S.I. No. 168/2003 - European Communities (Reorganisation and Winding-Up of Insurance Undertakings) Regulations 2003

I, MARY HARNEY, Minister for Enterprise, Trade and Employment in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act 1993 (No. 25 of 1993) and for the purpose of giving further effect to Directive 2001/17/EC of the European Parliament and of the Council of 19 March 2001¹ , hereby make the following regulations:

Citation and application.

1. (1) These Regulations may be cited as the European Communities (Reorganisation and Winding-up of Insurance Undertakings) Regulations 2003.

(2) These Regulations apply to reorganisation measures adopted or winding-up proceedings commenced on or after 29 April 2003.

Interpretation.

2. (1) In these Regulations, except where the context otherwise requires -

“administrator” means -

(a) an administrator appointed under section 2 of the Insurance (No. 2) Act 1983 (No. 29 of 1983) to an insurance undertaking authorised by the Minister,

(b) an examiner appointed under section 2 of the Companies (Amendment) Act 1990 (No. 27 of 1990) to an insurance undertaking authorised by the Minister, or

(c) any person or body appointed to an insurance undertaking (being an insurance undertaking authorised in a Member State other than the State) by the competent authorities of that State for the purpose of administering reorganisation measures;

“branch” means any permanent presence of an insurance undertaking in the territory of a Member State other than the home Member State which carries on insurance business;

“Companies Acts” means the Companies Acts 1963 to 2001;

“competent authorities” means -

(a) in the State, the court or

(b) in a Member State other than the State, the administrative or judicial authorities which are competent for the purposes of the reorganisation measures or the winding-up proceedings;

“court” means the High Court;

“creditor” includes a policyholder;

“Directive” means Directive 2001/17/EC of the European Parliament and of the Council of 19 March 2001¹ ;

“home Member State” means the Member State in which an insurance undertaking has been authorised in accordance with Article 6 of Directive No. 73/239/EEC² or Article 6 of Directive No. 79/267/EEC³ or, in the case of a branch situated in a Member State of an insurance undertaking whose head office is located outside the Community, the Member State in which the branch has been granted authorisation according to Article 23 of Directive 73/239/EEC or Article 27 of Directive 79/267/EEC;

“Insurance Acts” means the Insurance Acts 1909 to 2000;

“insurance undertaking” means an insurance undertaking authorised by the Minister or an insurance undertaking authorised in a Member State, other than the State;

“insurance undertaking authorised by the Minister” means the holder of an authorisation issued by the Minister under the European Communities (Non-Life Insurance) Regulations 1976 ( S.I. No. 115 of 1976 ) or the European Communities (Life Assurance) Regulations 1984 ( S.I. No. 57 of 1984 );

“insurance undertaking authorised in a Member State other than the State” means -

(a) the holder of an authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State other than the State in accordance with Article 6 of Directive No. 73/239/EEC or Article 6 of Directive No. 79/267/EEC or

(b) the holder of an official authorisation to undertake insurance in Iceland, Liechtenstein and Norway pursuant to the EEA Agreement within the meaning of the European Communities (Amendment) Act 1993 (No. 25 of 1993);

“liquidator” means -

(a) in the State, a liquidator appointed under the Companies Acts to an insurance undertaking authorised by the Minister;

(b) in another Member State, any person or body appointed by the competent authorities or by the governing bodies, as appropriate, of an insurance undertaking authorised in that Member State, for the purpose of administering winding-up proceedings;

“Member State” means a Member State of the European Communities;

“Minister” means the Minister for Enterprise, Trade and Employment;

“reservation of title” includes retention of title;

“supervisory authorities” means -

(a) in the State, the Minister;

(b) in another Member State, the competent authorities within the meaning of Article 1(k) of Directive 92/49/EEC⁴ and of Article 1(1) of Directive 92/96/EEC⁵ ;

“technical reserves” means the amount, net of the amount recoverable by the undertaking under contracts of reinsurance ceded by it (but excluding any rights of recovery in respect of insurance liabilities already discharged by the undertaking), set aside by insurance undertakings to meet their liabilities under insurance contracts.

(2) A word or expression that is used in these Regulations and is also used in the Directive has, unless the contrary intention appears, the same meaning in these Regulations as it has in the Directive.

(3) In these Regulations, unless the contrary intention appears -

(a) a reference to a Regulation is a reference to a Regulation of these Regulations;

(b) a reference to a paragraph, subparagraph or clause is a reference to a paragraph, subparagraph or clause of the provision in which the reference occurs.

(4) In these Regulations, a reference to any enactment, Council Directive, order or regulation shall be construed as a reference to that enactment, Council Directive, order or regulation as amended by or under any subsequent enactment, Council Directive, order or regulation, including these Regulations.

(5) Subject to these Regulations, the Insurance Acts 1909 to 2000, shall, subject to any necessary modifications, apply to all insurance undertakings to which these Regulations apply.

(6) These Regulations shall have effect, notwithstanding any provision to the contrary in any enactment, order or regulation passed or made before the making of these Regulations.

Application.

3. (1) These Regulations shall apply to reorganisation measures and winding-up proceedings concerning insurance undertakings.

(2) These Regulations shall also apply, to the extent provided for in Regulation 30, to reorganisation measures and winding-up proceedings concerning branches in the European Community of insurance undertakings having their head office outside the Community.

Adoption of reorganisation measures - applicable law.

4. (1) Reorganisation measures adopted in respect of an insurance undertaking authorised by the Minister, including its branches in other Member States, are governed by the Companies Acts and the Insurance Acts, as appropriate, unless otherwise provided by Regulations 17 to 21 and 24 to 26.

(2) Reorganisation measures adopted in accordance with the Directive by the competent authorities of a Member State other than the State in respect of an insurance undertaking authorised in that other Member State, including any branch of the undertaking in the State, shall be recognised in the State once they become effective in that other Member State, even were the particular matter to be dealt with under the Companies Acts or the Insurance Acts such measures would not be provided for or would be provided for subject to specified conditions being fulfilled and such conditions are not fulfilled in the particular case.

Information to be given to supervisory authorities by administrator.

5. (1) The administrator appointed to an insurance undertaking authorised by the Minister shall inform the Minister of his or her decision, on the reorganisation measures to be adopted, where possible before the adoption of such measures, and failing that immediately thereafter.

(2) The Minister shall then inform, without any delay whatsoever, the supervisory authorities of all other Member States of that decision including the possible practical effects of the measures concerned.

Commencement of winding-up proceedings.

6. (1) A decision to commence winding-up proceedings in respect of an insurance undertaking authorised by the Minister, including its branches in other Member States, shall once it takes effect in the State, also take effect in those other Member States.

(2) A decision to commence winding-up proceedings in accordance with the Directive by the competent authorities of a Member State other than the State, in respect of an insurance undertaking authorised in that other Member State, including any branch of the undertaking in the State, shall take effect in the State once it takes effect in that other Member State.

Information to be given to supervisory authorities by liquidator.

7. (1) The liquidator appointed to an insurance undertaking authorised by the Minister shall, without delay after the making of the decision to commence winding-up proceedings or immediately thereafter inform the Minister of the decision to commence such proceedings.

(2) The Minister shall inform the supervisory authorities of all other Member States, without any delay whatsoever, of that decision including the possible practical effects of the winding-up proceedings concerned.

Applicable law.

8. (1) The Companies Acts and the Insurance Acts, subject to Regulations 17 to 21 and 24 to 26, apply to proceedings to wind-up an insurance undertaking authorised by the Minister.

(2) The laws, regulations and administrative provisions applicable in another Member State apply to proceedings to wind-up an insurance undertaking authorised in that Member State.

Treatment of insurance claims.

9. (1) Insurance claims shall, with respect to assets representing the technical reserves of an insurance undertaking authorised by the Minister, take absolute precedence over any other claims on the insurance undertaking including claims accorded preference under section 285 of the Companies Act 1963 (No. 33 of 1963).

(2) Notwithstanding paragraph (1), expenses arising out of the winding-up proceedings shall take precedence over insurance claims to the extent that the assets of the undertaking, other than the assets representing the technical reserves, are insufficient to meet such expenses.

(3) An insurance undertaking authorised by the Minister shall keep a register (“the register”) showing the assets representing the technical reserves it is required to maintain in accordance with the Insurance Acts and regulations made under those Acts.

(4) The register shall be maintained at the principal office of the insurance undertaking in the State and shall contain up-to-date details of the assets representing its technical reserves.

(5) The total value of the assets entered in the register, valued in accordance with the rules prescribed in the Insurance Acts and regulations under those Acts, shall at no time be less than the value of the technical reserves.

(6) Where an asset entered in the register is subject to a right in rem in favour of a creditor or a third party, with the result that part of the value of the asset is not available for the purpose of covering commitments, that fact shall be recorded in the register and the amount not available shall not be included in the total value referred to in paragraph (5).

(7) The register shall be open for inspection by an officer or officers of the Minister during normal business hours.

(8) Every insurance undertaking authorised by the Minister shall furnish to the Minister a certificate of the value of the assets entered in the register on the closing date for which the accounts and balance sheets of the insurance undertaking are furnished to the Minister, such values being those in such accounts and balance sheets.

Supplemental provisions in relation to Regulation 9.

10. (1) Where assets representing the technical reserves of an insurance undertaking authorised by the Minister are subject to -

(a) a right in rem in favour of a creditor or a third party, without meeting the conditions of Regulation 9(6), or

(b) a reservation of title in favour of a creditor or of a third party, or

such rights or reservations shall be disregarded if the undertaking is being wound up, except where Regulation 18, 19 or 20 applies to that asset.

(2) The composition of the assets entered in the register at the time when winding-up proceedings are commenced shall not thereafter be changed and no alteration other than the correction of purely clerical errors shall be made in the register, except with the sanction of the court or other person having functions under the Companies Acts.

(3) Notwithstanding paragraph (2), the liquidator shall add to the assets representing the technical reserves the yield therefrom and the value of the pure premiums received in respect of the class of business concerned between the commencement of the winding-up proceedings and the time of payment of the insurance claims or until any transfer of portfolio is effected.

(4) If the product of the realisation of assets is less than their estimated value in the register, the liquidator shall be required to provide an explanation in such form or manner as the court or other person requires to the court or other person having functions under the Companies Acts.

(5) Section 32 of the Insurance Act 1989 (No. 3 of 1989) is repealed.

(6) In this Regulation the “register” shall be construed in accordance with Regulation 9(3).

Withdrawal of authorisation.

11. (1) When a liquidator has been appointed to an insurance undertaking authorised by the Minister, the Minister shall withdraw the authorisation of the undertaking, except to the extent necessary for the purposes of paragraph (2), in accordance with Regulations 37 to 39 of the European Communities (Life Assurance) Framework Regulations 1994 ( S.I. No. 360 of 1994 ) or Regulations 17 to 19 of the European Communities (Non-Life Insurance Framework Regulations 1994 ( S.I. No. 359 of 1994 ), as appropriate, if the authorisation has not been previously withdrawn.

(2) The withdrawal of authorisation pursuant to paragraph (1) shall not prevent the liquidator from carrying on some of the insurance undertaking's activities in so far as that is necessary or appropriate for the purposes of the winding-up, provided that such activities are carried on with the consent and under the supervision of the Minister.

Publication.

12. The liquidator of an insurance undertaking authorised by the Minister shall publish an extract from the decision to commence winding-up proceedings in the Official Journal of the European Communities, including the following information:

(a) the name of the competent authority;

(b) the name and address of the liquidator;

Information to known creditor.

13. (1) The liquidator of an insurance company authorised by the Minister shall without delay, individually inform by written notice each known creditor who has his or her normal place of residence, domicile or head office in a Member State.

(2) The notice under paragraph (1) shall include the following information -

(a) the periods in which steps must be taken by the creditors in the proceedings;

(b) the consequences if a particular step is not taken within the period concerned;

(d) any other information of particular relevance to creditors.

(3) The notice under paragraph (1) shall also indicate whether creditors whose claims are preferential or secured in rem need to lodge their claims.

(4) In the case of insurance claims, the notice under paragraph (1) shall also indicate the general effects of the winding-up proceedings on the insurance contracts, in particular, the date on which the insurance contracts or the operations will cease to produce effects and the rights and duties of insured persons with regard to the contract or operation.

Right to lodge claims.

14. (1) A creditor who has a normal place of residence, domicile or head office in a Member State other than the State, including a public authority of such a Member State, shall have the right to lodge claims arising from the liquidation of an insurance undertaking authorised by the Minister.

(2) The claims of all creditors who have their normal place of residence, domicile or head office in a Member State other than the State, including a public authority of such a Member State, shall be treated in the same way and accorded the same ranking as claims of an equivalent nature which may be lodged by creditors who have their normal place of residence, domicile or head office in the State.

(3) A creditor shall send copies of supporting documents, if any, and shall indicate -

(a) the nature of the claim;

(b) the date on which it arose;

(d) whether he or she alleges preference, security in rem, or reservation of title in respect of the claim and the assets that are covered by his or her security.

Languages and form.

15. (1) The information in the notice referred to in Regulation 13 shall be provided in English.

(2) The form which is used for the purposes of that notice shall bear the following heading (in all the official languages of the European Union) - “Invitation to lodge a claim: time limits to be observed.”.

(3) Where the known creditor is a holder of an insurance claim, the information in the notice referred to in Regulation 13 shall be provided in the official language or one of the official languages of the Member State in which the creditor has his or her normal place of residence, domicile or head office.

(4) Any creditor who has his or her normal place of residence, domicile or head office in a Member State other than the State, may lodge his or her claim in the official language of the Member State, but if he or she does so the lodgement of his or her claim shall bear the heading “Lodgement of Claim” in English.

Regular Information to Creditors.

16. The liquidator of an insurance undertaking authorised by the Minister shall keep creditors regularly informed, in an appropriate manner, in relation to the winding-up and the progress of it.

Effects on certain contracts and rights.

17. (1) Notwithstanding Regulations 4 and 8, the effects of the commencement of reorganisation measures or winding-up proceedings on the contracts and the rights mentioned in this Regulation shall be governed by paragraph (2), (3) or (4) as appropriate.

(2) Employment contracts and employment relationships shall be governed solely by the law of the Member State applicable to the employment contract or employment relationship.

(3) A contract conferring the right to make use of or acquire immovable property shall be governed solely by the law of the Member State in whose territory the immovable property is situated.

(4) Rights of the insurance undertaking with respect to immovable property, a ship or an aircraft subject to registration in a public register shall be governed by the law of the Member State under whose authority the register is kept.

Third parties' rights in rem.

18. (1) The commencement of reorganisation measures or winding-up proceedings shall not affect the rights in rem of creditors or third parties in respect of tangible or intangible, movable or immovable assets (whether they are specific assets or collections of indefinite assets as a whole which change from time to time) belonging to the insurance undertaking which are situated within the territory of a Member State other than the home Member State at the time of the commencement of the said measures or proceedings.

(2) The rights in rem referred to in paragraph (1) are -

(a) the right to dispose of assets or have them disposed of and to obtain satisfaction from the proceeds of or income from those assets, in particular by virtue of a lien or a mortgage;

(b) the exclusive right to have a claim met, in particular a right guaranteed by a lien in respect of the claim or by assignment of the claim by way of a guarantee;

(c) the right to demand the assets from, or to require restitution by, anyone having possession or use of them contrary to the wishes of the party so entitled;

(d) a right in rem to the beneficial use of assets.

(3) The right, recorded in a public register and enforceable against third parties under which a right in rem within the meaning of paragraph (1) may be obtained, shall be considered a right in rem.

Reservation of title.

19. (1) The commencement of reorganisation measures or winding-up proceedings against an insurance undertaking purchasing an asset shall not affect the seller's rights based on reservation of title where at the time of the commencement of such measures or proceedings the asset is situated in a Member State other than the state in which such measures or proceedings were commenced.

(2) The commencement of reorganisation measures or winding-up proceedings against an insurance undertaking selling an asset, after delivery of that asset, shall not constitute grounds for rescinding or terminating the sale and shall not prevent the purchaser from acquiring title where at the time of the commencement of such measures or proceedings the asset sold is situated within the territory of a Member State other than the State in which such measures or proceedings were commenced.

Set-off.

20. The commencement of reorganisation measures or winding-up proceedings shall not affect the right of creditors to demand the set-off of their claims against the claims of the insurance undertaking where such a set-off is permitted by the law applicable to the insurance undertaking's claim.

Regulated markets.

21. Notwithstanding Regulation 18, the effects of a reorganisation measure or the commencement of winding-up proceedings on the rights and obligations of the parties to a regulated market shall be governed solely by the law applicable to that market.

Regulations 18 to 21: Saving.

22. Regulations 18 to 21 shall not preclude any of the following actions, in relation to acts which adversely affect all the creditors, namely -

(a) actions to set aside such acts or to have such acts declared void,

(b) actions to have such acts avoided,

Regulations 18 to 21: Further saving.

23. Nothing in these Regulations shall affect any proceedings commenced in any court concerning the reorganisation or the winding-up of an insurance undertaking where such proceedings were commenced before 29 April 2003.

Detrimental acts.

24. It shall be a defence to an action for voidness, voidability or unenforcability of legal acts detrimental to all the creditors, for the person concerned who has benefited from the act concerned, if:

(a) the said act is subject to the law of a State other than the home Member State; and

(b) that law does not allow any means of challenging that act in the relevant case.

Protection of third-party purchases.

25. Where by an act concluded after the adoption of reorganisation measures or winding-up proceedings an insurance undertaking disposes, for a consideration, of -

(a) an immovable asset;

(b) a ship or an aircraft subject to registration in a public register; or

(c) transferable or other securities whose existence or transfer presupposes entry in a register or account laid down by law or which are placed in a central deposit system governed by the law of a Member State;

the validity of that act shall be governed by the law of the Member State within whose territory the immovable asset is situated or under whose authority the register, account or system is kept.

Pending legal proceedings.

26. The effects of reorganisation measures or winding-up proceedings on pending legal proceedings concerning an asset or a right of which the insurance undertaking has been divested shall be governed solely by the law of the Member State in which the legal proceedings are pending.

Administrators and liquidators.

27. (1) The appointment of an administrator or liquidator to an insurance undertaking authorised by the Minister shall be evidenced by a copy of the court order or notice of appointment under the Companies Acts or Insurance Acts, as the case may be, and a translation of the relevant document into one of the official languages of the Member State within the territory of which the administrator or liquidator wishes to act shall be made available by the administrator or liquidator if required by the competent authorities of that Member State.

(2) The appointment of an administrator or liquidator to an insurance undertaking authorised in a Member State other than the State shall be evidenced in the State by a certified copy of the original decision appointing him or her or by any other certificate issued by the competent authorities of that Member State, accompanied, in the case of a certificate not in the English language, by a certified translation into English.

(3) The administrator or liquidator appointed to an insurance undertaking authorised by the Minister shall be entitled to exercise within the territory of other Member States all the power that he or she is entitled to exercise within the territory of the State.

(4) The administrator or liquidator appointed by the competent authorities to an insurance undertaking authorised in a Member State other than the State shall be entitled to exercise within the territory of the State all the power that he or she is entitled to exercise within the territory of the home Member State.

(5) The administrator or liquidator appointed by the competent authorities of a Member State other than the State may, if the legislation of that Member State so permits appoint persons to assist or, where appropriate, represent him or her in the State in the course of the reorganisation measure or winding-up proceedings, in particular in order to help overcome any difficulties encountered by creditors in the State.

(6) In exercise of his or her powers under the Companies Acts or the Insurance Acts, an administrator or liquidator appointed to an insurance undertaking authorised by the Minister shall comply with the law of the Member State within whose territory he or she wishes to take action, in particular with regard to procedures for the realisation of assets and the informing of employees.

(7) In exercise of his or her powers under the legislation of the home Member State, an administrator or liquidator appointed to an insurance undertaking authorised in a State other than the State, shall comply with the laws of the State when taking action within the State, in particular with regard to procedures for the realisation of assets and the informing of employees and accordingly shall not resort to the use of force or have power to make any ruling or determination in relation to legal proceedings or disputes.

Registration in a public register.

28. (1) The registrar of companies shall, if requested by the administrator or liquidator appointed to an insurance undertaking authorised in a Member State other than the State, or by any other authority duly empowered in that other State, register a reorganisation measure or the decision to commence winding-up proceedings.

(2) The administrator or liquidator appointed to an insurance undertaking authorised by the Minister shall, if so required by the law of a Member State other than the State, take all the measures necessary to register a reorganisation measure or the decision to open winding-up proceedings in the land register, the trade register and any other public register kept in that other Member State.

(3) The costs of the registration referred to in paragraphs (1) and (2) shall be regarded as costs and expenses incurred in the reorganisation or winding up proceedings.

Professional secrecy.

29. All persons required to receive or divulge information in connection with the procedures of communication laid down in Regulations 6, 8 and 30 shall be bound by professional secrecy in the same manner as laid down in Article 16 of Directive 92/49/EEC and Article 15 of Directive 92/96/EEC, except where required to disclose the information concerned by order of a court of competent jurisdiction in civil or criminal proceedings.

Branches of third country insurance undertakings.

30. (1) These Regulations shall apply to the reorganisation measures and winding-up proceedings concerning a branch situated in a Member State of an insurance undertaking whose head office is located outside the Community.

(2) Where an insurance undertaking whose head office outside the Community has branches established in more than one Member State, each branch shall be treated independently with regard to the application of these Regulations but the supervisory authorities, competent authorities, administrators and liquidators involved shall endeavour to coordinate their activities.

GIVEN under my Official Seal,

this 29^th day of April 2003.

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MARY HARNEY

________________________

Minister for Enterprise, Trade and Employment

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation)

These Regulations give effect to Directive 2001/17/EC of the European Parliament and Council of 19 March 2001 (O.J. L 110, 20/4/2001, p.28). The Directive provides that the reorganisation and winding-up of an insurance undertaking should be under the control of the administrator or the liquidator appointed by the authorities of the undertaking's “home” Member State and that the laws of that Member State should apply, subject to certain exceptions listed in the Directive.

The Regulations also gives effect to one of the options provided in the Directive, namely, that policyholders must be given priority in relation to an insurance undertaking's technical reserves.

Insurance companies must also maintain a register of assets representing the technical reserves.

¹ O.J. L 110, 20.4.2001, p. 28

² O.J. L228, 16.8.1973, p. 3

³ O.J. No. L 63, 13/3/1979, p. 1

⁴ O.J. No. L 228, 11/8/1992, p. 1

⁵ O.J. No. L 360, 9/12/1992, p. 1