On the Regulation of Insurance Operations
Number: Federal Law No. 6/2007
Issued On: 15 Feb 2007
Type: Federal Law
Federal Law No. 6/2007
On the Regulation of Insurance Operations
Federal Law No. 9/1984 dated 20/03/1984
Cabinet Decision No. 15/2012 dated 9/05/2012
Federal Law No. 5/2012 dated 10/10/2012
Cabinet Decision No. 28/2015 dated 05/08/2015
Federal Law No. 3/2018 dated 25/04/2018.
Federal Decree-Law No. 24/2020 dated 27/09/2020
Federal Decree-Law No. 25/2020 dated 27/09/2020
We, Khalifa Bin Zayed Al Nahyan, President of the United Arab Emirates State,
Pursuant to the perusal of the Constitution; and
Federal Law No. 1/1972, on the Jurisdiction of the Ministries and the Powers of the Ministers, and its amending laws; and
Federal Law No. 6/1974, on Public Utility Associations, and its amending laws; and
Federal Law No. 5/1975, on the Commercial Register; and
Federal Law No. 26/1981, on the Maritime Commercial Law and its amending laws; and
Federal Law No. 8/1984, on Commercial Companies, and its amending laws; and
Federal Law No. 9/1984, on Insurance Companies and Agents, and its amending laws; and
The Civil Transactions Law promulgated by Federal Law No. 5/1985, and its amending laws; and
The Penal Code promulgated by Federal Law No. 3/1987, and its amending laws; and
The Civil Procedures Law promulgated by Federal Law No. 11/1992, and its amending laws; and
The Criminal Procedures Law promulgated by Federal Law No. 35/1992, and its amending laws; and
Federal Law No. 21/1995, on Traffic and Circulation; and
Acting upon the proposal of the Minister of Economy, the approval of the Cabinet and the ratification of the Federal Supreme Council;
Have promulgated the following Law:
INTRODUCTORY TITLE - DEFINITIONS
Article 1 - Definitions
The provisions of Article 1 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
Unless the context otherwise requires, the following terms and expressions shall have the meanings assigned to each:
The State: The United Arab Emirates.
The Ministry: The definition of 'Ministry' was abrogated by virtue of Paragraph 1 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The Minister: The definition of 'Minister' was abrogated by virtue of Paragraph 1 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The Authority: The definition of 'Authority' was abrogated by virtue of Paragraph 1 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The Board: The Board of Directors of the Central Bank.
The Chairman: The Chairman of the Board.
The Director General: The definition of 'Director General' was abrogated by virtue of Paragraph 1 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The Company: The Insurance Company established in the State as well as the foreign insurance company licensed to operate in the State whether through a branch or an insurance Agent.
The Insurer: Any Insurance Company established in the State or any foreign company licensed to practice insurance activities in the State, under the present Law.
The Insured: The person who contracted insurance with the Company.
Insurance Agent: The person accredited and delegated by the Company to practice insurance activities on its behalf or on behalf of one of its branches.
Insurance Policy (Insurance Contract): The Insurance Policy (contract) concluded between the Insurer and the Insured comprising the contract conditions between the parties, their obligations and rights, the rights of the insurance beneficiary, and any riders appended to this Policy.
The Reinsurer: Any Reinsurance company established in the State or any foreign reinsurance company licensed to perform reinsurance activities in the State; or a reinsurance company abroad.
Insurance Broker: The person who independently acts as an intermediary in insurance or reinsurance activities between the applicant for insurance or reinsurance, on one hand, and any insurance or reinsurance company, on the other hand, and receives in return a commission from the insurance or reinsurance company that issues the insurance or reinsurance policy.
The Inspection and Damage Assessment Expert: The person who inspects and assesses the damages in matters of insurance.
The Insurance Consultant: The person who undertakes the study of insurance needs of his clients, gives his advice as to the adequate insurance coverage and assists in preparing the insurance requirements; against remuneration to be paid by his clients.
The Actuary: The person who evaluates the amount of insurance policies as well as the related documents and accounts.
Insurance-Related Professionals: Any person licensed by the Authority to practice any of the activities of the Insurance Agent, Actuary, Insurance Broker, Inspection and Damage Assessment Expert or Insurance Consultant or any other insurance-related profession which the Board decides to regulate.
The Register: The Register of insurance companies or insurance agents.
The Data: All (paper and electronic) data and information related to any insurance activity, including the data related to identifiable individuals, whether directly or indirectly.
The Branch: The branch of the company that undertakes insurance activities in the name of the main office.
The Managing Director: The person appointed by a foreign insurance company to manage its branch in the State.
The Beneficiary: The person having acquired the rights to the insurance contract, whether initially or through transfer of these rights in a legal manner.
The Technical reserves: The reserves which the insurer must deduct and keep in order to cover his financial obligations towards the insured in compliance with this Law.
The Solvency Margin: The excess amount of the Company's actual assets over its liabilities which enables it to pay fully its liabilities and the indemnities due upon their maturity, without adversely affecting the Company's activities or weakening its financial position.
The Minimum Insured Amount: An amount equal to one - third of the required Solvency Margin or the amount fixed by the Board, whichever is bigger.
The Auditor: The Auditor licensed to work in the State.
The Person: Any physical or legal person.
1- The provisions of this Law shall apply to all insurance companies established in the State and to the foreign companies licensed to operate in it, including the companies performing co-insurance, joint insurance or reinsurance activities, provided for in this Law, and related professions.
2- The provisions of this Law do not apply to companies operating in the State free zones, except those mentioned in a specific text of this Law.
1- Insurance is a contract whereby the insurer undertakes to pay to the insured or to the beneficiary, to whose favour the contract was made, an amount of money, an annuity or other indemnity in case an accident occurs or the insured risk materialize, in consideration of premiums or any monetary payments payable by the insured to the insurer.
2- The insurer is under obligation to pay the indemnity provided for in the policy to the insured or the beneficiary - as the case may be - upon occurrence of the accident or materialization of the risk insured, thus legally subrogating the insured or the beneficiary in their rights or their obligations.
3- Upon application from the concerned persons, the Company is under obligation to issue an insurance policy as concerns all vehicles licensed to circulate in the State. The implementing Regulation to this Law shall fix the cost tariff of such insurance taking into consideration the seriousness of the risks.
TITLE 1 - INSURANCE ACTIVITIES AND KINDS
For the purpose of applying the provisions of this Law, direct insurance activities are classified in three categories:
1- Insurance of persons and endowment insurance.
2- Insurance of property.
3- Insurance of liabilities.
The implementing Regulation to this Law shall determine the contents of each of these three categories.
Insurance activities comprise the activity relating to the kinds stipulated in Article 4 of this Law. It also includes reinsurance, insurance agents, actuarial activities, insurance brokers, risk detection and appraisal assessors and Insurance Consultants.
TITLE 2 - THE INSURANCE AUTHORITY
The text of Article 6 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 7 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 8 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
THE AUTHORITY'S BOARD OF DIRECTORS
The text of Article 9 was replaced by virtue of Article 1 of Federal Law No. 5/2012 dated 10/10/2012, then abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 10 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 11 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 12 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 13 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 14 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 15 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 16 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 17 was abrogated by virtue of Paragraph 2 of Article 3 Federal Decree-Law No. 24/2020 dated 27/09/2020.
The Authority shall charge annual fees in return for supervision and control, as well as any other fees proposed by the Board provided they are sanctioned by a Cabinet decision.
The text of Article 19 was replaced by virtue of Article 1 of Federal Law No. 5/2012 dated 10/10/2012, then abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 20 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 21 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 22 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The provisions of Article 23 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
Upon recommendation of the Director General, the Board shall issue the regulations, rules, instructions and decisions relating to insurance activities, including:
1- The solvency margin and the minimum amount of insurance provided that it does not fall below one third of the solvency margin, with due regard to the international standards in this respect.
2- Bases on which are computed the technical reserves.
3- Reinsurance ratios.
4- Bases of investment of the company's assets.
5- Determination of the Company's assets against its insurance obligations.
6- The accounting policies to be followed by the Company and the forms required to prepare and submit the reports and financial statements.
7- Bases of keeping accounting books as well as the records of companies, agents and brokers and specifying the information that should be entered in these books and registers.
8- Registers which should be kept and held by the Company as well as the information and documents that should be provided to the Authority.
9- Rules and ethics of the profession.
10- Combating money laundering and financing terrorism in insurance activities, in collaboration with the concerned authorities.
11- Rules of the percentage of ownership of the insurance companies' capitals, taking into account the provisions of the Federal Law on Commercial Companies.
New provisions were added under no. 23 (BIS 1) by virtue of Article 2 of Federal Law No. 3/2018 dated 25/04/2018 as follows:
Article 23 BIS 1
The Authority may impose on whoever carries out the insurance activities some of the types and branches thereof exclusively, determine the conditions, terms and tariffs to be applied and regulate the rights and obligations of the related parties.
New provisions were added under no. 23 (BIS 2) by virtue of Article 2 of Federal Law No. 3/2018 dated 25/04/2018 as follows:
Article 23 BIS 2
The Authority may establish funds having independent legal personality with the purpose of protecting and compensating persons. A decision shall be issued by the Board to determine the way these funds are established, their objectives and financing, the risks they cover and the benefits they provide once such risks arise.
TITLE 3 - INSURANCE COMPANIES
CHAPTER 1 - THE INSURER
Insurance and reinsurance activities shall be exercised in the State by any of the following persons who are licensed and registered with the Authority:
a- A public Joint Stock company established in the State.
b- A branch of a foreign insurance company.
c- An insurance Agent.
2- a- A prior approval of the Board is required before establishing in the State any insurance company or opening a branch of a foreign insurance company or performing the work of an insurance Agent.
b- The Company's financial year starts on the first of January and ends on the thirty first of December of each year. As concerns its first financial year, it shall start as of the date of its foundation and end on the thirty first of December of the following year.
3- The provisions of Clause 3 were abrogated by virtue of Article 4 of Federal Law No. 3/2018 dated 25/04/2018.
4- Shall be void, any insurance policy concluded by a Company that is not recorded in accordance with the provisions of this Law. The injured party may claim damages for the prejudice resulting from such voidance.
The five-year period mentioned in the preceding provisions of the present Article was extended to an additional period of three years as of 28/08/2012 by virtue of Article 1 of Cabinet Decision No. 15/2012 dated 09/05/2012, then the additional period mentioned in Cabinet Decision No. 15/2012 dated 09/05/2012 was extended to another one-year period as of 28/08/2015 by virtue of Article 1 of Cabinet Decision No. 28/2015 dated 05/08/2015, then the provisions of Article 25 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
1- The Company may not combine between insurance of persons, capitalization insurance and property and liability insurance activities.
2- By way of exception from the provisions of Clause 1 of the present Article, the existing company licensed to practice the two types of insurance prior to the promulgation of this law may combine between insurance of persons, capitalization insurance and property and liability insurance activities, provided that:
a- It fully separates between the insurance of persons and capitalization, and the property and liability insurance in terms of technical, financial, technological, administrative and legal procedures as well as all related technical, administrative and financial regulations, with the exception of the General Manager of the company.
b- It prepares all financial statements and data required under this Law and the instructions and decisions of the Board on the basis of a consolidated total and on the basis of separation between the insurance of persons and capitalization on one hand and the property and liability insurance on the other hand.
1- It is not allowed to contract insurance with an insurance company outside the State with regard to funds or properties situated in the State or to liabilities arising therein. It is not also permitted to broker in transactions on such funds, properties or liabilities except with companies registered in accordance with the provisions of this Law.
2- The insurer may reinsure in or out of the State.
The Company may open branches in the State, after complying with the provisions of this Law.
The provisions of Article 28 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
1- The insurance policy in the state shall be written in Arabic language to which may be attached a comprehensive translation in another language. In case of discrepancy in the interpretation of the policy, the Arabic text shall prevail.
2- Clauses in the policy exempting the Company from liability must be written in bold characters, in a different print colour and initialled by the insured.
3- Insurance policies may be issued electronically according to the conditions and terms defined by virtue a Board decision.
4- Notwithstanding the provisions of Clause 1 of this article, the Director General may exempt some of the insurance policies from being written in Arabic language.
The Company undertakes to employ the number of nationals as decided by the Cabinet.
May neither be a member of the Board of Directors of a Company nor a general Manager or mandated Director, any person who:
1- Has been condemned for a felony or a misdemeanour against honour, trust, public morals, or for bankruptcy without being rehabilitated.
2- Has been considered by the Board liable of a serious violation to the provisions of this Law, or the Companies Law, in his capacity of General Manager or member of the Board of Directors of a company, including his responsibility for causing the forced liquidation of the company.
1- The Chairman or members of the Board of Directors of the company, its General Manager, its delegated Director or the person acting for him, any of the company's managers or any of its high ranking officers are prohibited to:
a- Participate in the management of any other competing with or similar to the insurance company.
b- Compete with the business of the Company, do any act or perform any activity that may contradict the Company's interests.
c- Practice the work of an insurance agent or broker.
d- Receive any commission for any of the insurance acts.
2- It is prohibited for any person assuming the management of the Company, or for any of its employees, to act as representatives of any shareholder in this company.
Each of the General Manager, the delegated Director and the senior officers of the Company must fulfill the conditions of capacity and experience in the insurance business. The Company shall provide the Authority with a detailed statement that includes the qualifications and experience of each of them as specified in the Implementation Regulation to this Law.
1- The Company has to inform the Authority of the names of the members of its Board of Directors, its General Manager or Delegated Director or any of its senior officers, as well as of the vacancy of any of their positions which the company must fill within sixty days from the date of their occurrence and inform the Director General of the Authority of this fact.
2- The Company's Board of Directors shall provide the Authority with copies of the Minutes of the Board meetings and resolutions relating to the election of the Chairman of its Board of Directors, his Deputy and the members accredited to sign for the Company, together with samples of their signatures, within seven days from the issue of such resolutions.
3- In case the Chairman or the members of the Board of Directors of the Company submit their resignation or if the Board loses its legal quorum, the Authority's Board of Directors shall form a provisional committee composed of experienced and specialized persons, and shall appoint a president and a vice-president for such committee, from among its members. This Committee shall manage the Company, convene the General Meeting of Shareholders to meet within a period not exceeding three months as of the date of formation of such Committee, renewable once for the same period, in order to elect a new Board of Directors for the Company. The Company shall bear the fees of such Committee as fixed by the Board.
In implementation of the instructions issued by the Board, the Company shall keep the following:
1- The solvency margin and the minimum amount of insurance as concerns the kind of insurance involved.
2- Technical reserves estimated at the end of each financial year.
3- Reserves that must be kept in the State.
The provisions of Article 35 were replaced by virtue of Article 1 of Federal Law no. 3 of 2018 dated 25/04/2018 and became as follows:
The Company licensed to practice insurance activities after the effective date of this Law shall appoint or accredit a licensed Actuary within one month as of the date on which it was licensed and inform the Director General of this within one month from such appointment or accreditation. Companies that were licensed prior to the effective date of this Law have to adapt their situation in conformity with the provisions of this Article within three months as of the effective date of this Law.
1- Companies have to submit any data or information required by the Director General concerning themselves or other companies, having ownership relations or otherwise connected therewith. These data and information must be submitted within the period fixed by the Director General, together with any data or information submitted by the Company to any other controlling Body or any data or information the company receives from such bodies, upon their occurrence.
2- The Company's Board of Directors shall convene the Director General to attend the General Meeting of Shareholders fifteen days at least prior to the date of the meeting. The Director General may delegate, a representative from among the employees of the Authority for this purpose.
3- The Director General may assign one or more employee(s) of the Authority to verify or scrutinize, in suitable time any of the Company's transactions, registers or documents, and the Company must put any of these at the disposal of the delegated employee and cooperate with him, thus enabling him to perform his duties in full.
4- As a result of the scrutiny made under the provisions of clause (3) of this Article, the Director General shall appoint experts, counsels, actuaries or auditors to verify the Company's business transactions, assess its status and submit a report thereon. The Company has to offer any assistance required for the performance of their work in the most complete manner and shall bear the salaries, fixed for any of them, by the Director General.
5- The expert, counsel, actuary or auditor is prohibited from disclosing, to anybody whatsoever, any of the information that reached him under the provisions of clause (4) of this Article, unless he obtains a written approval of the Board to do so.
1- The Company is under obligation to provide the Authority, within a period not exceeding four months as of the expiry of the financial year, with a detailed report on its activities, duly signed by the Chairman of the Board, the delegated Director or the persons authorized to sign on behalf of the Company, which shall include its annual closing accounts and all details appended thereto including its yearly Balance-sheet, detailed profit and loss accounts' the kind of insurance practiced and for each branch thereof, and the auditor's report and such within a period not exceeding four months as of the end of the financial year. The report should reach the Authority thirty days at least prior to convening the Company's General Meeting of Shareholders.
2- Should it appear that the accounts and information provided for in clause (1) of this Article are inconsistent with the provisions of this Law, or the regulations, bylaws, instructions or decisions issued thereunder, the Director General shall ask the Company's Board of Directors to correct them in order to obtain the approval thereon which is a condition precedent to their submission to the General meeting of the Board of Directors.
3- In case the Company is exposed to a bad financial or administrative situation or has sustained heavy losses affecting the rights of the insured or beneficiaries, the Chairman of its Board of Directors or its General Manger shall forthwith inform the Director General of this matter.
1- a- The Company shall provide the Authority with forms of policies and riders used in its business transactions which include the general and special conditions, the technical bases applied in these documents and the premium rates appended thereto. The Company shall also provide the Director General with the surrender value tables of these policies, concerning insurance of persons and capitalization, and the premium rates appended thereto.
b- Should public interest so require or in case of an existing material defect, the director General shall demand a modification of these forms within the period fixed by him for this purpose. The Company may object to the amendment and in case of disagreement, the matter shall be submitted to the Board for settlement.
2- The company shall provide the insured and the beneficiaries with copies of the policies and the relevant information.
Insurance and reinsurance Companies registered with the Authority shall abide by the principle of disclosure and transparency in their dealings with their clients and in all documents, papers, publications, advertisements, publicity, articles and scientific material issued by them. The Board shall issue a regulation concerning the matters that should be observed for executing the contents of this Article.
1- The Company's auditor shall submit to the Authority, with a copy to the Chairman of the Company's Board of Directors, a prompt report in the following instances:
a- If he notices that the financial situation of the Company does not allow it to honor its obligations towards the insured or adversely affects its capacity to meet the financial requirements provided for in this Law, and the regulations, bylaws, instructions, and decisions issued thereunder and which pertain to the financial status of the Company.
b- If he discovers a material defect in the Company's financial practices, including the entry of data in its accounting registers.
c- If he rejects or makes reservations as concerns any certificate issued by the Company relating to its income or its financial data.
d- If he decides to resign or if his reappointment in the Company has been rejected by the Extraordinary Meeting of shareholders.
2- The Director General may ask the Company's auditor to provide him directly, within a specified period, with the necessary information for the control of the Company's activities.
3- In case the auditor recommends the non-ratification of the financial statements submitted to him by the Board of Directors, the General Meeting of shareholders may take any of the following resolutions:
a- Return the financial statements to the Board of Directors and ask it to correct the balance-sheet and the profit and loss account according to the auditor's remarks and consider them ratified subsequent to this correction.
b- Refer the matter to the Director General who shall appoint an expert Committee of auditors and fix their remuneration, which shall be borne by the Company, to settle the dispute between the Board of Directors of the company and its auditors. The decision of the Committee shall be binding after resubmitting it to the General Meeting of shareholders for approval. The balance-sheet and the profit and loss account shall be amended in accordance with the decision of the Committee.
The provisions of Article 41 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
1- The Authority shall conduct a periodic inspection of insurance and reinsurance companies to ascertain the soundness of their financial situation and their compliance with the law provisions and the technical bases on which insurance and reinsurance operations are built. Should it come to the knowledge of the Director General, through inspection, or through sufficient information leading to any of the following, he has to make sure that the said information is correct:
a- The Company did not fulfil its obligations or that it may fail to do so, or may be unable to continue its activities.
b- The Company violated the provisions of this Law, or the Regulations, bylaws, instructions or decisions issued thereunder.
c- The measures taken by the Company that are necessary to the reinsurance of the risks assumed by it are insufficient or totally missing, with the exception of the insurance-related professionals.
d- The Company is no more fulfilling one of the licensing or registration conditions that are necessary for practicing the insurance business.
e- The Company's total losses have exceeded 50% of its paid-up capital.
f- The Company has ceased its activities for more than one year without justifiable or licit cause.
2- Should it appear to the Director-General that the above information is true, he shall have to ask the Company to take specific measures to redress its situation within the period he fixes for this purpose, failing which the Director General shall refer the matter to the Board in order to take the necessary measures for redressing its situation including:
a- Ask the Company or the main office of the foreign insurance company, as the case may be, to take the necessary measure to redress its administrative situation including the discharge of its general manager, its delegated Director or any of its principal officers.
b- Dismiss the Company's Chairman of the Board or any Board member whose responsibility, for letting the Company reach such a deteriorated stage, is established.
c- Wind up the Company's Board of Directors and appoint a neutral and temporary administrative committee, formed of experts, as a substitute for the Board, designate a president and vice-president for this committee, and determine its functions and competences for a period not exceeding six months renewable for a maximum period of one year where circumstances so require. The Company shall bear the remuneration of the said committee as fixed by the Authority. Upon termination of the Committee's functions, a new Board of Directors shall be elected in accordance with the provisions of the Law on Commercial Companies.
d- Take the necessary measures to merge the Company in another company in accordance with the provisions of the Law on Commercial Companies.
e- Suspension or cancellation of the Company's license.
f- Restructuring the Company.
g- Prevent the Company from issuing additional policies or from practicing one or more specific type of insurance.
h- Set up a maximum level for the total amount of premiums that may be collected by the Company from insurance policies issued by it.
i- Maintain in the State assets equal in value to all its net obligations resulting from its activities in the State or a specific percentage of its value determined by the Board upon recommendation of the Director General.
j- Limit the practicing by the Company of any of its investment activities concerning the guarantee of the solvency margin or compel the Company to liquidate its investments in any of these activities in order to reach this objective unless this shall cause prejudice to the Company as determined by the competent expert in this field.
k- Appoint an independent observer from outside the Authority to attend the meetings of the Company's Board of Directors and participate in the discussions without having the right to vote on decisions. The Board shall determine the competencies and remuneration of this observer.
l- Liquidation of the Company.
m- The provisions stipulated in Clauses 1 and 2 of this Article shall apply to the insurance-related professionals to the extent they are compatible with the nature of activities of these professions.
New provisions were added under no. 41 (BIS 1) by virtue of Article 2 of Federal Law No. 3/2018 dated 25/04/2018 as follows:
Article 41 BIS 1
1- Subject to the provisions of the Federal Government's Administrative Violations and Sanctions Act, the Authority shall have the power to impose the administrative fines on insurance and reinsurance companies and on insurance-related professionals.
2- The Board of Directors shall issue a decision determining the violations to which the fines provided for under Clause 1 hereof shall be imposed.
New provisions were added under no. 41 (BIS 2) by virtue of Article 2 of Federal Law No. 3/2018 dated 25/04/2018 as follows:
Article 41 BIS 2
1- The Director General may appoint any expert, advisor, actuary or auditor to perform the inspection or auditing.
2- Inspectors and auditors appointed by the Director General shall be granted all the necessary powers enabling them to carry out their tasks, including:
a- Review the books, registrations, data and internal auditing reports, collect information and ask for necessary clarifications from the insurance or reinsurance company or the insurance-related professionals and members with regard to the insurance activities they carry out as well as obtain copies of the books, registrations and data.
b- Collect the necessary information and clarifications from the members of the insurance or reinsurance company with regard to all registers, works and activities related to the insurance company.
c- Collect the necessary information and clarifications from any third party with whom the insurance or reinsurance company or the insurance-related professionals have a relationship in terms of auditing.
New provisions were added under no. 41 (BIS 3) by virtue of Article 2 of Federal Law No. 3/2018 dated 25/04/2018 as follows:
Article 41 BIS 3
The insurance or reinsurance company, the insurance-related professionals or any of the managers or employees thereof shall be prohibited from:
1- Preventing, intercepting or obstructing any person appointed by the Director General to carry out inspection or auditing activities according to the law.
2- concealing any of the data, registrations or books requested by the Director General or his appointee in charge of carrying out inspection or auditing activities.
3- Issuing any statements or providing any data, registrations or books which are inaccurate or misleading.
FUNDS OF INSURANCE COMPANIES
Every insurance company must keep with a bank operating in the State a deposit, as guarantee for the discharge of its obligations, which amount shall be as follows:
1- Four Million Dirhams for the two kinds of insurance of persons and on capitalization, provided for in clause (1) of Article 4 of this Law.
2- Two Million Dirhams per each kind of insurance which shall come under property and liability insurances provided for in clauses (2) and (3) of Article 4 of this Law, provided the total amount does not exceed Six Million Dirhams as a maximum regardless of the number of branches.
The amount of the deposit stated in the two preceding clauses may, upon proposal from the Chairman, by a Cabinet order, be increased.
The deposit shall be in cash or its equivalent in shares and bonds of companies established in the State or a mortgage on a real estate located in it, on condition the approval of the Chairman is obtained.
The deposit shall be kept in one of the accredited banks in the State in the name of the Company and to the order of the Chairman in his quality. As to the real mortgage, an inscription to this end should be recorded with the competent mortgage registration department. The Authority shall be provided with an official certificate to this effect. The returns of the cash deposit, if any, shall be entered in the Company's account. Upon approval of the Chairman, all or part of the deposit may be substituted for any other form of deposits set forth in this Article provided that its amount is not, at the time of such substitution, below the level fixed by law for the deposit.
The deposit may not be disposed of but with the written permission of the Chairman or his deputy. The competent court or the Committee may order the distraint of the deposit for debts resulting from insurance operations performed by the Company but not for other debts.
The Authority must ask the Company to complete the deposit, if it falls below the limit set forth by law, due to the fall of the value of shares, bonds, real estates, or the levy of distraint on all or part of it according to the preceding clause or for any other reason. The Company has to complete the deposit within a maximum period of thirty days as of the date of the request to complete the deposit.
The bank is not allowed to dispose of the deposit in any manner whatsoever except by virtue of a final court judgment or a written authorization from the Chairman. The authorities concerned with the registration of real estates may not as well cancel the inscription of mortgage on the real estate object of the deposit except by a written authorization from the Chairman or whoever is authorized by him.
Companies practicing any kind of insurance provided for in clause (1) of Article 4 must keep with it, inside the State, funds equal in value, to at least, the amount of the mathematic reserves specific to the contracts concluded or implemented within the State. The Cabinet may, upon recommendation of the Chairman, reduce the proportion of the said reserves that should be kept by the Company to a percentage not below 50%.
These funds must be completely separate from the funds pertaining to the other insurance operations and, when computing the said reserves, the deposit mentioned in clause (1) of Article 42 of this Law should be taken into consideration so as to adopt whichever is the larger amount.
The insurance companies operating at the effective date of this Law shall be given a respite of one year from that date to adjust their situation with the provisions of clauses (1) and (2) of Article 42. This respite may be extended by another year by a Cabinet decision upon recommendation of the Chairman.
1- It is not allowed to establish any Company or open a branch of a foreign insurance company in the State except after obtaining a license from the Authority which may give or reject the license as it deems appropriate to the requirements of the national economy, and on condition that the object of the company be the practice of the insurance business. The Implementation Regulation to this Law shall specify the documents that should be submitted with the application for the license.
2- In case the license is given upon false statements, it shall be cancelled by decision of the Director General.
CHAPTER 2 - REGISTRATION OF INSURANCE COMPANIES AND AGENTS
1- Any of the companies stated in clause (1) of Article 24 of this Law may not practice insurance operations except after its recording in the register in accordance with the provisions of this Law and fulfilling the conditions specified in the Implementation Regulation to the said Law.
2- Should registration be effected on basis of false information, it shall be cancelled by decision of the Director General.
The Company may not place reinsurance with another company unless the latter is licensed to practice the same kind of insurance for which reinsurance is requested.
Acting upon the submission made by the Director General, the Board may order the Company to stop practicing one kind or more of insurance for a period not exceeding one year and notify the Company and the concerned authority of the said order, in any of the following instances:
1- If the Company violates the provisions of this Law, or the Regulations, byelaws or instructions issued thereunder.
2- If the Company ceases to fulfil any of the conditions that should be observed for registration according to the provisions of this Law.
3- If the Company does not practice any of the kinds of insurance included in the registration or ceases to practice it for a period of one year.
4- If the Company fails to honour its financial obligations.
5- If the Company abstains from executing a decisive court judgment concerning the insurance contract.
1- Should the Company, within a period not exceeding one year from the date of discontinuance, remove the cause of ceasing the work due to any of the instances stated in Article 50 of this Law, the Board, acting upon the proposal of the Director General, shall issue a decision approving that the Company resume or start practicing the insurance operations and notify the concerned authority and the Company of the decision.
2- Should the Company refrain from removing the cause of discontinuance of work within a period not exceeding one year from the date of discontinuance, its licence shall be cancelled as regards the kind or kinds of insurance involved by resolution of the Board and the concerned authority and the Company shall be notified of the decision.
1- Decisions issued by the Board, for this purpose, shall specify the measures concerning the discontinuance of work or cancellation of the license for one or more kinds of insurance, as well as the powers given to the Director General in this respect.
2- The decision ordering the cessation of work or the cancellation of the license for one or more kinds of insurance shall entail the following:
a- Prohibit the Company to conclude insurance contacts in any of these kinds of insurance at the risk of applying the penalties provided for in this Law.
b- Considering all rights and obligations resulting from contracts concluded prior to the cessation of work or cancellation of the license, for one or more kinds of insurance involved, valid and in effect and the Company shall remain liable therefore.
The Company whose registration has been cancelled as regards one or more kinds of insurance may apply for re-registration within a period not exceeding one year as of the date of cancellation and shall attach to its application the documents establishing the removal of the reasons which prompted the cancellation of the registration. The Board shall give its decision, in this respect, upon what was submitted by the Director General, within a maximum period of one month from the date of submitting the matter to the Board.
1- If the Company, that had its registration cancelled for all kinds of insurance to which it was licensed to practice, does not submit an application for reinstating its registration within the period stated in Article 53 of this Law, or if the Board rejects this application, the Company has to start the procedures for its voluntary liquidation within one month from the expiry of this period or the notification of the rejection decision, failing which it shall be liquidated according to the provisions of this Law.
2- The registration of the Company shall be considered as cancelled in case a decision is taken for its voluntary liquidation or a final court judgment is rendered ordering its compulsory liquidation or if it is declared bankrupt.
CHAPTER 3 - BRANCHES OF FOREIGN INSURANCE COMPANIES
1- Prior to registration, foreign insurance companies are bound to appoint an authorized manager for their branch in order to practice in their stead insurance activities and they shall be responsible for his acts. These companies have to attach to their appointment decision an official document, of which a certified copy shall be deposited with the Authority, empowering the manager with all necessary powers to manage the branch, including the following powers:
a- Issue insurance policies and riders as well as paying the indemnities resulting therefrom.
b- Represent the Company before the Authority, the competent courts and all other official and non official bodies as concerns the work and administration of the branch.
c- Receive warnings and all other notifications and correspondence addressed to the Company.
2- Branches of foreign insurance companies must inform the Director General of the authorized manager's name within one month from the date of his appointment and, in case of vacancy of his position, they have to appoint a substitute within one month from such vacancy.
3- The branch of the foreign insurance company has to publish the consolidated closing accounts of the company in two local wide-spread dailies issued in the State in the Arabic language and in a daily local paper issued in the English language.
REPRESENTATION OFFICES OF FOREIGN INSURANCE COMPANIES
1- Representative offices of foreign insurance companies may not start their activities in the State before obtaining a license to this effect from the Authority.
2- The Authority shall issue a Regulation regulating the functions of these offices.
3- Acceptance or rejection of granting a license shall be done by a Board decision to be notified to the concerned party.
CHAPTER 4 - SPECIFIC PROVISIONS APPLICABLE TO INSURANCE COMPANIES PRACTICING INSURANCE OF PERSONS AND CAPITALIZATION OPERATIONS
Companies practicing the two kinds of insurance activities provided for in clause (1) of Article 4 of this Law may not discriminate between one policy and the other of the same kind as concerns insurance rates, dividends distributed to policyholders or other conditions unless such differentiation is the result of a distinction in life expectancy as concerns policies in which the period of life is of relevant. Shall be excepted:
1- Reinsurance policies.
2- Insurance policies in amounts enjoying special discounts as per price schedules notified to the Authority.
3- Policies with special conditions on the life of the members of the same family or on groups of persons tied up with the same profession, work or any other social ties.
The Director General may authorize the Company, upon its request, to issue policies with a reduction on the normal rates should it have justifiable reasons for this.
Companies practicing any of the two kinds of insurance stated in clause (1) of Article 4 of this Law have, through an actuary, to examine the financial situation of this kind of insurance and assess the value of its standing obligations once every three years at least.
This assessment includes all insurance transactions that the Company contracted within the State and abroad, separately, and if these transactions are made through a branch of a foreign company, the assessment shall be restricted to the operations contracted or implemented within the State.
The assessment referred to in article 59 of this Law must be done each time the Company wants to examine its financial situation in order to determine the proportion of profits that should be distributed to shareholders or policyholders, or whenever it desires to publish this financial situation.
The Authority may require this assessment at any time prior to the lapse of three years provided that one year at least has lapsed since the last examination.
The Implementation Regulation to this Law shall specify the data that should be included in the expert report on the result of the examination and assessment referred to in Articles 59 and 60 of this Law.
The Company shall send to the Authority a copy of the expert report on the result of the examination and assessment, referred to in Articles 59 and 60 of this Law, within six months as of the expiry of the period subject of the examination accompanied with:
1- A statement of in force insurance policies concluded with the Company within the State or abroad at the date of effectuating the examination and, if the transactions were made through a branch of a foreign company, the statement shall be restricted to the policies contracted or implemented within the State.
2- An acknowledgment made by those in charge of the administration of the company that all data and information needed to reach a sound report have been made available to the expert.
Subsequent to the lapse of the six months stated in this Article, the Director General may grant an additional period to the Company to submit the report provided that the said period does not exceed three months.
Should the Authority notice that the expert report does not reflect the true financial situation of the Company, it shall order a re-examination, on the Company's expense, by an actuary selected by it for this purpose.
Companies practicing insurance of persons and capitalization insurance may not deduct, directly or indirectly, any part of the funds allocated to meet their obligations originating from the insurance policies in order to distribute it as dividends to the shareholders or policyholders or to pay any amount other than their obligations originating from the insurance policies issued by them. Distribution of dividends shall restrictively be taken from the surplus amount designated by the expert in his report subsequent to the examination referred to in Article 59 of this Law.
In implementing the provisions of this Article, the Company's funds within the State and abroad may be considered one entity, without prejudice to the provisions of Article 34 of this Law.
Companies practicing insurance of persons and capitalization insurance are prohibited to issue savings bonds for a period exceeding thirty years. Should the period of the bond be twenty five years or more, its redemption amount, after the twenty fifth year may not be less than the total amount of the mathematical reserves and the premiums that the holder of these bonds are committed to must be equal in value or progressively diminishing.
The savings bonds must include the cancellation conditions which the Company may oppose to the bond holder due to the delays in paying the premiums.
Cancellation of the contract may, however, occur prior to the expiry of three months from the due date of the premium, but if the bond is registered, the said period shall only start to run as of the date of the notice addressed to the bond holder through registered mail.
These instruments must also provide that the rights thereto shall devolve, upon the death of their holder, to the beneficiaries without imposing additional amounts or new conditions.
A Regulation issued by the Board, upon proposal of the Director General, shall specify the other information that must be included in the savings bonds.
In case of bankruptcy of the Company carrying out insurance of persons and capitalization insurance, or in case of its liquidation, the amount due to every policy holder whose policy has not expired shall be equal to the mathematical reserves of his policy at the date of bankruptcy or liquidation computed on basis of the technical tariff rules of the premiums at the date of conclusion of the policy.
CHAPTER 5 - INSURANCE AND REINSURANCE COMPANIES OPERATING IN THE STATE FREE ZONE
Insurance companies licensed to operate in free zones may not carry out directly any activity outside the zone, reinsurance excepted.
CHAPTER 6 - THE INSURANCE AGENT
1- The provisions governing the Authority of the insurance agent activities and the ensuing responsibilities shall be determined by regulations or instructions to be issued by the Board for this purpose.
2- It is prohibited for any one to perform the activities of an insurance agent before providing the Director General with the agreement between him and the Company accrediting him as an agent. He may not act as an agent for more than one company and he must fulfill the conditions provided for in Article 30 of this Law.
CHAPTER 7 - INSURANCE BROKERS, INSPECTION AND DAMAGE ASSESSMENT EXPERTS INSURANCE COUNSELORS AND ACTUARIES
No person may carry out the activities of an “Insurance Broker”, “Reinsurance Broker”, an “Inspection and Damage Assessment Experts”, “an “Insurance Counsel” or “Actuary” unless he is recorded in the ad hoc register under the conditions specified by the Board through regulations to be issued in this respect provided they include determination of his responsibilities, regulation of his work and the conditions of recording his name in the register. In addition, he has to meet the conditions stated in Article 30 of this Law.
CHAPTER 8 - TRANSFER OF INSURANCE POLICIES AND CESSATION OF ACTIVITIES
The Company may transfer the insurance policies, contracted by it in the State, with all rights and obligations concerning any kind of insurance that it carries out to one or more other companies carrying out the same kind of insurance.
1- An application of the transfer shall be submitted to the Director General to which shall be appended all policies and documents pertaining to the transfer agreement. The Director General shall then direct that an announcement of the transfer be published in the Official Gazette once only, as well as twice in two local widely diffused dailies issued in the Arabic language and a local daily paper issued in the English language, on the transfer applicant expense. The announcement must indicate that the policyholders, the beneficiaries thereof or all interested persons have the right to submit an opposition against this transfer to the Director General within forty five days from the date of the last announcement provided the object of the opposition and the reasons on which it is based are stated therein.
2- In case no opposition is filed by the concerned persons within the period referred to in clause (1) of this Article, the Director General shall issue a decision approving the transfer and this decision shall be published in the Official Gazette within one month from its issuance and shall be opposable to all policyholders, beneficiaries and debtors of the company. The funds of the company shall be transferred to the transferee company with due compliance with the provisions concerning transfer of property and the assignment of funds; provided that the transferred funds shall be exempted from registration and custody fees that are imposed by virtue of the laws on transfer of property and assignment of funds.
However, if an opposition is filed within the specified period provided that no decision shall be taken as concerns the application for transfer until after an agreement is reached between the concerned parties or a final judgment is rendered on the said opposition. The Director General may, however, decide the acceptance of the transfer provided an amount is collected, from the company, equal to its liabilities towards the opposing party including the expenses that are required for preservation of any of the company's assets.
The provisions set forth in Articles 71 and 72 of this Law shall apply if any company is willing to cease its operations in the State concerning the carrying out of one or more kinds of insurance, or to free its funds that must be kept in the State for this kind, or these kinds, of insurance after submitting proof that the company has honoured its obligations as concerns all policies concluded or implemented within the State in respect of the kind or kinds of insurance object of the cessation or that it has transferred these policies to another company in the manner stated in Articles 71 and 72 of this Law.
CHAPTER 9 - MERGER OF COMPANIES, APPROPRIATION, RESTRUCTURING AND LIQUIDATION
1- Merger of insurance companies shall be governed by the provisions applicable to mergers as provided in the Law on Commercial Companies.
2- An insurance company may only merge with another company carrying out the same kind of insurance. Any merger procedures may not commence except after submitting the merger application to the Director General to which shall be attached the reports and the necessary statements and obtain an approval from the Board.
1- The Director General shall form an assessment committee in which membership shall include a representative of each of the companies, their auditors, experts and specialized persons; the Director General shall appoint one of them to preside the committee.
2- The Committee referred to in clause (1) of this Article shall assess all the assets of the companies wanting to merge as well as all their rights and obligations in order to determine the net rights of shareholders at the date fixed for the merger. The Committee shall submit its report, together with the balance-sheet of the company resulting from the merger, to the Director General within a period not exceeding ninety days from the date of referring the matter to it. The Board may, upon recommendation of the Director General, extend this period to a similar one if necessity so requires provided that the companies willing to merge shall bear in equal shares the salaries of the Committee and, in case of disagreement thereon, these salaries shall be determined by a decision of the Director General, which shall be final in this respect.
3- The Director General shall submit the Committee's report, as well as his recommendation in its respect, to the Board. Should the latter approve the Committee's report, the Board shall form an implementing Committee composed of the Chairmen and members of the Board of Directors of the companies wanting to merge and the auditors of these companies to carry out the merger implementation procedures in accordance with the provisions of the Law on Commercial Companies.
1- Companies that are parties to the merger have to allow the insured to take knowledge of the merger agreement in order to verify its clauses and this agreement should be exposed in the principal seat of each of these companies during fifteen days as of the date of publishing the merger decision in the official Gazette.
2- Every interested person is entitled to file an opposition with Board within thirty days from the date of publishing the decision concerning the merger of the companies but the oppose should specifically state the object of his opposition and the reasons on which it is based and the prejudice allegedly sustained because of the merger. In case the Board is unable, for whatever reason, to settle the opposition within thirty days from its reference to it, the oppose is entitled to resort to the competent tribunal. Neither these oppositions nor the court claim shall stay the merger decision unless the tribunal decides otherwise.
3- The Board shall issue the instructions concerning the merger procedures, the settlement of the oppositions filed in its concern and all other related matters.
1- a- For the purposes of restructuring the company in accordance with clause (2/j) of Article 41 of this Law, the Board may, upon the presentation of Director General wind up the Board of Directors of the company and form a neutral committee to restructure the company, from experienced and specialized persons and appoint a president and vice-president to this committee for a period not exceeding one year from the date of issuance of such decision and the company shall bear the remuneration of this committee as fixed by the Board. The committee has to submit a monthly report to the Director General on the progress of the restructuring process or whenever requested to do so.
b- The restructuring, to this end shall comprise the administration of the company and Authority of its unsound financial affairs with all its creditors with a view to determining the indebtedness of the company and the manner of settling it through approving a restructuring scheme.
2- The committee referred to in clause 1/a) of this Article has to publish a one-time announcement in the official Gazette and another, three consecutive working days, in two widely spread local dailies issued in the Arabic language and a daily local paper issued in the English language, on the company's expense, on condition that it includes an invitation to all creditors to submit a statement of the amount of their debt supported by documentary proof, within thirty days as of the date of the last publication of the announcement. Any statement submitted by any creditor after the expiry of this period shall not be accepted.
1- Notwithstanding any mention in the provisions of any other legislation, shall be stayed the implementation of any seizure on the company's funds or assets, whether by way of arrestation or distress, or any act of disposal or any execution on these funds or assets, as of the date of issuance of the restructuring decision up to the realization of any of the following instances:
a- Expiry of the period provided for in clause (1/a) of Article 77 of this Law, in case of approval of the restructuring scheme.
b- Issuance of a Board decision in accordance with the provisions of this Law rejecting the restructuring scheme.
c- Rejection by the creditors of the restructuring scheme according to the provisions of this Law.
d- Issuance of a Board decision to stay the restructuring process in accordance with the provisions of this Law.
2- Stoppage of calculation of the delays concerning the hearing of the case, due to limitation, as concerns the procedures provided for in clause (1) of this Article.
1- The Committee shall prepare its report, concerning the restructuring scheme, within a period not exceeding fifteen days from the date of its confirmation of the debts. The Committee shall invite the creditors to approve the restructuring scheme through the publication of an announcement in two widely spread local dailies issued in the Arabic language and a daily local paper issued in the English language provided it is approved by creditors representing not less than three quarters of the debts that are not privileged or secured by a mortgage.
2- a- In case the creditors approve the restructuring scheme, according to the provisions of clause (1) of this Article, the Committee shall submit this scheme to the Director General who in turn shall submit it to the Board with his recommendations.
b- Should the creditors disapprove the scheme prepared in accordance with the provisions of clause (1) of this Article, the Committee shall submit a report in this respect to the Director General who shall submit it with his recommendations to the Board in order to take the adequate measure according to clause (2) of Article 41 of this Law.
3- The Board may approve or disapprove the submitted scheme, according to clause (1) of this Article. In case of approval, the restructuring process shall start and, in case of disapproval, the Board shall decide to take the adequate measure in accordance with clause (2) of Article 41 of this Law.
4- Subsequent to the completion of the restructuring, a new Board of Directors shall be elected in accordance with the provisions of the Law on Commercial Companies.
1- Should the Board notice the company's stumbling situation despite the application of the restructuring scheme or its uselessness, it may decide to discontinue the restructuring process and take the adequate measure according to clause (2) of Article 41 of this Law.
2- The board may, pursuant to the recommendation of the general director, issue the necessary instructions to reinstate the restructuring and the matters related thereto in accordance to the provisions of this law.
CHAPTER 10 - LIQUIDATION OF THE COMPANY
1- The liquidation of the company is governed by the provisions of this Law and the regulations and decisions issued thereunder. Liquidation shall be carried out by one or more liquidators appointed by the General Meeting by the absolute majority required for the company's resolutions.
Where liquidation takes place by a court judgment, the court shall specify the method of liquidation and shall appoint the liquidator.
The decision appointing the liquidator shall determine as well its remuneration and powers with the obligation to submit a guarantee if necessary.
In case the decision appointing the liquidator didn't determine his remuneration, the latter shall be determined by the competent court.
2- The decision appointing the liquidator shall be recorded in the Commercial Register and shall be published in two widely spread local dailies issued in the Arabic language, and a local daily issued in the English language, within a maximum period of one week as of the date of its recording in the commercial register. This appointment may not be opposed to third parties except from the date of such recording.
3- The Board of Directors' authority shall end when the company enters in the liquidation phase. The cadres of the company shall remain operating during the liquidation period but their powers shall be restricted to the liquidation operations which are not within the powers of the liquidator.
1- Every interested person is entitled to attack the decision of the company's General Meeting, appointing the liquidator, before the competent court within forty days from the date of entry of this decision in the commercial register.
2- The appeal referred to in clause (1) of this Article shall not stay the liquidation proceedings unless the court decides otherwise.
The discharge of the liquidator shall take place in the same manner followed for his appointment. Any decision or judgment ordering the discharge of the liquidator must include the appointment of his replacement and must be publicized through an entry made in the commercial register and through publishing it in two widely spread local dailies issued in the Arabic language and a local daily paper issued in the English language. The discharge may not be opposed to third parties except from the date it is made known to the public.
The liquidation decision shall entail the following:
1- Addition by the liquidator of the expression “Under liquidation” to the Company's name in all its papers and correspondence.
2- Cease giving effect to any delegation of authority or power to sign issued by any authority in the company. The liquidator shall exclusively be authorized to give any delegation or power to sign required by the liquidation process.
3- Interrupt calculating the limitation period barring the hearing of the case concerning any rights or claims due or pending in favor of the company for a period of one year as of the date of issue of the liquidation decision.
4- Stay any judicial action and procedure taken by or against the company for a period of six months unless the court orders to resume it before the expiry of the said period, with due compliance with the provisions of clause 5 of this Article.
5- Stay any procedural or execution proceedings against the company except where they are requested by a mortgagee creditor and related to the mortgaged property, then these proceedings are stayed or not accepted for a period of six months from the date of issuance of the liquidation decision.
The liquidator is entitled to take all the decisions and measures he deems necessary to complete the liquidation procedure including:
1- Managing the work of the company within the limits required by the liquidation procedures.
2- Take stock of all the assets of the Company and its property and such in accord with the Board of Directors which shall commit to submit to the liquidator the assets of the Company and its books and documents.
3- Appoint any experts or persons to assist to complete the liquidation procedures or set up private committees and entrust to them any of the tasks or powers entrusted to him and issue the necessary decisions to complete the liquidation procedures.
4- Engage one or more lawyers to represent the Company under liquidation in any suit or legal proceedings related thereto.
1- Notwithstanding any agreement to the contrary, the liquidator may take all measures he deems necessary to protect the rights of the company, including:
a- Cancel any act or rescind any contract taken or made by the company and recover any amount paid by it during the three months preceding the issuance of the liquidation decision, in case preference is given to a specified person over the creditors of the company. The mentioned period shall be one year if the company has any ownership relation or is tied up with this person. Preferential treatment is considered existing when the act or measure is totally or partially without consideration or when it includes an appraisal of an asset or right below its real value or a property or right below its prevailing price in the market.
b- Cancel any act or rescind any contract taken or made by the company with any person having an ownership relation or is tied up with him, or recover any amount paid by the company to any of them during the three months preceding the issuance of the liquidation decision.
c- Agreement with any of the company's debtors on the mode of payment, or payment by instalments, of any amounts or obligations incumbent on them.
d- Terminate the employment of any one employed by the company with payment of his dues.
e- Anticipatory terminations of any contract made with any person.
2- The liquidator shall take any of the measures referred to in clause (1) of this Article by giving written notice to the concerned person. This process may be challenged before the court of first instance, in whose jurisdiction the principal office of the company is situated, within thirty days as of the date of serving this notice to the said person.
1- Shall be considered void all mortgages and securities incumbent on any of the company's property or rights during the three months preceding the issuance of the liquidation decision. This period shall be one year if these mortgages or securities are in favor of a person having an ownership relation or is tied up with the company.
2- Shall be considered cancelled every seizure of any of the company's property or right prior to the issuance of the liquidation decision unless the said decision is given upon request of a mortgagee creditor and relating to the mortgaged property.
Within the context of articles 86 and 87 of this Law, a person is considered tied up with the company in any of the two following cases:
1- If the person is an officer of the company or maintains a common business interest with an officer therein.
2- If he is the spouse of an officer in the company or a relative to this officer or to his spouse up to the third degree or if he maintains a common business relationship with any of them.
With due compliance to the provisions of the legislations in force in the State, the liquidator has to pay the company's debts and sell its property whether movable or immovable by public auction or by any other means, unless the instrument of appointment provides for a sale through a specific method. The liquidator, however, may not sell the assets of the company in bulk except if authorized by the General Meeting.
1- With due observance of the provisions relating to the insured and beneficiaries of insurance policies, the liquidator, within thirty days from the date of issuance of the liquidation decision, has to publish a notice in a conspicuous place in two wide- spread local dailies issued in the Arabic language and in a daily paper issued in the English language, informing the creditors that they must submit their claims against the company, whether matured or not, within two months, if they reside in the State, or three months if they reside abroad.
2- The said notice shall be published again in the same manner after the lapse of fourteen days from the date of publication of the first notice. The period of limitation of the claims shall start to run as of the date of publication of the first notice.
3- Should the liquidator or the competent court be satisfied that the creditor has a lawful excuse for not submitting his claim within the period fixed in Clause (1) of this Article, the said period shall be extended by a maximum of three additional months.
4- The period running from the date of issuance of the liquidation decision up to the date of publication of the first notice mentioned in item (1) of this article shall not be included in the computation of the period fixed for non acceptance of the claims concerning the creditors' rights or claims towards the company under liquidation.
1- With due observance of the provisions of [clause (2) of this Article, the liquidator shall, within three months from the date of issuance of the liquidation decision, send the notices stated hereunder unless he deems that there are justifying reasons for going beyond this period provided that the total period does not exceed six months:
a- A notice, with acknowledgment of receipt, to each of the insured and the beneficiary under an insurance policy up to the amount of his rights and obligations.
b- A notice, with acknowledgment of receipt, claiming from each debtor the amount of debts and obligations due by him to the company.
2- An opposition may be filed with the liquidator concerning the notice mentioned in clause (1) of this Article, within thirty days as of the date of notification, failing which the insured or the beneficiary or the debtor shall be considered as acknowledging the contents of the notice.
3- The period fixed for admitting the case shall be interrupted by filing the claim submitted in accordance with clause (2) of this Article.
4- Where the notice of claim served by the liquidator to the debtor, in accordance with clause (1/b) of this Article, has become final and decisive, the liquidator may make a settlement with the debtor or execute the notice against him in accordance with the legal provisions in force.
1- a- The liquidator shall decide the claims and oppositions submitted to him in accordance with Articles 91 and 92 of this Law, within a period not exceeding six months from the date of their submission.
b- In case the liquidator does not give his decision within the period fixed in sub-clause (a) above, the claims and oppositions shall be considered legally rejected.
2- Every interested person may challenge, before the court of first instance within whose jurisdiction the principal seat of the company is situated, the liquidator's decision given according to clause (1) of this Article, within thirty days as of the date of his notification of the decision or thirty days from the expiry of the six-month period referred to in clause (1/a) of this Article whichever is shorter.
Notwithstanding any provision to the contrary in any other legislation, the liquidator may submit an application to the competent court of first instance to lay a provisional attachment on any property of the company's debtors or to take any provisional or summary measure against them in accordance with the legal provisions in force, taking into consideration the following:
1- Exempt the liquidator from annexing a surety bond with the application.
2- The liquidator must have issued the claim notice when submitting the said application or is about to issue it within the eight days following the issuance of the decision. The said notice shall stand for the action in substance which must be filed according to the provisions of the Civil Procedures Law.
1- Subsequent to the issue of the liquidation decision, no creditor, debtor, insured or beneficiary may sue the company under liquidation except on the basis and procedures provided for in this Law.
2- Considering the provisions of clause (1) of this Article, any prejudiced person from the acts or procedures taken by the liquidator may challenge it before the court of first instance in whose jurisdiction is located the principal seat of the company, in accordance with the provisions of the laws in force. The court may approve, nullify or amend these acts and procedures.
The provisions of Article 95 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
Notwithstanding the legislations in force in the State, the due debts and obligations of the company under liquidation shall be discharged in the following order:
1- The rights of the employees and workers due for the last four months.
2- The remuneration of the liquidator, the expenses and costs incurred by him and the loans obtained by him.
3- The rights of the policyholders and beneficiaries under the insurance policies. The liquidator is bound to allocate the assets of the company representing the technical reserves to be retained according to the provisions of this Law to reimburse these obligations and every amount obtained by the company from reinsurance shall be part of these technical reserves.
4- The rights of the other debtors according to their order of privilege according to the provisions of the laws in force.
5- The rights of shareholders.
1- The liquidator has to submit to the General Meeting, every six months, a provisional account of the liquidation process and give all information and statements required by the shareholders on the status of the liquidation. He has to terminate his assignment within the period fixed in the deed of his appointment. In case there is no mention about this period, each partner may apply to the competent court for fixing the liquidation period.
2- The period of liquidation may not be extended except by a resolution of the General meeting after perusing a report from the liquidator on the reasons that prevented the completion of liquidation in time. Should the liquidation period be fixed by the court, it may not be extended except after securing its authorization.
1- Upon termination of the liquidation, the liquidator shall present to the General Meeting a closing account of the liquidation process which shall terminate after ratification of the closing account.
2- The liquidator has to publicize the end of liquidation in the commercial register and publish it in two wide- spread local dailies issued in the Arabic language and a daily paper issued in the English language. The liquidation shall not be opposable to third parties except from the date of such publicity. After termination of the liquidation, the liquidator shall submit an application to strike off the company from the commercial register.
1- a- Any notice or decision issued by the liquidator shall be notified, in accordance with the provisions of this Law, to the concerned person by delivering it to him in person or to his legal representative or by dispatching it by registered mail with acknowledgment of receipt to his last address as conserved with the company under liquidation.
b- Each notice sent according to this article shall be considered as duly delivered to the addressee should this latter refuse to receive it.
2- In case notification according to the provisions of clause (1) of this Article becomes impossible, the liquidator shall publish it, twice at least, in two wide spread local dailies issued in the Arabic language and a daily paper issued in the English language. Publication expenses shall be borne by this concerned person and such publishing shall be considered legal in all respects.
CHAPTER 11 - THE EMIRATES INSURANCE ASSOCIATION
The provisions of Article 99 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
1- Insurance and Reinsurance companies and insurance-related professionals subject to the provisions of this Law have to form among each other a professional Union called “The Emirates Insurance Association” having juristic personality and they shall be all members in this Association. The Association shall also form separate committees concerned with the different insurance activities carried out by the members.
2- Subsequent to the approval of the Authority, the Association shall prepare a statute issued by the Chairman and determining its functions, responsibilities, relationship with the Authority, the formation of its committees concerned with the different insurance activities, the rules and procedures of its General Meeting, the formation of its Board of Directors, the meetings of each of them, the affiliation fees, the yearly subscription fees, rules of practicing the profession and the disciplinary measures against its members and other matters within its competence.
TITLE 4 - SANCTIONS
The provisions of Articles 100 through 108 were abrogated by virtue of Article 4 of Federal Law No. 3/2018 dated 25/04/2018.
The Minister of Justice, in agreement with the Minister, shall issue a Regulation specifying the Authority's employees who have the capacity of judicial bailiff in the implementation of the provisions of this Law.
TITLE 5 - GENERAL PROVISIONS
The provisions of Article 110 were replaced by virtue of Article 1 of Federal Law No. 3/2018 dated 25/04/2018 and became as follows:
1- The insurance company shall process the insurance claims according to the legislations in force and the provisions of the insurance policies based on the following procedures:
a- A decision shall be issued concerning any insurance claim according to instructions of the profession rules and ethics.
b- In the event the claim is fully or partially rejected, the Company shall explain the reasons for its decision in writing.
c- Should a dispute arise concerning any claim, the concerned party shall have the right to submit a written complaint to the Authority which shall also have the right to ask the Company to provide clarifications.
d- The complainant, in case of objection to the clarifications provided by the Company, may request that the dispute be referred to the Committee formed by virtue of Article (110) BIS3.
2- One or more committees shall be formed in the Authority to be in charge of settling the disputes arising from the insurance policies, activities and services. This committee shall have the power to request any instruments or documents, have recourse to experts, hear witnesses or adopt any other alternatives to settle the disputes brought before it.
3- Claims related to the disputes arising from the insurance policies, activities and services may be only accepted after bringing these disputes before the committees formed according to the provisions of Clause 2 hereof.
4- The concerned parties shall have the right to challenge the decisions of the committees before the competent court of first instance within thirty days as of the date of their notification of said decision; otherwise, the decision shall be deemed final and enforceable.
5- The Board shall issue the necessary decisions concerning the formation of the committees according to the provisions of Clause 2 hereof, their competencies, powers, work system, remuneration of their members, experts to which these committees shall have recourse, insurance types and branches concerning which insurance disputes and all other related matters may be resolved before these committees.
Existing companies, at the time this Law comes into effect, have to regularise their status to comply with its provisions, as well as the bye-laws and instructions issued thereunder, within the period fixed by the Board provided it does not exceed two years as of the effective date of this Law.
Should the Company refrain from regularising its status in accordance with the provisions of Article 111 of this Law, its registration shall be stricken off by decision of the Board.
All physical persons practicing the activities of insurance agents, brokers, Inspection and Damage Assessment Experts, Insurance Counselors or Actuaries are bound, on the effective date of this law, to redress their situation according to the provisions of this Law, the bye-laws and instructions issued thereunder, within the period fixed by the Board provided it does not exceed one year from the effective date of this Law, otherwise their registration or license, as the case may be, shall be automatically cancelled and they shall be prohibited from resuming their insurance activities, exposing themselves to legal liability.
1- Notwithstanding anything stated in any other legislation, electronic data, data retrieved from computers, or communications by, telex, fax and electronic mail shall be valid as evidence should they abide by their respective legislative criteria.
2- Companies shall conserve for the period fixed by law, mini pictures on microfilms or other modern technical support, instead of the original sized books, registers, statements, documents, correspondence, telegrams, notices and other papers related to their financial business. These mini pictures shall have the same weight of evidence as the originals, in accordance with the legislative criteria issued by regulation.
3- Companies, using in the Authority of their financial operations the computer or modern technical devices, shall be exempted from keeping commercial books provided for in the Law on Commercial Transactions. The information obtained from these computers, or other modern devices shall be considered as obtained from commercial books provided that the insurance companies abide by the legislative criteria decided in this respect.
All ministries, governmental departments, public institutions and companies in which the Government participates - and which benefit from the insurance business - shall have to submit any statements and information, concerning the insurance transactions concluded by them, that are required by the Director General within the period he fixes for this purpose.
The Agent, broker, reinsurance broker, actuary, the Inspection and Damage Assessment Experts and the insurance counsellors governed by the provisions of this Law are bound to submit any data or information required by the Director General within the period fixed by him.
1- The Director General must inform the concerned body or the competent authorities, as the case may be, of all regulations concerning them and issued by the Board or by him personally.
2- The Director General shall publish, on the Company's expense, all regulations concerning the suspension, cancellation or reinstatement of registration or those concerning merger, appropriation, restructuring, liquidation or termination of companies, in the Official Gazette and in two wide-spread local dailies issued in the Arabic language and in a daily paper issued in the English language.
The provisions of the Commercial Companies Law shall not apply on insurance business except to the extent where it does not contradict the provisions of this Law, and the bye-laws, instructions and regulations issued thereunder.
The text of Article 119 was amended by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020, then abrogated by virtue of Paragraph 1 of Article 5 of Federal Decree-Law No. 25/2020 dated 27/09/2020.
The text of Article 120 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The text of Article 121 was abrogated by virtue of Paragraph 2 of Article 3 of Federal Decree-Law No. 24/2020 dated 27/09/2020.
The Federal Law No. 9/1984 on Insurance Companies and Agents referred to shall be abrogated. The Implementation Regulation and all regulations issued thereunder shall remain in force, to the extent they are not in contradiction with the provisions of this Law, until the issuance of the Implementation Regulation to this Law.
All provisions in violation of or in contradiction with, the provisions of this Law are hereby abrogated.
The present Law shall be published in the Official Gazette and shall come into force six months after its publication date.
Promulgated by Us at the
On 21 Muharram 1428 H
Corresponding to 05 February 2007
Khalifa Bin Zayed Al Nahyan
President of the United Arab Emirates State
This Federal Law has been published in the Official Gazette, issue no. 462, p. 15.
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