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Article (41)

FED LAW 6/2007 Effective from 15/2/2007

The Authority shall conduct periodical inspection on the insurance and re¬insurance companies to ensure the soundness of their financial situations, and their compliance with the provisions of the law and the technical basis of carrying out the insurance and re-insurance operations. Should the Director General come to know through such inspection or vide sufficient information that one of the following incidents took place, then he shall ensure soundness of such information:

  1. (a) The company did not fulfil its obligations, or it's likely to fall short in doing so or the company is unable to continue its operations.
  2. (b) The company violated the provisions of the law herein, bylaws, regulations, instructions or the decisions issued pursuant thereto.
  3. (c) The company's procedures needed to reinsure the risks accepted by it are inadequate or the company didn't make these procedures, with the exception of the insurance-related professions.
  4. (d) The company has lost one of the required terms and conditions for licensing or registration to carry out the insurance activity.
  5. (e) The company's total losses exceeded (50%) of its paid-up capital.
  6. (f) The company ceased its operations for more than one year without justifiable cause or legitimate reason.

2. Should the Director General became evident that the said information is correct he shall ask the company to take certain procedures to rectify its position within the period he shall determine, and in case the company failed to do so, the Director General shall refer the matter to the Board to take the necessary actions to rectify these situations; including:
(a) Request from the company or the main office of the foreign insurance company, as appropriate, to take the necessary action to correct the administrative situations, including the disqualification of the Director-General, the Authorized Manager or any senior official.

(b) Disqualification of the Chairman of the Board of Directors or any member of the Board that proves accountability for the current status of the Company.

(c) Dissolving the Company's Board of Directors and appointing a provisional neutral administrative committee of experienced individuals to take its place and appointing a chairman for the committee and a deputy thereof. The functions and competencies of the committee shall be determined for a period not exceeding six months, extendable for a period not exceeding one year in cases where this is required. The company shall be liable for the fees of the committee as determined by the Authority and upon accomplishment of the committee's mission a new Board of Directors shall be elected in accordance with the provisions of the Commercial Companies Law.

(d) Taking the necessary action to merge the company into another according to the provisions of the Commercial Companies Law.
(e) Ceasing or cancelling the company's license.
(f) Restructuring the company.
(g) Preventing the company from concluding any more insurance contracts or preventing it from practicing a particular type or types of insurance.
(h) Setting upper limit for the premiums total amounts received by the company for issuing insurance policies.
(i) Retaining assets in the State equal in value to the company's total net obligations accrued from its operations in the State or a certain percentage of their value as determined by the Board based on the recommendation of the Director General.
(j) Restricting the company's involvement in any of its investments activities associated with the solvency margin or compeling it to liquidate its investments in any of these activities to serve this purpose, unless such action would cause damage to the company as decided by the expert specialized in this field.
(k) Appointing an independent observer member from outside the Authority to attend meetings of the Board of Directors of the company and participate in the discussions without having a vote during taking the decision and the Board shall determine his competencies and fees.
(l) Liquidating the company.

3. The provisions stipulated in paragraph (1) and (2) of the article herein shall apply to Insurance Related Professions to the extent appropriate to the nature of these professions.

Article (41) bis (1):

1. Subject to the provisions of the Law concerning Offences and Administrative Sanctions in the Federal Government, the Authority has the power to impose administrative fines on insurance companies, reinsurance companies and insurance-related professions.

2. The Cabinet shall issue a decision to determine the offences for which the fines referred to in paragraph (1) of the article herein shall be imposed.

Article (41) bis (2):

1. The Director-General shall designate any expert, consultant, actuary or auditor for the purpose of conducting an inspection or audit.

2. Inspectors and auditors appointed by the Director General shall be given all necessary authorities to enable them to carry out their duties, including:

(a) Accessing records, registers, statements and internal audit reports. As well as collecting information and requesting necessary clarifications from the insurance company, reinsurance company, insurance-related profession and the members in respect of the insurance operations they carry out. In addition to obtaining prints or copies of records, registers and statements.

(b) Collecting the necessary information and clarifications from the members of the group of insurance company or reinsurance company in relation to all records, operations and activities relating to the insurance company.

(c) Collecting the necessary information and clarifications from any third party that has a relation with the insurance company, reinsurance company or the insurance-related profession concerning the subject matter of auditing.

Article (41) bis (3):

Any insurance company, reinsurance company or insurance-related profession, or any of their managers or employees shall not:

1. Prevent, intercept or obstruct any person appointed by the Director General to carry out inspections or audits pursuant to the law herein.

2. Conceal any data, registers or books requested by the Director General or the person appointed by him to perform the inspection or auditing duties.

3. Issue any misleading statements or give any inaccurate data, registers or books.

This article has been amended by Federal Law No. (03) of 2018. You are on the latest version. To view the previous version, click the version box below.
Version 1(effective from 15/02/2007 to 26/04/2018)

 

The Authority shall conduct periodical inspection of the insurance and re-insurance companies to ensure safety of the financial situations, observance of the provisions of the law and the technical basis of conducting the insurance and re-insurance operations. Should the Director General came to know through such inspection or vide sufficient information that one of the following incidents took place he shall ensure soundness of such information:

  1. That the company did not fulfill its obligations or it's likely to fall short in doing so or unable to go on with its operations.
  2. That the company violated the provisions of the law herein, or the regulations, rules, directives or the decision issued pursuant thereto.
  3. That the company's procedures needed to re-insure the risks of its tolerance are inadequate or the company didn't make these procedures.
  4. That the company became devoid of one of the required terms and conditions for licensing or registration to carry out the activity of insurance.
  5. That the company's total losses exceeded 50% of its paid-up capital.
  6. That the company ceased to carry out its operations for more than a year without justified or legitimate reason.

2. Should the director general became evident that the said information are correct he shall ask the company to take certain procedures to rectify its situations within the period he may determine and should the company failed to do as so, the director general shall refer the matter to the Board to take the necessary actions to rectify these situations; including:

  1. Preventing the company from concluding any more insurance contracts or transacting in certain type or types of insurance.
  2. Setting upper limit for the premiums total amounts received by the company against issuing insurance policies.
  3. Retaining assets in the State equal in value to the company's total net obligations accrued from its operations in the State or to a certain percentage of their value as determined by the Board following a recommendation by the Director General.
  4. Restricting the company's involvement in any of its investments activities associated with the solvency margin or obliging it to liquidate its investments in any of these activities to serve this purpose unless such action would inflect harms on the company as decided by the expert specialized in this respect.
  5. Asking the company or the main office of the foreign insurance company as the case might be to take the necessary actions to rectify the administrative situation therein including removing the Director General, the authorized manager or any of its senior officers away from office.
  6. Removing the Chairman of the company's board of directors or any Board member proved to be liable for the ensuing situation of the company.
  7. Dissolving the company's board of directors, appointing a provisional neutral administrative committee of experienced individuals to take its place and as well appointing a chairman for the committee and a deputy thereof, determining their responsibilities and powers for a period not to exceed six months subject to renewal for a period not more than a year in the cases requiring as so. The company shall bear the fees of the committee as determined by the Authority and upon accomplishment of the committee's mission a new board of directors shall be appointed according to the provisions of the Law of Commercial Companies.
  8. Taking the necessary action to merge the company into another according to the provisions of the Law of Commercial Companies.
  9. Ceasing or canceling the company's license.
  10. Restructuring the company.
  11. Liquidating the company.