appoint an auditor for that company and shall fix the
remuneration to be paid by that company to such auditor.
(3) The auditor’s report shall include a statement as to whether
the various requirements of this Act and of any rules or regulations
made thereunder, and of any insurance directive in respect of the
company have been complied with and observed and any
provisions made for that purpose.
(4) Every auditor of an authorised company shall have the right
to demand such information or explanation as he deems necessary
in the performance of his duties from any officer or employee of, or
any person under an appointment from, that company.
(5) An auditor shall immediately give notice in writing to the
competent 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 the
reasons for so doing.
(6) An authorised company shall give notice in writing to the
competent authority immediately it receives notice of a resolution
intended to be put before the company’s annual general meeting to
appoint as an auditor a person other than the retiring auditor or
otherwise providing expressly that the retiring auditor shall not be
reappointed.
(7) Where, for any reason whatever, the appointment of an
auditor comes to an end, the authorised company shall, not later
than fourteen days from the termination of such appointment, give
notice in writing to the competent authority stating reasons for such
  22  CAP. 403. h   INSURANCE BUSINESS 
termination.
(8) The competent authority may require an authorised
company to change its appointed auditor where, in the competent
authority’s opinion, such auditor is considered unfit for this
appointment, at any time during his term of office.
(9) Before requiring an authorised company to change its
appointed auditor in the circumstances mentioned in subarticle (8),
the competent authority shall notify in writing its intention to the
company and the auditor concerned stating reasons for requiring
such change and giving the auditor the opportunity to submit in
writing within fourteen days from the date of serving of such notice
reason why its appointment with the company should not be
terminated.
Cap. 386.
(10) For the purposes of this Act, an approved auditor shall be a
person who is qualified to be an auditor in accordance with the
Companies Act, and holds the authorisation of the competent
authority issued to him in accordance with regulations made for the
purpose of this article.
(11) Notwithstanding anything contained in the foregoing
subarticles, the competent authority may, in the case of a company
whose head office is in a country outside Malta authorised as
aforesaid, approve such alternative arrangements as it thinks
reasonable and which do not materially detract from the main
objects of this article, and where such arrangements have been
carried out, the provisions of this article shall not apply to the
extent that they are replaced by such arrangements.
Cap. 386.
(12) Subject to the provisions of subarticle (10), in so far as the
provisions of this article are inconsistent with the provisions of the
Companies Act, the provisions of this article shall prevail, and the
provisions 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 on
long term business shall - 
( a ) within thirty days of beginning to carry on such
business, appoint an approved actuary as actuary to the
company;
( b ) whenever the appointment comes to an end, within
thirty days of such termination, make a new
appointment.
(2) A company making an appointment under subarticle (1)
shall, within fourteen days, inform the competent authority in
writing stating that fact, the date of such appointment and the name
and qualifications of the person appointed; and if an appointment
under that subarticle comes to an end, the company shall, within
fourteen days, inform the authority in writing stating that fact, the
name 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 company
shall not effect and carry out any new long term contracts of
  INSURANCE BUSINESS  g CAP. 403.  23
insurance until the appointment is made.
(4) Notwithstanding the provisions of subarticle (2), the
competent authority may, within fourteen days of receiving a notice
of termination of an appointment of an approved actuary, request in
writing the approved actuary concerned to give in writing the
reasons for such termination; and the actuary shall, within fourteen
days, give reasons in writing.
(5) For the purposes of this Act, an approved actuary is a
person who -
( a ) is a fellow of an institute of actuaries, or a fellow of a
faculty of actuaries, or holds actuarial qualifications of
similar standing of an institute of repute recognised for
such purposes by the competent authority; and
( b ) holds the Authority’s authorisation to act as actuary to
a 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 on
long term business -
( a ) shall, at the close of its financial year, cause an
investigation to be made into its financial condition in
respect of that business by the person who for the time
being is its actuary under article 22(1); and
( b ) when such an investigation has been made, or when at
any other time an investigation into the financial
condition of the company in respect of its long term
business has been made with a view to the distribution
of profits, or the results of which are made public,
shall cause an abstract of the actuary’s report of the
investigation to be made and such abstract to be
available to the policyholders of the company for
inspection at the offices of the company.
(2) An investigation to which subarticle (1)( b ) relates shall
include -
( a ) a valuation of the liabilities of the company
attributable to its long term business; and
( b ) a determination of any excess over those liabilities of
the assets representing the fund or funds maintained by
the company in respect of that business and, where any
rights of any long term business policyholders to
participate in profits relate to particular parts of such a
fund, a determination of any excess of assets over
liabilities in respect of each of those parts.
(3) For the purposes of any investigation to which this article
applies, the value of any assets and the amount of any liabilities
shall be determined in accordance with any applicable valuation
regulations.
(4) The form and content of any abstract under this article shall
be such as may be determined by an insurance directive made for
the purposes of this article.
  24  CAP. 403. h   INSURANCE BUSINESS 
(5) Where an investigation is made, the actuary’s report of the
investigation shall be forwarded by the company concerned to the
competent authority -
( a ) with regard to an investigation made at the close of the
company’s financial year, together with the audited
financial statements of the company required to be
forwarded under article 20;
( b ) with regard to an investigation made at any other time,
not later than thirty days from the close of the
investigation.
(6) Notwithstanding the provisions of subarticle (1), the
competent authority may in writing, at any time, direct a company
authorised as aforesaid to cause to be forwarded to it a valuation of
the company’s liabilities outstanding at the date specified in the
direction on account of its long term business, together with a
statement prepared by the actuary of the company concerned, in the
form and content as the competent authority may by the insurance
directive determine.
(7) Subarticle (1)( b ), subarticles (2) and (4), and subarticle
(5)( b ) shall not apply to a company if its business is restricted to
reinsurance.
(8) Notwithstanding anything contained in any of the foregoing
subarticles, in the case of a company whose head office is in a
country outside Malta authorised to carry on long term business,
the competent authority may approve such alternative arrangements
as it thinks reasonable and which do not materially detract from the
main objects of this article, and where such arrangements have
been carried out, the provisions of this article shall not apply to the
extent 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 actuary
respectively of an authorised company, or due to a direct request by
the competent authority made under this Act, an auditor or an
actuary, as the case may be, becomes aware of any matter which
relates to and may have a serious adverse effect upon the insured,
the policyholder or any other interested person of the company, or
of the branch in Malta of a company whose head office is in a
country outside Malta, he shall immediately inform the competent
authority through the company’s management, or if circumstances
so warrant, directly to the competent authority.
(2) For the purposes of subarticle (1), any matter which relates
to and may have a serious adverse effect includes any matter
which:
( 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 a
going concern; or
( c ) may be prescribed by the Minister.
(3) An auditor or actuary, as the case may be, of an authorised
company shall likewise have a duty to report to the competent
  INSURANCE BUSINESS  g CAP. 403.  25
authority any facts and decisions which relate to or have a serious
adverse effect upon the insured, the policyholder or any other
interested person, relating to the company, or of the branch in
Malta of a company whose head office is outside Malta, of which
he becomes aware in his capacity as auditor of or actuary to a
company 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 shall
automatically be revoked if the authorised company -
( a ) does not commence to carry on business pursuant to
the authorisation within twelve months of its issue, or
within such other period as may be specified in the
authorisation; or
( b ) is declared bankrupt or goes into liquidation or makes
a composition with its creditors or is otherwise
dissolved; or
( c ) has ceased to operate as a result of a merger with
another company carrying on business of insurance or
for any other reason whatsoever; or
( d ) is a company whose head office is in a country outside
Malta, and the overseas regulatory authority in the
country of registration, incorporation or constitution
withdraw 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 other
provision of this Act, the competent authority may at any time
suspend or revoke an authorisation issued or held under this Act if -
( a ) any document or information accompanying an
application for authorisation, or any information given
in connection therewith, is false, incorrect or
misleading in any material particular, or if the
authorised company has concealed, or conceals from,
or fails to notify to the competent authority any
document or information or change therein which it
was its duty to reveal or to notify under this Act and
any rules or regulations made thereunder or any
insurance directive; or
( b ) the authorised company ceases to carry on the business
for which the authorisation was issued; or
( c ) the authorised company suspends payment or is about
to suspend payment; or
( d ) it considers that the authorised company does not fulfil
or comply with the requirements of, or has
contravened, any of the provisions of this Act and any
rules or regulations made thereunder, or any insurance
directive, or has failed to satisfy or comply with any
condition to which it or the authorisation held by it is
subject by virtue of or under this Act; or
  26  CAP. 403. h   INSURANCE BUSINESS 
( e ) it considers that any officer who effectively controls
the business the company is authorised to carry on is
no longer a fit and proper person to ensure its sound
and prudent management; or
( f ) it receives a written request so to do from the
authorised company; or
( g ) the authorised company no longer possesses the
required own funds; or
( h ) the authorised company is likely to become unable to
meet its obligations or can no longer be relied upon to
fulfil or satisfy its obligations towards insureds,
policyholders, creditors or other interested persons; or
( i ) close links within the meaning of article 8, exist
between the authorised company and another person,
and the competent authority is prevented from
exercising its supervisory functions effectively either
by reason of those close links or by reason of any law,
regulation or administrative provision of a country
outside Malta governing that other person, or by
reason 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 an
authorisation it shall give the company concerned notice in writing
setting out the reasons for its intention to do so.
(2) Every notice given under subarticle (1) shall state that the
company concerned may, within such reasonable period after the
service thereof as may be stated in the notice (being a period of not
less than forty-eight hours and not longer than fifteen days), make
representations in writing to the competent authority giving reasons
why the authorisation should not be suspended or revoked and the
competent authority shall consider any representations so made
before arriving at a final decision.
(3) The competent authority shall notify in writing its final
decision to the company concerned.
(4) An authorisation issued to a company whose head office is
in a country outside Malta may only be revoked after consultation
with the overseas regulatory authority of the country of
registration, incorporation or constitution, unless the competent
authority decides that the matter is urgent or that there are
circumstances which make such prior consultation inappropriate.
(5) In the case of a suspension or a revocation of an
authorisation of a company whose head office is in Malta, the
competent authority shall inform the overseas regulatory authority
of any state in which the company or its subsidiaries are carrying
on the business of insurance.
  INSURANCE BUSINESS  g CAP. 403.  27
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 authority
may suspend or revoke an authorisation under article 26, the
competent authority may, either in lieu of or in addition to any such
suspension or revocation, and without prejudice to its powers to
suspend or revoke an authorisation, proceed in any one or more of
the following manners:
( a ) require the company forthwith to take such steps as the
competent authority may consider necessary to rectify
or remedy the matter;
( b ) appoint a person to advise the company in the proper
conduct of its business;
( c ) appoint a person to take charge of the assets of the
company, or any portion of them, for the purposes of
safeguarding the interests of insureds, policyholders,
creditors and shareholders of the company;
( d ) appoint a person to assume control of the business of
the company either to carry on that business or to carry
out such other function or functions in respect of such
business, or part thereof, as the competent authority
may direct;
( e ) require the company to dissolve and wind up its
business or, in the case of a company whose head
office is in a country outside Malta, to wind up its
business in Malta;
( f ) appoint a competent person to act as liquidator for the
purpose of winding up the affairs of the company;
( g ) fix the remuneration to be paid by the company to any
person appointed under this article;
( h ) do such other act or require the doing of such other
thing 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 of
such manners, whether in addition thereto or in substitution
therefor.
(2) Where a person is appointed by the competent authority -
( a ) under subarticle (1)( b ), it shall be the duty of the
company to act in accordance with the advice given by
such person unless and until the competent authority,
on representation made to it, directs otherwise;
( b ) under subarticle (1)( c ), 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 company in general meeting, or by
the directors, or by any other person, 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 exclusion of any other
person;
  28  CAP. 403. h   INSURANCE BUSINESS 
( c ) under subarticle (1)( d ), the company shall submit its
business to the control of such person and shall
provide him with such facilities as he may require the
company to provide him to carry on that business or to
carry out the functions assigned to him under the said
paragraph; and all the powers, functions and duties of
the company, whether exercisable by the company in
general meeting, or by the directors, or by any other
person, including 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 subarticle (1)( f ), such person shall be the
liquidator of the company for all purposes of law to the
exclusion of any other person.
(3) In the case of a company whose head office is in a country
outside Malta, the branches and offices in Malta of that company
shall, if the competent authority so directs and to the extent it so
directs, be deemed to constitute a separate company.
(4) The competent authority may, where it feels is in the best
interest of the public so to do, make or issue public statements or
notices giving warnings or information about any of the following: 
( a ) the suspension, revocation or restriction of an
authorisation;
( b ) any action taken in terms of this article;
( c ) the carrying out of business of insurance in an
unsatisfactory manner and the persons carrying out
such business;
( d ) any other practice or matter which may be detrimental
to the interest of insureds, policyholders, creditors or
other interested persons;
( e ) the commission of an offence against this Act;
( f ) the imposition by the competent authority of an
administrative penalty.
 (5) The competent authority may require the company
concerned to pay all the expenses of, and incidental to, the
publication or issue of public statements or notices pursuant to this
article or such part thereof as it may deem appropriate; and any sum
so due shall be recoverable by the competent authority in the same
manner 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 other
provision of this Act which requires an authorised company to
furnish to the competent authority any information or
documentation, 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
  INSURANCE BUSINESS  g CAP. 403.  29
it may specify, such information and documentation as
it may require with respect to the business such
company is authorised to carry on; or with respect to
any person with whom the company has close links
within the meaning of article 8;
( b ) furnish to it any information or documentation
aforesaid verified in such manner as it may specify;
( c ) attend before it, or before a person appointed by it, at
such time and place as it may specify, to answer
questions and provide information and documentation
with respect to any such business as aforesaid.
(2) The competent authority may take copies of any documents
furnished or provided under this article or extracts from them.
(3) Where an authorised company required to provide
information or documentation under this article does not have the
relevant information or documentation, it shall disclose to the
competent authority where, to the best of its knowledge, that
information or documentation is, and the competent authority may
require any person, whether indicated as aforesaid or not, who
appears to it to be in possession of that information or documen-
tation, to provide it.
(4) A statement made and documentation provided in
pursuance of any requirement under this article may be used in
evidence against the person making the statement or providing the
documentation as well as against any person to whom they relate.
Cap. 9.
(5) The provisions of this article shall not apply to information
or documentation which is privileged in accordance with the
provisions of article 642 of the Criminal Code.
(6) The power to require the production of documentation
under the provisions of this article shall be without prejudice to any
lien or charge claimed by any person in relation to such
documentation.
(7) Where the competent authority has appointed a person
under subarticle (1)( c ), such person shall, for the purposes of
carrying out his functions under his appointment, have all the
powers conferred on the competent authority by this article and a
requirement made by him shall be deemed to be and have the same
force 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 Companies
Act relating to the investigation of companies, the competent
authority may, whenever it deems it necessary or expedient,
appoint one or more inspectors to examine the affairs of an
authorised company and to report thereon to it.
(2) An inspector appointed under subarticle (1) -
(a) shall have and may exercise all the powers conferred
on the competent authority by article 29, and any
requirement made by him shall be deemed to be and
have the same force and effect as a requirement of the
competent authority;
  30  CAP. 403. h   INSURANCE BUSINESS 
( b ) may, and if so directed by the competent authority
shall, make interim reports and on the conclusion of
his examination shall make a final report to the said
Authority.
(3) The competent authority may forward to the company
concerned a copy of any report made by an inspector in respect of
its affairs.
(4) Where the affairs of an authorised company are under
examination, it shall be the duty of all officers and agents of the
company 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 which they are
reasonably able to give; and if an officer or an agent of the
company refuses to produce any books or documents which it is his
duty under this article to produce, or refuses to answer any question
which is put to him by an inspector with respect to the affairs of the
company, an inspector shall refer the matter to the competent
authority and the competent authority shall thereupon enquire into
the 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 company
whose affairs are under examination which are in the possession or
under the control of the competent authority.
(6) The competent authority shall have the power to order that
all expenses of, and incidental to, an examination pursuant to this
article or such part thereof as it may deem appropriate, shall be
paid by the company concerned; and any sum so due shall be
recoverable by the competent authority in the same manner as an
administrative penalty imposed under this Act.
Cap. 404.
(7) In this article, any reference to officers or to agents shall
include a reference to past as well as present officers or agents and
the expression "agents", in relation to an authorised company, shall
include an authorised insurance agent, an authorised insurance
manager, a person, other than an insurance agent or an insurance
manager, authorised to act for the company in the same manner and
to the same extent as an insurance agent, an insurance sub-agent
registered under the Insurance Brokers and Other Intermediaries
Act, the bankers, the auditors and, in the case of a company
authorised to carry on long term business, the actuary, of the
company and a person as may be prescribed by regulations made
for the purposes of article 18.
Right of entry to 
obtain information 
and documents.
Cap. 386.
31. (1) Without prejudice to the provisions of the Companies
Act, relating to the entry and search of premises, any officer,
employee or agent of the competent authority, on producing
evidence of his authority, may enter premises occupied by a person
on whom a notice has been served under article 29 or whose affairs
are being investigated under article 30, for the purpose of obtaining
there the information or documents required by that notice, or
otherwise for the purpose of the examination, and of exercising any
of the powers conferred by the said articles.
  INSURANCE BUSINESS  g CAP. 403.  31
(2) Where any officer, employee or agent of the competent
authority has reasonable cause to believe that if such notice as is
referred to in subarticle (1) were served it would not be complied
with or that any documents to which it could relate would be
removed, tampered with or destroyed, such person may, on
producing evidence of his authority, enter any premises referred to
in subarticle (1) for the purpose of obtaining there any information
or documents specified in the authority, being information or
documents that could have been required under such notice as is
referred to in subarticle (1).
(3) For the purposes of any action taken under the provisions of
this article, the competent authority may request the assistance of
the Commissioner of Police, who may for such purpose exercise
such powers as are vested in him for the prevention of offences and
the enforcement of law and order:
Provided that where an entry as is mentioned in this article
involves premises that are occupied for the purpose of habitation,
such entry shall be carried out in the presence of an officer of the
Police of a rank not below that of inspector and shall moreover not
take place between nine in the evening and five in the morning.
Business 
statements.
32. (1) Subject to the following subarticles, an authorised
company which in any calendar year carries on business of
insurance shall, in respect of the business of insurance so carried on
by it, forward to the competent authority a statement relating to that
business made out in the form, manner and content as the
competent authority may by an insurance directive made for the
purpose of this article determine; and the date by which such
statement shall be forwarded shall also be established by that
directive.
(2) The statement required to be furnished under this article
shall be verified in the manner required by the insurance directive.
(3) The competent authority may at any time direct an
authorised company to forward to it such statement at such interval
and 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 under
which a company authorised under this Act ("the transferor"), is to
transfer to another company, whether authorised thereunder or not
("the transferee") all its rights and obligations under such general
business 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 is
in Malta, the performance by it of the obligations
proposed to be transferred constitutes the carrying on
of business of insurance in or from Malta or in or from
a country outside Malta; or
( b ) where the transferor is a company whose head office is
  32  CAP. 403. h   INSURANCE BUSINESS 
in a country outside Malta, the performance by it of
the obligations proposed to be transferred constitutes
business of insurance in or from Malta,
the transferor shall apply to the competent authority for its approval
of the scheme.
(2) The competent authority shall not determine an application
made under subarticle (1) unless it is satisfied that -
( a ) a notice approved by it for the purpose has been
published -
(i) in at least two local daily newspapers of which
one is published in the Maltese language and the
other in the English language; and the text of the
notice shall be in Maltese in the Maltese daily
and in English in the English daily;
(ii) where the transferor is a company which carries
on business from Malta or in or from a country
outside Malta and, as regards any policy
included in the proposed transfer which
evidences a contract of insurance, the risk is a
risk situated outside Malta, in two daily
newspapers in the country where the risk is
situated;
( b ) except in so far as the competent authority has
otherwise directed, a copy of the notice has been sent
by the transferor to every policyholder affected by the
scheme and every other person who claims an interest
in a policy included in the proposed transfer and has
given notice of his claim to the transferor;
( c ) copies of a statement setting out particulars of the
transfer and approved for the purpose by the
competent authority have been available for
inspection -
(i) at each of the branches, agencies and offices of
the transferor in Malta;
(ii) where the transferor is a company which carries
on business from Malta or in or from a country
outside Malta and, as regards any policy
included in the proposed transfer which
evidences a contract of insurance, the risk is a
risk situated outside Malta, at one or more places
in the country where the risk is situated,
for a period of not less than thirty days beginning with
a date to be determined by the competent authority.
(3) The notice referred to in subarticle (2) shall include a
statement that written representations concerning the transfer may
be sent to the competent authority within a period to be specified
by the competent authority; and the competent authority shall not
determine the application until after considering any
representations made to it before the specified day.
  INSURANCE BUSINESS  g CAP. 403.  33
(4) Subject to subarticle (6), the competent authority shall not
approve a transfer on an application made under subarticle (1)
unless it is satisfied that -
( a ) the transferee is, or immediately after the approval will
be, authorised under article 7 to carry on general
business of the class or classes or part classes to be
transferred under the scheme;
( b ) the transferee possesses, after taking the proposed
transfer into account, the margin or margins of
solvency required to be maintained under this Act; and
( c ) the transferee’s financial resources are, consequential
to the transfer, adequate to fulfil the other obligations
required 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 in
such other manner as it may think fit; and
( b ) send a copy of that notice to the transferor, the
transferee and every person who made representations
in accordance with the notice referred to in subarticle
(2),
and if it refuses the application it shall inform the transferor and the
transferee in writing of the reasons for its refusal.
(6) Where the transferor is a company which carries on
business from Malta or in or from a country outside Malta and, as
regards any policy included in the proposed transfer which
evidences a contract of insurance, the risk is a risk situated outside
Malta, the competent authority shall not approve the transfer unless
it is satisfied -
( a ) that the overseas regulatory authority in the country
where the risk is situated has been notified of the
proposed transfer;
( b ) either that the overseas regulatory authority has
consented to the transfer or that the overseas
regulatory authority has not refused its consent to the
transfer within the period of three months beginning
with the date of the notification.
Effect of approval 
under article 33.
34. (1) Subject to subarticle (2), a scheme giving effect to a
transfer approved by the competent authority under article 33 shall
be effectual in law -
( a ) to transfer to the transferee all the transferor’s rights
and obligations under the policies included in the
transfer scheme; and
( b ) if the scheme so provides, to secure the continuation
by or against the transferee of any legal proceedings
by or against the transferor which relate to those rights
or obligations,
  34  CAP. 403. h   INSURANCE BUSINESS 
notwithstanding the absence of any agreements or consents which
would otherwise be necessary for it to be effectual in law for those
purposes.
(2) Except in so far as the competent authority may otherwise
direct, a policyholder whose policy is included in such a scheme
shall not be bound by the scheme unless he has been given written
notice of its carrying out by the transferee.
Transfer of long 
term business.
35. (1) Where it is proposed to carry out a scheme under
which the whole or part of the long term business carried on by a
company authorised under this Act ("the transferor company"), is
to be transferred to another company whether authorised thereunder
or not ("the transferee company"), and -
( a ) where the transferor company is a company whose
head office is in Malta, the business proposed to be
transferred is business carried on in or from Malta or
in or from a country outside Malta;
( b ) where the transferor company is a company whose
head office is in a country outside Malta, the business
proposed to be transferred is business carried on in or
from Malta,
the transferor company or the transferee company shall, by
application filed before the Financial Services Tribunal, request
approval of the scheme. Approval by the Tribunal shall be in
accordance with the provisions of this article.
(2) The Tribunal shall not determine an application filed before
it under subarticle (1) unless -
( a ) the application is accompanied by a report on the
terms of the scheme by an independent actuary; and
( b ) the Tribunal is satisfied that the requirements of
subarticle (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 and
giving the addresses of the branches, agencies and
offices at which, and the period for which, copies of
the documents mentioned in paragraph ( d ) will be
available as required by that paragraph has been
published -
(i) in at least two local daily newspapers of which
one is published in the Maltese language and the
other in the English language; and the text of the
notice shall be in Maltese in the Maltese daily
and in English in the English daily;
(ii) where the transferor company is a company
which carries on business from Malta or in or
from a country outside Malta and, as regards any
policy included in the proposed transfer which
evidences a contract of insurance, a country
outside Malta is the country of the commitment,
  INSURANCE BUSINESS  g CAP. 403.  35
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 the
opinion of the actuary on the likely effects of the
scheme on the long term business policyholders
of the companies concerned,
has been sent to each of those policyholders and every
other person who claims an interest in a policy
included in the proposed transfer and has given written
notice of his claim to the transferor company;
( c ) a copy of the application, of the report mentioned in
subarticle (2)( a ) and of any statement sent out under
paragraph ( b ) of this subarticle has been served on the
competent authority and that a period of not less than
thirty days has elapsed since the date of service; and
( d ) copies of the application and of the report mentioned
in subarticle (2)( a ) have been open to inspection -
(i) at each of the branches, agencies and offices in
Malta 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 in
or from a country outside Malta, or
( bb ) a company whose head office is in a country
outside Malta which carries on business
from Malta,
and, as regards any policy included in the proposed
transfer which evidences a contract of insurance, a
country outside Malta is the country of the
commitment, at such place in that country as the
Tribunal has directed; for a period of not less than
thirty days beginning with a date to be determined by
the Tribunal; and that copies of the report have been
made available for purchase from those offices and
places during that period upon payment of such fee as
may 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 be
adversely 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 a
transfer on an application filed before it under subarticle (1) unless
it is satisfied that -
( a ) the transferee company is, or immediately after the
  36  CAP. 403. h   INSURANCE BUSINESS 
approval will be, authorised under article 7 to carry on
long term business of the class or classes to be
transferred under the scheme;
( b ) the transferee company produces evidence that -
(i) after taking the transfer into account, it
possesses the margin or margins of solvency
required to be maintained under this Act; and
(ii) its financial resources are, consequential to the
transfer, adequate to fulfil the other obligations
required of it by or under this Act.
(6) Where the transferor company is a company which carries
on business from Malta or in or from a country outside Malta and,
as regards any policy included in the proposed transfer which
evidences a contract of insurance, a country outside Malta is the
country of the commitment, the Tribunal shall not approve the
transfer unless the competent authority certifies -
( a ) that the overseas regulatory authority in that country
has been notified; and
( b ) either that the authority has consented to the scheme or
that the authority has not refused its consent to the
scheme within the period of three months beginning
with the date of the notification.
(7) Where a scheme is approved by the Tribunal under this
article the transferee company shall, within ten days from the date
on which the approval is made or such longer period as the
competent authority may allow, deposit two office copies of the
approval with the competent authority.
Provisions 
supplementary to 
article 35.
36. Where the Tribunal approves a scheme under article 35, the
long term business referred to in the application may be transferred
to the transferee without any further need of any document
evidencing the consent of the policyholder and of every other
person who claims an interest in a policy included in the proposed
transfer and notwithstanding any opposition by the policyholder
and every other person who claims an interest in a policy included
in the proposed transfer. The Tribunal may make provision for such
incidental, consequential and supplementary matters as are
necessary to secure that the scheme shall be fully and effectively
carried out; and, where such be the case, for the continuation by or
against the transferee company of any legal proceedings pending by
or 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 of
reinsurance.
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 be
required before any person may lawfully -
  INSURANCE BUSINESS  g CAP. 403.  37
( a ) acquire, directly or indirectly, a qualifying
shareholding in an authorised company;
( b ) increase, directly or indirectly, an existing holding
which is not a qualifying shareholding so as to cause it
to become a qualifying shareholding in an authorised
company;
( c ) increase, directly or indirectly, a qualifying
shareholding so as to cause it to equal or exceed,
twenty per centum or thirty-three per centum or fifty
per centum or to cause the authorised company to
become that person’s subsidiary;
( d ) reduce, directly or indirectly, a qualifying
shareholding so as to cause it to fall below fifty per
centum or thirty-three per centum or twenty per
centum or to cause the authorised company to cease to
be that person’s subsidiary;
( e ) reduce, directly or indirectly, a qualifying
shareholding so as to cause it to cease to be a
qualifying shareholding;
( f ) divest itself, directly or indirectly, of a qualifying
shareholding.
(2) Deleted by Act XVII. 2002.255.
(3) Subarticle (1) shall apply whether or not any of the relevant
shares are shares listed on any Stock Exchange.
(4) It shall be the duty of an authorised company and of the
directors thereof to notify the competent authority forthwith upon
becoming aware that any person intends to take any of the actions
set out in subarticle (1).
(5) Notwithstanding anything contained in any other law, the
consent of the competent authority given in writing shall be
required before any authorised company may lawfully -
( a ) merge with any other company, whether authorised
under this Act or not;
( b ) undergo any reconstruction or division;
( c ) increase or reduce its nominal or issued share capital
or effect any material change in voting rights.
(6) It shall be the duty of all directors and qualifying
shareholders of an authorised company to notify the competent
authority forthwith upon becoming aware that the company intends
to take any of the actions set out in subarticle (5).
(7) Any person intending to take any of the actions set out in
subarticle (1) and any authorised company intending to take any of
the actions set out in subarticle (5) shall notify the competent
authority in writing and the competent authority may issue, for the
purpose of this article, an insurance directive determining the form
in which such notification shall take place and the information
required to be furnished to the competent authority with such
notification; and the competent authority upon a notification by a
  38  CAP. 403. h   INSURANCE BUSINESS 
person intending to take any action set out in subarticle (1)( a ) to
( c ), when, determining what action to take in accordance with this
article, upon such notification, determine whether such person is a
fit and proper person.
(8) Within three months of receipt of such notification or
receipt of such information as the competent authority may
lawfully require, whichever be the later, the competent authority
shall issue a notice -
( a ) granting unconditional consent to the taking of the
action; or
( b ) granting consent to the taking of the action subject to
such conditions as the competent authority may deem
appropriate; or
( c ) refusing consent to the taking of the action,
and if it refuses to grant consent it shall inform the person or the
authorised company concerned in writing of the reason for its
refusal.
(9) If any person or any authorised company takes or intends to
take any action set out in subarticles (1) and (5) without obtaining
the consent of the competent authority, then, without prejudice to
any other penalty which may be imposed under this Act, the
competent authority shall have the power to make an order -
( a ) restraining the person or company from taking, or
continuing with, the action;
( b ) declaring the action to be void and of no effect;
( c ) requiring the person or company to take such steps as
may be necessary to restore the position existing
immediately before the action was taken;
( d ) restraining the person or company from exercising any
rights which the action would, if lawful, have
conferred upon them, including the right to receive any
payment or to exercise any voting rights attaching to
the shares acquired;
( e ) restraining the person or company from taking any
similar action or any other action within the categories
set out in subarticles (1) and (5).
(10) In the case of a company whose head office is in a country
outside Malta authorised under this Act to carry on in or from
Malta the business of insurance, the provisions of this article shall
apply to the extent only of requiring the company to give to the
competent authority, not later than thirty days from such change or
occurrence, as the case may be, the information therein referred to.
(11) Without prejudice to any other provision of this Act, where
the influence exercised by any person holding a qualifying
shareholding is, or is likely to , operate against the sound and
prudent management of an authorised company, the competent
authority may exercise any of its powers under this Act, including
the power to issue directives as it may deem reasonable in the
  INSURANCE BUSINESS  g CAP. 403.  39
circumstances.
Companies ceasing 
to carry on 
business.
Amended by:
XVII. 2002.256.
39. (1) Subject to the following provisions of this article, if an
authorised company intends to cease either wholly or partly to
carry on the business it is authorised to carry on, such company
shall, not later than six months before the date on which it intends
to cease to carry on such business, give notice thereof in writing to
the competent authority and the company shall comply with any
provision of this Act that may be required of it in such
circumstances.
(2) Where an authorised company gives notice to the
competent authority under subarticle (1), the competent authority -
(a) shall require the company to -
(i) give publicity to the matter, amongst its
policyholders and in the press in the form and
manner as may be determined by an insurance
directive made for the purpose of this article;
(ii) discharge all its liabilities to its policyholders
and creditors in a manner acceptable to the
competent authority;
(iii) appoint a person which shall service or, as the
case may be, run-off such business; and
( b ) may require the company to -
(i) ascertain that its technical provisions are
covered by equivalent and matching assets;
(ii) ascertain that such assets are of the categories
determined by any applicable insurance
directive.
(3) Subarticle (2)( b ) shall not apply to a company if its
business is restricted to reinsurance.
(4) The competent authority shall, not later than thirty days
before the proposed date on which a company as aforesaid intends
to cease to carry on the business it is authorised to carry on, issue a
permit to the company concerned -
( a ) authorising it to cease to carry on such business and to
service or run-off that business, as from a specified
date;
( b ) specifying the conditions under which such service or
run-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 permit
authorising it to cease to carry on the business it is authorised to
carry on shall not, as from the date specified in the permit ("the
specified date"), effect and carry out any new contracts of
insurance in the business mentioned in the permit but shall -
( a ) in the case of long term business, service or cause the
person named in the permit to service on its behalf;
  40  CAP. 403. h   INSURANCE BUSINESS 
( b ) in the case of general business run-off or cause the
person named in the permit to run-off on its behalf,
contracts of insurance effected and carried out by it before the
specified date.
Dissolution and 
winding up of 
authorised 
companies
Amended by:
XVII. 2002.257.
Cap. 386.
41. (1) Without prejudice to the provisions contained in
article 42 and subject to the following provisions of this article, any
company authorised to carry on the business of insurance shall -
( a ) in the case of a company whose head office is in
Malta, dissolve and consequentially wind up under and
in accordance with the Companies Act; and
( b ) in the case of a company whose head office is in a
country outside Malta, dissolve and wind up under and
in accordance with the provisions of the laws of the
country where the head office of such company is
situated governing the dissolution and winding up of
such companies.
(2) Where it appears to the competent authority that an
authorised company is, for any reason whatever, likely to dissolve
and wind up, or has given notice of dissolving and winding up, or is
being dissolved and wound up, the competent authority shall -
( a ) in the case of a company whose head office is in
Malta, prohibit the free disposal of the assets of the
company whether such assets are situated in Malta or
in country outside Malta; and
( b ) in the case of a company whose head office is in a
country outside Malta, prohibit the free disposal of the
assets of the company situated in Malta or in any other
country if such assets relate to the company’s business
in Malta,
if such prohibition has not been imposed on the company by virtue
of or under any other provision of this Act.
(3) Notwithstanding the provisions of any other law, the assets
of a company which are prohibited under subarticle (2) or by virtue
of or under any other provision of this Act to be freely disposed of
shall be available only for meeting the liabilities of the company
attributable to its business of insurance in Malta:
Provided that debts and other liabilities arising out of
contracts of insurance attributable to its business of insurance in
Malta 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 subarticle
the restriction imposed by that subarticle shall not apply to so much
of those assets as represents the excess.
(5) In so far as the provisions of this article are inconsistent
with the provisions of any other law, the provisions of this article
shall prevail, and the provisions of any other law shall, to the extent
of the inconsistency, not apply to such companies.
(6) The Minister may, after consultation with the competent
  INSURANCE BUSINESS  g CAP. 403.  41
authority, make regulations in respect of the winding-up or re-
organisation of companies whose head office is in Malta, including
their branches, if any, and of branches of companies whose head
office is outside of Malta, and different provisions may be made for
different cases or classes of cases, and account shall be taken of
Malta’s international commitments in this regard. Such regulations
may provide for the implementation of detailed re-organisation
measures and procedures, including the following matters: the
publication and submission of information in such language or
languages and in such newspapers or other publications as may be
prescribed, the submission of information to creditors, and the
manner and procedure thereof, the notification to creditors and the
procedure for the submission of claims or representations,
measures for the protection of the rights of creditors and other third
parties, including set-off arrangements; consultation between the
competent authority and any other regulatory, administrative or
judicial authorities in Malta and outside Malta with competence
over the winding-up or re-organisation of such companies or of
branches thereof; the publication of decisions relating to such
winding-up or re-organisation procedures; the establishment of
rules governing the applicability of the proper or applicable law
and 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 authorised
under this Act to carry on long term business shall be dissolved and
consequentially wound up voluntarily.
(2) Without prejudice to the provisions contained in article 41,
in the event of a company as aforesaid being dissolved and wound
up -
( a ) the assets representing the technical provisions
maintained by the company in respect of its long term
business shall be available only for meeting the
liabilities of the company attributable to that business;
( b ) the other assets of the company shall be available only
for meeting the liabilities of the company attributable
to 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 in
either paragraph the restriction imposed by that subarticle shall not
apply 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 to
carry on the business of insurance and the holder of a permit issued
thereunder to service or run-off that business shall notify in writing
the competent authority of any material changes in the
documentation provided or required to be provided by or under this
Act and any rules or regulations made thereunder, or any insurance
directive, as soon as the holder becomes aware of such changes.
(2) Without prejudice to article 38, a company whose head
  42  CAP. 403. h   INSURANCE BUSINESS 
office is in Malta authorised under this Act shall -
( a ) before making any addition or alteration to the
memorandum or articles of association or other
instrument constituting the company, submit in writing
to the competent authority particulars of the proposed
addition or alteration for its prior consent; and no such
addition or alteration shall be made or shall be
registered, or shall take effect, whether it is registered
or not, unless and until the competent authority has
signified its consent in writing; and
( b ) inform the competent authority of the names of the
persons holding a qualifying shareholding in the
company and the percentage of such holding; and the
competent authority may, by an insurance directive
made for the purposes of this article, determine the
form, manner and content of the information to be
forwarded to it and the date by which such information
shall be forwarded shall also be established by that
directive.
(3) Without prejudice to the foregoing provisions of this
article, an authorised company shall notify the competent authority
on a continuous basis, with any change or circumstances which
may give rise to the existence of close links within the meaning of
article 8.
Statutory notice by 
authorised 
companies in 
relation to long 
term policy.
44. (1) No company authorised under this Act to carry on long
term business shall enter into a contract of insurance the effecting
of which constitutes the carrying on of long term business, other
than 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 means
as may be prescribed a statutory notice in relation to
that contract; or
( b ) does so at the time when the contract is entered into.
(2) Regulations under this article may be made with respect to
any matter related to a statutory notice; and the regulations may
exempt from any requirement contracts as may therein be
prescribed.
(3) For the purposes of this article a statutory notice is a notice
which -
( a ) contains such matters (and no others) and is in such
form as may be prescribed and complies with such
requirements as may be prescribed for securing that
the notice is easily intelligible; and
( b ) has annexed to it a form of notice of cancellation of a
description as may be prescribed for serving by means
as may be prescribed a notice of cancellation on the
authorised company.
  INSURANCE BUSINESS  g CAP. 403.  43
Linked long term 
policies.
45. Regulations may be made, as respects the matters as may
therein be prescribed, in relation to contracts of insurance the
effecting of which constitutes the carrying on of long term business
and which -
( a ) are entered into by a company whose head office is in
Malta authorised under this Act to carry on long term
business; and
( b ) are contracts under which the benefits payable to the
policyholder are wholly or partly to be determined by
reference to the value of, or the income from, property
of any description (whether or not specified in the
contract) or by reference to fluctuations in, or in an
index 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 by
an insurer by reason only that, at the time the contract is entered
into, there is a breach of any provision of this Act or of the
Insurance Brokers and Other Intermediaries Act, (in this article
referred to as "the Act") and of any rules or regulations made under
this Act or under the Act or of any insurance directive issued in
virtue of this Act or any insurance intermediaries directive issued
in 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 directive
made for the purpose of this article determine the language in
which a contract of insurance relating to a risk which is a risk
situated in Malta or to a commitment where Malta is the country of
the commitment of a class or classes or part classes of business as
may therein be specified is to be expressed.
(2) In the absence of any such insurance directive, the contract
shall be expressed in the English language.
(3) The provisions of this article shall not apply to a company
whose 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 or
cause to be issued in Malta any advertisement or carry out or cause
to be carried in Malta any promotional activity related to the
business of insurance which misleads, or directly or by implication
is likely to mislead, or deceive any prospective policyholder, or the
insurance sector in general, or the general public with respect to its
assets or corporate structure or financial standing or authorisation
or any other material respect:
Provided that, in the case of a company whose head office
is in Malta, the provisions of this subarticle shall also apply with
respect to -
( a ) an advertisement issued or caused to be issued; and
( b ) a promotional activity as aforesaid carried out or
caused to be carried out,
from Malta or in or from a country outside Malta.
(2) The competent authority may by an insurance directive
  44  CAP. 403. h   INSURANCE BUSINESS 
made for the purposes of this article determine the form and content
of insurance advertisements and make different provision in
relation to insurance advertisements of different classes or part
classes or descriptions; and the manner in which any promotional
activity as aforesaid shall be carried out or caused to be carried out.
(3) The provisions of subarticle (2) shall not apply to a
company if its business is restricted to reinsurance.
(4) Where a company issues or causes to be issued an
advertisement or carries out or causes to be carried out any
promotional activity which is in breach of or does not comply with
any of the provisions of subarticle (1) or (2), the competent
authority may issue an order directing the company -
( a ) to withdraw, wholly or partly, the advertisement or
promotional activity; or
( b ) to amend any particular of the advertisement or
promotional activity; or
( c ) to do such other thing as it deems appropriate in the
circumstances.
(5) If a company refuses or fails to comply with any order
issued by the competent authority under subarticle (4) or refuses or
fails to comply with such order within the time specified therein,
without prejudice to any penalty which the company may incur
under this Act, the competent authority shall have the power to
enforce, at the expense of the company concerned, the order issued
by 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 legal
personality or otherwise, as may be prescribed, to be known and in
this Act referred to as the "Protection and Compensation Fund" -
( a ) for the payment of any claims in respect of risks
situated in Malta and of commitments where Malta is
the country of the commitment as may be prescribed
against a company authorised to carry on business of
insurance in Malta, remaining unpaid by reason of the
insolvency of such company, subject to such
limitations, restrictions and exclusions as may be
prescribed; and
( b ) for the payment of compensation to victims of road
traffic accidents as may be prescribed subject to such
limitations and restrictions as may be prescribed.
Contributions to 
the Fund.
50. (1) The Fund shall consist of all contributions made to it
under this Act and any rules and regulations made thereunder, and
of all other assets and revenues pertaining to it.
(2) All companies authorised under this Act to carry on
business of insurance in Malta shall contribute to the Fund in such
amounts and to such limitations as shall be prescribed and different
  INSURANCE BUSINESS  g CAP. 403.  45
amounts and limitations may be prescribed with respect to different
kinds of business of insurance or different classes or part classes
thereof, or different kinds of authorised companies, or in view of
other different circumstances.
Management of the 
Fund.
51. The Protection and Compensation Fund shall be managed
and otherwise dealt with in accordance with regulations made for
the purposes of this Act:
Provided that such regulations shall ensure that payments
made into the Fund by companies authorised to carry on long term
business shall be utilised for compensation with respect to long
term business and shall be treated separately and utilised
exclusively for compensation with respect to long term business,
and payments made into the Fund by companies authorised to carry
on general business shall also be treated separately and shall be
utilised exclusively for compensation with respect to general
business:
Provided further that no payment shall be made from the
Fund to any person who is a shareholder in the insolvent company
and holds twenty per centum or more of the issued shares of such
company.
Prescription in 
respect of claims 
for payment out of 
the Fund.
52. No claim for payment of compensation shall be made out
of the Fund unless such claim is made -
( a ) as respects a claim under article 49( a ), within two
years from the date the name of the company is struck
off the register or such company is otherwise
definitely wound up;
( b ) as respects a claim under paragraph ( b ) of that article,
within two years from the date of occurrence of the
accident relating to that claim.
Exemptions from 
income tax.
Substituted by:
XVII. 2002.261.
53. All contributions made to the Protection and Compensation
Fund and any income of any funds belonging to the Fund shall be
exempted from any liability for the payment of income tax under
any 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 article
49( a ) -
(i) business of insurance carried on by a member of
Lloyd’s or of a recognised insurance body if the
governing body of Lloyd’s or of such other
recognised insurance body, as the case may be,
gives a written undertaking or any form of
guarantee acceptable to the competent authority
to meet all claims against any of its members, in
a manner being not less favourable than that as
may be prescribed under article 49( a ) in the
event of the insolvency of any of its members;
(ii) business of insurance restricted to any one class
  46  CAP. 403. h   INSURANCE BUSINESS 
or part class carried on by a company and in
respect of which, in the event of the insolvency
of the company, payment out of the Fund to meet
claims against the company falls within such
exclusions 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 following
powers at the request of or for the purposes of assisting an overseas
regulatory authority:
( a ) the power to impose, revoke or vary conditions on the
grant of an authorisation pursuant to the provisions of
article 7(6);
( b ) the power to revoke or suspend an authorisation under
article 26;
( c ) the power to take any action under article 28, in lieu of
or in addition to any suspension or revocation of an
authorisation;
( d ) the power to require information and documentation
under article 29;
( e ) the power to appoint inspectors under article 30;
( f ) the power of entry to obtain information and
documentation under article 31; and
( g ) the power to communicate to the overseas regulatory
authority information in its possession, whether such
information is the result of any of the above powers or
otherwise.
(2) The competent authority shall exercise powers by virtue of
this article:
( a ) where the assistance is requested by the overseas
regulatory authority for the purposes of the exercise of
one or more of its regulatory functions; or
( b ) where so required within the terms of Malta’s
international commitments; or
( c ) where so required within the terms of undertakings
assumed in bilateral or multilateral agreements for the
exchange of information and other forms of
collaboration with overseas regulatory authorities
including a request under a memorandum of
understanding concluded with the competent authority.
(3) There shall be meetings between an authorised company, its
approved auditors, and, in the case of a company authorised to
carry on long term business, its approved actuary and the
competent authority on a bilateral or a multilateral basis as
circumstances may warrant. Such meetings may be called by any of
the parties, and shall in each case be chaired by the competent
authority.
  INSURANCE BUSINESS  g CAP. 403.  47
Communication by 
auditors, etc., with 
the competent 
authority.
56. (1) No duty (including the duty of professional secrecy) to
which -
( a ) an auditor or an actuary of a company; or
( b ) a person appointed to make a report under article
30(1),
may be subject, shall be regarded as contravened by reason of his
communicating in good faith to the competent authority, whether or
not in response to a request made by it, any information or opinion
on a matter to which this article applies and which is relevant to
any function of the competent authority under this Act.
(2) In relation to an auditor or an actuary of an authorised
company, this article applies to any matter falling within article 24.
(3) In relation to a person appointed to make a report under
article 30(1), this article applies to any matter of which he becomes
aware in his capacity as the person making the report which relates
to the business or affairs of the company in relation to which his
report is made.
(4) If it appears to the competent authority that any accountants
or class of accountants who are persons to whom subarticle (1)
applies are not subject to satisfactory rules made or guidelines
issued by a professional body specifying circumstances in which
matters are to be communicated to the competent authority as
mentioned in that subarticle, the competent authority may, after
consultation with such bodies as appear to the competent authority
to represent the interests of accountants and authorised companies,
make rules for the purposes of this article, applying to those
accountants and specifying such circumstances; and it shall be the
duty of an accountant to whom the rules apply to communicate a
matter to the competent authority in the circumstances specified by
the rules.
The Financial 
Services Tribunal.
Amended by:
XVII. 2002.264.
Cap. 330.
57. (1) For the purpose of this Act, the term "Financial
Services Tribunal" means the tribunal referred to in article 21 of
the Malta Financial Services Authority Act, and the term
"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 Malta
Financial Services Authority Act, shall be substituted by persons to
be appointed by the Minister under this Act and who, in his
opinion, possess the necessary expertise and experience in the
business of insurance; and the provisions of article 21(5) to (7) of
the said Act shall apply to the persons appointed pursuant to this
proviso in the same manner and to the same extent as they apply to
the members mentioned in article 21(2) of the said Act.
(2) The Financial Services Tribunal shall, in addition to the
functions and powers assigned to it under article 58, have the
function and power to decide applications for transfer of long term
business filed before it under this Act.
(3) Upon determining an application for transfer of long term
business, the Tribunal shall have the power to order the payment of
  48  CAP. 403. h   INSURANCE BUSINESS 
costs and expenses by any party to the application.
Cap. 330. (4) The provisions of article 21 of the Malta Financial Services
Authority Act and of any regulations made thereunder shall, except
in so far as any of them is incompatible with the provisions of this
article or of article 35 or 58, apply to applications for transfer of
long term business and appeals made to the Financial Services
Tribunal under this Act:
Cap. 330.
Provided that regulations made under subarticle (13) of the
said article 21 may distinguish between procedures made for the
purposes of the provisions of this Act and procedures made for the
purposes of the provisions of the Malta Financial Services
Authority Act.
(5) The Minister may, for the purposes of this article, subject to
article 35, make regulations governing the procedure for
determining an application for transfer of long term business filed
under that article, provided that in the absence of such regulations
the Tribunal shall regulate its own procedure.
Appeals.  58. (1) Subject to the provisions of this article, any person
who is aggrieved by a decision of the competent authority -
( a ) to refuse to issue an authorisation under articles 7, 13
or 21;
( b ) to impose any condition in an authorisation issued or
held under articles 7, 13 or 21;
( c ) to revoke an authorisation under article 26, or under
any regulation made under this Act;
( d ) to refuse an application for transfer of general business
under article 33;
( e ) to issue any notice or make any order under article 38;
( f ) to impose an administrative penalty in respect of
infringements as may be prescribed under article 67,
may appeal against the decision to the Financial Services Tribunal
which shall have exclusive competence to hear appeals on the
matters listed in this subarticle.
(2) An appeal under this article shall lie only on any of the
following grounds -
( a ) that the competent authority has wrongly applied any
of the provisions of this Act; or
( b ) that the decision of the competent authority constitutes
an abuse of discretion or is manifestly unfair, provided
that the discretion of the competent authority may not,
so long as it has been exercised properly, be queried
by the Tribunal.
(3) An appeal made under this article shall not suspend the
operation of any decision from which the appeal is made except in
the case of an appeal from a decision as is mentioned in subarticle
(1)( f ).
  INSURANCE BUSINESS  g CAP. 403.  49
Confidentiality.
Amended by:
XVII. 2002.265.
59. (1) Nothing in this Act shall authorise the competent
authority to enquire or cause an enquiry to be made in an authorised
company into the affairs of any individual policyholder of the
authorised company except -
( a ) for the purpose of ensuring compliance with any of the
provisions of this or of any other Act; or
( b ) where the policyholder’s risk is large within the terms
of the large risks regulations to be prescribed under
article 64 and it believes that such a risk can be a
threat to that company or to the insurance sector in
general.
(2) Subject to the provisions of subarticle (3), information
obtained by any person for the purposes of, or pursuant to, any of
the provisions of this Act, or of any rules or regulations made
thereunder, or of any insurance directive, or in the discharge of any
functions under any of the said provisions, or from an overseas
regulatory authority, shall be treated as confidential and protected
by the duty of professional secrecy, and shall not be disclosed to
any other person, not being a person who may lawfully obtain that
information for the purposes of, or pursuant to, the provisions of
this Act, or of any rules and regulations made thereunder or of any
insurance directive except with the consent of the person from
whom the information was obtained, provided the information
relates solely to that person.
(3) The provisions of subarticle (2) shall not preclude the
disclosure of information -
( a ) with a view to the institution of, or otherwise for the
purposes of, criminal proceedings or of any
proceedings by the competent authority before any
court under this Act;
( b ) with a view to enabling or assisting the competent
authority in the performance or discharge of any of its
functions under this Act;
( c ) which has been made available to the public by virtue
of being disclosed on any circumstances in which, or
for any purpose for which, disclosure is not precluded
by this article;
( d ) in a summary or collection of information formed in
such a way as not to enable the identity of any person
to whom the information relates to be ascertained;
( e ) to an auditor where such disclosure would assist the
auditor in the exercise of his functions under articles
21 and 24;
( f ) to an actuary where such disclosure would assist the
actuary in the exercise of his functions under article
23;
Cap. 345.
( g ) to the Central Bank of Malta or to the Listing
Authority under the Financial Markets Act, where such
information is required by the Bank or the Listing
  50  CAP. 403. h   INSURANCE BUSINESS 
Authority in the exercise of their respective functions
in terms of law;
( h ) in response to a request from, or for the purpose of
assisting, an overseas regulatory authority pursuant to
article 55;
( i ) to such other local or overseas regulatory, judicial or
enforcement authorities where such disclosure is
required or requested for the pursuance of serious
regulatory concerns or the deception, prevention of
prosecution of criminal offences;
( j ) in civil or commercial proceedings in relation to the
bankruptcy or compulsory winding up of an authorised
company provided such information does not concern
third parties involved in attempts to rescue such
company, and to such overseas bodies responsible for
the liquidation and bankruptcy of a person holding an
authorisation or an equivalent licence from an
overseas regulatory authority or for other similar
procedures.
(4) No person, including past and present officers or agents of
an authorised company, shall disclose any information relating to
the affairs of a company or of a policyholder of a company which
he has acquired in the performance of his duties or the exercise of
his functions under this Act except -
( a ) when authorised to do so under any of the provisions
of this Act;
( b ) for the purpose of the performance of his duties or the
exercise of his functions;
( c ) when lawfully required to do so by any court or under
a provision of any law.
(5) In this article, any reference to officers or agents has the
same meaning as is assigned to it in article 30(7).
Cap. 373.
(6) When an officer or an employee of an authorised company
has reason to believe that a transaction or a proposed transaction
could involve money laundering, he shall act in accordance with
regulations laid down under the Prevention of Money Laundering
Act and any guidelines issued by the competent authority.
Compliance with the provisions of this subarticle shall not
constitute a breach of confidentiality.
Communication of 
confidential 
information.
Cap. 377.
Cap. 9.
60. (1) Notwithstanding the provisions of the Professional
Secrecy Act, article 257 of the Criminal Code shall not affect or
prevent the exchange of information about policies, policyholders
or potential  policyholders -
( a ) amongst companies authorised to carry on the business
of insurance ("insurers");
Cap. 404.
( b ) amongst companies or persons registered or enrolled
under the Insurance Brokers and Other Intermediaries
Act ("intermediaries");
  INSURANCE BUSINESS  g CAP. 403.  51
( c ) between insurers and intermediaries;
( d ) between insurers, or intermediaries, or insurers and
intermediaries, and the Commissioner of Police,
provided that such exchange is compatible with or reasonably
required for the purpose of preventing, detecting or suppressing
insurance fraud.
(2) For the purposes of this article, "insurers" includes the
authorised insurance agents and insurance managers of the insurers.
 Service of notices, 
etc.
61. A notice or other document to be given or served under this
Act or any rules or regulations made thereunder shall be deemed to
have 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 the
competent authority, or at his last known address; or
( c ) it has been sent to him by post or by telefax at any of
the aforesaid addresses; or
( d ) in the case of a commercial partnership registered in
Malta, it has been delivered, sent by post or by telefax,
or left at the registered office, or the last known
registered office, of that commercial partnership; or
( e ) in the case of any other body of persons, whether
corporate or unincorporate, it has been given or served
in any of the manners aforesaid to or on an officer, or a
clerk of that body or to or on the person designated by
that body under article 11(1)( d )(i) or paragraph 4.1 of
the First Schedule, as the case may be;
and the expression "officer", in relation to a body of persons shall
include an authorised insurance agent, an authorised insurance
manager, or a person, other than an insurance agent or an insurance
manager, authorised to act for that body of persons in the same
manner 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 or
constituted in a country outside Malta, which is similar
in nature to a company as known under the laws of
Malta and which would, if it were such a company,
qualify to be authorised under this Act as a company
carrying on business of insurance, to be continued as a
company carrying on business of insurance under the
Companies Act and under this Act; and
( b ) a company carrying on business of insurance
authorised under this Act to be continued as a body
corporate registered, incorporated or constituted under
the laws of a country outside Malta, in either case by
complying with the regulations;
Cap. 386.
  52  CAP. 403. h   INSURANCE BUSINESS 
companies carrying on business of insurance, have effect
accordingly.
(2) Regulations under this article may provide that continuance
as aforesaid may only take place if -
( a ) it is within the power of such body or company so to
continue;
( b ) the continuance is, in either case, approved in such
manner as may be prescribed,
and the regulations may further provide that the continuance of a
company carrying on business of insurance as a body corporate
under a foreign jurisdiction shall not take place unless -
(i) such continuance (or similar process, including
conversion) is permitted by the law of such
foreign jurisdiction and is in accordance with
such provisions thereof as may bring about such
continuance (or similar process); and
(ii) such continuance (or similar process) will
operate the continuation of the corporate
existence of the company as, or its conversion
into, a body corporate which will continue to
retain or will succeed to all assets, rights and
liabilities of the company.
(3) ( a ) The provisions of the foregoing subarticles shall also
apply,  mutatis mutandis  to -
(i) companies authorised to act as an insurance
manager; and
Cap. 404.
(ii) companies enrolled to carry on the business of
insurance broking under the Insurance Brokers
and Other Intermediaries Act, and accordingly
references in this article to "authorised" and to
"business of insurance" shall be deemed to
include references to "enrolled" and "business of
insurance broking" respectively.
( b ) In this subarticle reference to the "company" shall
include reference to a "partnership en commandite" or
to a similar or equivalent body corporate the capital of
which is divided into shares.
Valuation 
regulations.
63. (1) Regulations may be made with respect to the
determination of the value of assets and the amount of liabilities in
any case in which the value or amount is required by any provision
of this Act to be determined in accordance with valuation
regulations.
(2) Without prejudice to the generality of subarticle (1),
regulations under this article may provide that, for any specified
purpose, assets or liabilities of any specified class or description
shall be left out of account or shall be taken into account only to a
specified extent.
(3) Regulations under this article may make different provision
  INSURANCE BUSINESS  g CAP. 403.  53
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 the
competent authority, make rules or regulations to give effect to the
provisions of this Act and to amend or revoke any schedule thereto
and may amend or revoke such rules or regulations; and without
prejudice to the generality of the foregoing, the Minister may, by
such rules or regulations, in particular, make provision in respect of
any one or more of the following matters:
( a ) any matter relating to or connected with the business
of insurance or contracts of insurance;
( b ) the requirements, duties or conditions to be observed
by any company authorised under this Act for the
sound and prudent management of its activities;
( c ) the fees and duties to be levied in respect of any matter
provided for by or under this Act or any rules or
regulations made under this article;
( d ) the categories of assets required to be maintained
under this Act;
( e ) the determination and regulation of large risks;
( f ) any matter relating to or connected with any provision
contained in the Schedules;
( g ) any matter that may or is to be prescribed under any
provision of this Act;
( h ) any matter incidental to or connected with any of the
above;
( i ) the penalties or other punishments to which persons
contravening or failing to comply with any provision
of any regulation made as aforesaid shall become
liable, being penalties not exceeding five thousand liri,
in respect of any offence and in respect of a continuing
offence of a further penalty not exceeding one hundred
liri for each day during which the offence continues.
(2) Except where any regulation made under this Act provides
for a lesser penalty, any person acting in contravention of or failing
to comply with or otherwise observe any such regulation shall be
liable to a penalty of not less than one hundred liri and not
exceeding five thousand liri, in respect of each offence and in the
case of a continuing offence to a further penalty not exceeding one
hundred 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 or
part classes of business of insurance, from all or any of the
provisions of this Act or of any rules or regulations made
thereunder, subject to such conditions or requirements including
the requirement of other forms of authorisation and notification
procedures as may be prescribed.
(4) Rules or regulations made under this article may make such
exemptions, conditions or modifications as may be specified
  54  CAP. 403. h   INSURANCE BUSINESS 
therein in respect of different cases, circumstances or purposes and
may give the competent authority such power of adaptation of the
rules and regulations as may be specified therein.
(5) The exercise of any of the powers assigned under this
article shall be subject to any obligations or restrictions arising
from Malta’s international commitments.
(6) Rules and regulations made under this Act and any
amendment or revocation of such rules and regulations, may be
published 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 business
of insurance carried on by an authorised company with an insured
who is a person not resident in Malta for the purposes of the said
Act. 
(2) No duty shall be chargeable under the Duty on Documents
and Transfers Act, or under any enactment replacing that law, on
any contract of insurance relating to a risk situated outside Malta.
Exclusion of 
liability.
66. The competent authority and any member, officer or
employee of the competent authority, and any body established by
this Act, and any member, officer or employee of that body, and
any other person appointed to perform a function under this Act or
any rules or regulations made thereunder, shall not be liable in
damages for anything done or omitted to be done in the discharge
or purported discharge of any functions under this Act or any rules
or regulations aforesaid, unless the act or omission is shown to
have been done or omitted to be done in bad faith.
Offences and 
penalties.
67. (1) Any person who contravenes or fails to comply with
any 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 an
authorisation under this Act or any rules or regulations
made thereunder, furnishes information or makes a
statement or a declaration which he knows to be
inaccurate, false or misleading in any material
particular, or recklessly furnishes information or
makes 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 and
abets, any contravention of any provision of this Act
or any rules or regulations made thereunder or any
insurance directive; or
( c ) who intentionally obstructs a person exercising rights
conferred by this Act or any rules or regulations made
thereunder; or
( d ) who contravenes or fails to comply with any condition,
limitation, requirement, directive or order made or
given under any of the provisions of this Act or of any
rules or regulations made thereunder or any insurance
directive; or
  INSURANCE BUSINESS  g CAP. 403.  55
( e ) who being a director, a controller, an officer or an
employee of a company -
(i) fails to take all reasonable steps to secure
compliance by the company with any of the
provisions of this Act or of any rules or
regulations made thereunder, or any authori-
sation or permit issued thereunder, or any
insurance directive; or
(ii) fails to take reasonable steps to ensure the
correctness of the statements made or other
information given under any of the provisions
aforesaid; or
(iii) removes, destroys, conceals or fraudulently
alters any book, document or other paper with
intent to avoid detection of the commission of an
offence 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 authorised
insurance agent, an authorised insurance manager, or a person,
other than an insurance agent or an insurance manager, authorised
to act for the company in the same manner and to the same extent
as an insurance agent.
(4) The Minister shall make regulations under this article
prescribing penalties for offences against this Act, and such
regulations may -
( a ) prescribe penalties which are enforceable by
prosecution in the courts of Malta;
( b ) prescribe different penalties for contraventions of
different provisions of this Act;
( c ) prescribe penalties calculated in accordance with the
duration of the commission of the offence,
unless such penalties are otherwise imposed under article 64.
(5) The penalties prescribed by the regulations made under
subarticle (4) -
( a ) in the case of imprisonment, shall not provide for a
sentence of imprisonment greater than two years;
( b ) in the case of a fine imposed after a prosecution in the
courts of Malta, shall not provide for a fine ( multa ) of
less than one hundred liri or greater than fifty thousand
liri.
(6) The Minister may by the regulations made under this article
provide for administrative penalties in respect of infringements, as
may be prescribed, which may be imposed and recovered by the
competent authority without recourse to a court hearing;
administrative penalties shall be due to the competent authority as a
civil debt:
Provided that an administrative penalty may not be greater
  56  CAP. 403. h   INSURANCE BUSINESS 
than a financial penalty of five thousand liri in respect of any
infringement and, in respect of a continuing infringement, a further
penalty not exceeding fifty liri for each day during which the
infringement continues.
Proceedings for an 
offence under this 
Act.
68. (1) No proceedings for an offence under this Act and any
rules or regulations made thereunder other than an infringement to
which article 67(6) applies shall be commenced without the
sanction of the Attorney General.
(2) The provisions of this Act and any rules or regulations
made thereunder shall not affect any criminal proceedings that may
be competent under any other law.
Savings.
Cap. 290.
69. (1) Subject to subarticle (4), every licence issued or other
action whatever taken or commenced under the Insurance Business
Act *  (in this article referred to as "the Act") shall continue in force
and to be valid as if such licence were issued or other action were
taken or commenced under this Act.
(2) Every company licensed under the Act to carry on business
of insurance either as principal or as agent shall, not later than the
appointed date, conform with the provisions of this Act or
otherwise cease to carry on the business it was licensed to carry on,
and shall until the appointed date or until it conforms with the
provisions of this Act, whichever is the earlier, continue to be
governed by the provisions of the Act. For the purpose of this
article "appointed date" means a day being six months after the date
of the coming into force of this Act.
(3) Where a company ceases to carry on business of insurance
either as principal or as agent on grounds that such company did
not, on the appointed date, conform with the provisions of this Act,
that company shall be deemed to have given notice to the
competent authority under article 39 on the appointed date to cease
to carry on the business it was licensed to carry on, on the
appointed date, and to have been issued with a permit by the
competent authority under that article on the appointed date to
cease to carry on such business on the appointed date and to service
that business as from that date. The competent authority may
impose such conditions with regard to the servicing of that business
as it may deem proper.
Cap. 404.
(4) Every licence issued or renewed or other action whatever
taken or commenced under the Act in so far as it applies to
insurance brokers and insurance salesmen, shall continue in force
and to be valid as if such licence were a certificate of enrolment
issued or as if such other action were action taken or commenced
under the Insurance Brokers and Other Intermediaries Act.
(5) For the purposes of this article "licence" includes an
authority, 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.
  INSURANCE BUSINESS  g CAP. 403.  57
which were kept in force by the Act and all regulations, orders and
other instruments made under the Act, and any agreement and
arrangement which were made in virtue of the Act, any regulation,
order or other instrument shall, if and as in force immediately
before the commencement of this article, be deemed to have been
made under or in virtue of this Act and shall continue in force and
may be amended, altered, repealed or otherwise dealt with
accordingly.
(7) All references in any enactment and in any instrument or
other document to the Act, or any provision thereof, shall, in so far
as applicable, be read and construed as a reference to this Act or to
the corresponding provision thereof.
(8) The assets and the liabilities of the Security Fund
established by the Act shall upon the coming into force of this Act
be transferred to the Protection and Compensation Fund established
by article 49 without the need of any formality other than this Act.
Cap. 330.
(9) The provisions of this article shall not apply to insurance
offshore companies registered under the Malta Financial Services
Authority Act until such time as the Minister may by order in the
Gazette establish.
  58  CAP. 403. h   INSURANCE BUSINESS 
(Article 2)
PROVISIONS RELATING TO LLOYD’S
1. In this Schedule  "Lloyd’s" means the society and corporation incorporated
by Lloyd’s Act, 1871, of the United Kingdom, and regulated by or under Lloyd’s
Acts, 1871 to 1982, of the United Kingdom or any other law from time to time
amending or re-enacting the same;
"article" means article of the Act;
"syndicate" means a member or group of members of Lloyd’s underwriting
business of insurance at Lloyd’s through the agency of a managing agent to which a
particular syndicate number is assigned by or under the authority of the Council of
Lloyd’s.
2. The definition of "insurance agent" set out below shall apply in substitution
for the definition of that term contained in article 2(1) -
"insurance agent", in relation to Lloyd’s, means a person authorised as such under
article 13 appointed by or on behalf of a member of Lloyd’s to be its coverholder in
Malta in respect of business of insurance with authority to enter into contracts of
insurance on behalf of that member under the terms of a binding authority
agreement.
2.1 For the purposes of this paragraph  "binding authority agreement" means an
agreement between a member of Lloyd’s or a person acting on its behalf and a
coverholder 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 to
accept or to issue documents related to contracts of insurance evidencing the
acceptance of risks or commitments on behalf of a member of Lloyd’s granting such
authority pursuant to such agreement.
3. Article 8(1)( c ), ( d ) and ( f ) shall not apply to Lloyd’s; the requirements of
paragraphs ( c ) and ( d ), in so far as they apply, may, if the competent authority so
directs, apply to a member of Lloyd’s desirous of carrying on, or carrying on, the
business 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 of
this Schedule.
4.1 Lloyd’s shall at all times have a representative in Malta who shall be
resident in Malta and who shall be the representative in Malta of Lloyd’s and of each
of its members. 
4.2 The representative shall for the purposes of this Act be authorised to act
generally as judicial representative of, and accept service of any document on behalf
of, Lloyd’s and of each of its members and to file any judicial acts in the registry of
any 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 otherwise
apply to Lloyd’s or any of its underwriting members. Article 11(1)( d )(iii) shall not
Amended by:
XVII. 2002.268. FIRST SCHEDULE
  INSURANCE BUSINESS  g CAP. 403.  59
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 competent
authority by the chairman of Lloyd’s.
5. The members of Lloyd’s taken together shall be deemed to comply with the
requirements of article 14 if, when forwarding the financial statements under the
provisions of this Act, they forward to the competent authority -
( a ) a certified copy of the global returns relating to the business of
insurance carried on by the members of Lloyd’s prepared and furnished
by them to the overseas regulatory authority in accordance with the law
of the country in which they are regulated; and
( b ) a certificate signed by the chairman of Lloyd’s and by the authority
referred to in sub-paragraph ( a ) of this paragraph, that the members of
Lloyd’s have, in respect of the preceding year, complied with provisions
of the law relating to financial resources applicable to them in the
country aforesaid.
6. Pursuant to article 16(1)( b ), for the purpose of constituting the required
guarantee fund, the Malta margin of solvency shall apply to the members of Lloyd’s
taken together and shall be determined in accordance with the regulations made for
the purpose of article 14 by reference to the aggregate business carried on in or from
Malta by those members as if they were required under subarticle (2) of that article
to maintain the Malta margin of solvency.
7. Article 20(1)( c ) shall not apply to Lloyd’s and its members; however, a copy
of Lloyd’s members global accounts is to be made available for public inspection at
the office of its representative and copies of such accounts are available for purchase
therefrom.
8. Articles 33 to 36 shall apply in relation to transfers to and from members of
Lloyd’s if, and only if, the conditions specified in paragraph 8.1 of this Schedule are
satisfied.
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 transferee
are members of Lloyd’s;
( b ) that the Council of Lloyd’s has by resolution authorised one person to
act in connection with the transfer for the members of Lloyd’s
concerned 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 transfer
to or from members of Lloyd’s, they shall apply as if anything done in connection
with the transfer by the person authorised in accordance with sub-paragraph ( b ) of
paragraph 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 of
Lloyd’s with several liability and notwithstanding the provisions of this or any other
law, the assets which are required to be maintained in Malta by the members of
Lloyd’s under the provisions of the Act shall guarantee the liabilities of all the
members of Lloyd’s attributable to their business of insurance in Malta.
  60  CAP. 403. h   INSURANCE BUSINESS 
SECOND SCHEDULE
(Article 5)
LONG TERM BUSINESS
l. In this Schedule, "insurance directive" means the insurance directive made
under and for the purposes of article 5.
2. Classes of Long Term Business
Number Class Description
I Life and annuity Effecting and carrying out contracts of
insurance on human life or contracts to pay
annuities on human life, but excluding (in
each case) contracts within class III of this
Schedule.
II Marriage and birth Effecting and carrying out contracts of
insurance to provide a sum on marriage or on
the birth of a child, being contracts expressed
to be in effect for a period as may be specified
by the insurance directive, but excluding (in
each case) contracts within class III of this
Schedule.
III Linked long term Effecting and carrying out contracts of
insurance on human life or contracts to pay
annuities on human life or contracts to provide
a sum on marriage or on the birth of a child
where the benefits are wholly or partly to be
determined by reference to the value of, or the
income from, property of any description
(whether or not specified in the contracts) or
by reference to fluctuations in, or in an index
of, the value of property of any description
(whether or not so specified).
IV Permanent health  Effecting and carrying out contracts of
insurance providing specified benefits against
risks of persons becoming incapacitated in
consequence of sustaining injury as a result of
an accident or of an accident of a specified
class or of sickness or infirmity, being
contracts that -
( a ) are expressed to be in effect for a
period as may be specified by the
insurance directive, or until the
normal retirement age for the
persons concerned, or without limit
of time, and
  INSURANCE BUSINESS  g CAP. 403.  61
Number Class Description
( b ) either are not expressed to be
terminable by the insurer, or are
expressed to be so terminable only
in special circumstances mentioned
in the contract.
V Tontines Effecting and carrying out tontines.
VI Capital redemption Effecting and carrying out capital redemption
contracts.
VII Pension fund
management
Effecting and carrying out -
( a ) contracts to manage the investments
of pension funds, or
( b ) contracts or the kind mentioned in
paragraph ( a ) above that are
combined with contracts of
insurance covering either
conservation of capital or payment
of a minimum interest.
VIII Collective
insurance
Effecting and carrying out contracts of a kind
as may be specified by the insurance directive.
IX Social insurance Effecting and carrying out contracts of a kind
as may be specified by the insurance directive.
  62  CAP. 403. h   INSURANCE BUSINESS 
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 other
goods)
All damage to or loss of goods in transit, or baggage, irrespective of
the form of transport.
8 Fire and natural forces
All damage to or loss of property (other than property included in
classes 3, 4, 5, 6 and 7) due to:
( a ) fire;
( b ) explosion
( c ) storm;
  INSURANCE BUSINESS  g CAP. 403.  63
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 in
classes 3, 4, 5, 6 and 7) due to hail or frost, and any event such as
theft, other than those falling within class 8.
10 Motor vehicle liability
All liability arising out of the use of motor vehicles operating on the
land (including carrier’s liability).
11 Aircraft liability
All liability arising out of the use of aircraft (including carrier’s
liability).
12 Liability for ships (sea, lake and river and canal vessels)
All liability arising out of the use of ships, vessels or boats on the
sea, 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;
  64  CAP. 403. h   INSURANCE BUSINESS 
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 while
travelling, while away from home or while away from their
permanent 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 to
Property
Classes 8 and 9
6 Liability Classes 10, 11, 12 and 13
7 Credit and Suretyship Classes 14 and 15
8 General All classes
  INSURANCE BUSINESS  g CAP. 403.  65
(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 following
paragraphs in this Part of this Schedule.
3. A person desirous of acting as an insurance agent of an authorised company
or as an insurance manager shall make an application in writing in that behalf in such
form 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 in
accordance with the Companies Act:
Provided that, in the case of an applicant which is a partnership  en
commandite , the provisions of this Schedule shall apply subject to such
modifications as the competent authority may from time to time determine, which
modifications shall not materially detract from the main objects of the provisions so
modified.
3.2 The company’s objects are limited to operations arising directly from
business of insurance and matters and functions connected therewith or ancillary
thereto, to the exclusion of all other commercial business other than, in the case of
an insurance agent, business determined by the insurance directive made for the
purposes of article 13.
3.3 The applicant discloses to the satisfaction of the competent authority such
information as the competent authority has requested of it in relation to persons who
will, upon the authorisation of the company, have any proprietary, financial or other
interest in, or in connection with, that company.
3.4 All qualifying shareholders, controllers and all persons who will effectively
manage the affairs or carry out the operations appropriate to the application are fit
and proper persons to ensure its sound and prudent management.
3.5 The company’s own funds, whether in Maltese liri or in other currencies
acceptable to the competent authority are, at all times, not less than such amount
appropriate for the kind of business to be carried on by the company as may be
determined by an insurance directive made for the purpose under this Act, and such
own funds shall at all times be unencumbered.
3.6 The applicant has at all times in its favour a policy of professional indemnity
insurance acceptable to the competent authority, indemnifying it, or any person
employed by it, or otherwise acting for it, to such amount, in such manner and in
respect of such matters as the competent authority may, from time to time,
determine.
3.7 The applicant submits to the satisfaction of the competent authority a
scheme of operations appropriate to the application which shall include the
particulars or proof as may be determined by the insurance directive made for the
purpose 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.
  66  CAP. 403. h   INSURANCE BUSINESS 
the satisfaction of the competent authority that it holds an appointment in writing
signed by a senior officer of the company for which the applicant desires to act
designating applicant to act in the name and on behalf of the company, or solely on
behalf of the company, in the capacity specified in the appointment and in respect of
matters and under the conditions specified in that appointment.
3.9 Where an application is for authorisation to act as an insurance manager, the
appointment referred to in paragraph 3.8 in this Schedule shall not constitute a
prerequisite condition for issuing an authorisation in that behalf provided that the
authorised person shall not act for any company unless and until it produces proof to
the satisfaction of the competent authority that it holds an appointment in writing
from 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) therein
where not made and the period prescribed therein were a period of three
months.
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 whose
head office is in Malta" where a reference to a "limited liability company or a
partnership  en commandite , the capital of which is divided into shares constituted in
Malta in accordance with the Companies Act".
4.3 Article 20 shall not apply and the following provision shall apply in
substitution therefor:
"Every company authorised under this Act to act as an insurance agent
or an insurance manager shall, not later than four months from the date
of its financial year, or at any other time as may exceptionally be
authorised in writing by the competent authority, forward to the
competent authority a copy of its audited financial statements drawn up
in 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 which
intended to cease to act as an insurance agent or as an insurance
manager of an authorised company were required to give, not later than
three months before the date on which it intended to cease to act in the
capacity it was authorised to act, notice in writing of its intention to the
competent authority, and the holder were required to comply with any
directive issued to it by the competent authority;
  INSURANCE BUSINESS  g CAP. 403.  67
( 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 to
dissolve 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 this
paragraph:
( a ) paragraphs ( a ) and ( b ) thereof shall apply to the extent that they refer
only 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 moneys
held by it in a fiduciary capacity separate from its own moneys and shall, in respect
of those moneys, maintain separate accounts in accordance with requirements
determined by the insurance directive made for the purposes of article 13.
5.1 No person shall have or obtain any recourse or right against moneys
standing to the credit of the account referred in paragraph 5 of this Part of this
Schedule in respect of a claim or right against an insurance agent or an insurance
manager 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 a
specified form, as respects its business of insurance, in such circumstances, to such
value, in such manner and under such conditions as may be determined by the
insurance directive made for the purposes of article 13.
5.3 The bond referred to in paragraph 5.2 in this Part of this Schedule shall
provide that in the event of an insurance agent’s or insurance manager’s inability or
failure to meet its financial obligations in relation to any sums of money received by
it from, or on behalf of, its clients, a sum of money will become available to a person
nominated or approved by the competent authority, to be applied for the benefit of
any client of the agent or of the manager who has incurred loss or liability because of
the inability or failure of the agent or of the manager to meet such financial
obligations.
5.4 The provisions in this Part of this Schedule shall not apply to a company
authorised to act as an insurance manager for so long as the company holds no
appointment 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 is
contacted by, the insurance agent with a view to arranging a contract of
insurance with an authorised company carrying on business of insurance
through the agent or, who seeks assistance from, or is assisted by, the
agent 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, the
insurance manager with a view to accepting an appointment from
the company to manage any part of its business, or to exercise
  68  CAP. 403. h   INSURANCE BUSINESS 
managerial functions therein, or to be responsible for maintaining
accounts or other records of such company, or for entering into
contracts of insurance on behalf of such company under the terms
of the appointment; or
(ii) means a person who contacts, or is contacted by, the insurance
manager with a view to arranging a contract of insurance with an
authorised company carrying on business of insurance through the
manager or, who seeks assistance from, or is assisted by, the
manager in the administration and performance of such contract,
particularly in the event of a claim.
