Cap. 403 Art. 2Interpretation and scope.

(1) In this Act, unless the context otherwise requires -

"advertisement", in relation to the business of insurance, means any form or medium of marketing activity or communication disseminated to the public by means of all types of media, other than a prospectus, which promotes the purchase or procurement of a service or product and which is addressed by an authorised insurance undertaking to a client or potential client;

"approved actuary" and "actuary" have the meaning assigned to them by article 22(5); "approved auditor" and "auditor" have the meaning assigned to them by article 21(10); "authorisation", in relation to business of insurance, or to a matter connected therewith or ancillary thereto, means an authorisation or a deemed authorisation under this Act, and "authorised" shall be construed accordingly; "authorised insurance undertaking" means an undertaking, which has received authorisation pursuant to article 7 to carry on direct general business and, or long term business, and includes an undertaking authorised to carry on direct and reinsurance business;

"authorised reinsurance undertaking" means an undertaking which has received authorisation pursuant to article 7 to carry on business restricted to reinsurance; "body corporate" means any entity having a legal personality distinct from that of its members and also includes a foreign corporation; "branch" means premises of an authorised insurance and reinsurance undertaking, other than its head office, from which the business of insurance is carried on;

"business of insurance" means the effecting and carrying out of contracts of insurance of such class or classes of long term business or class or classes or part classes of general business as respectively specified in the Second Schedule and Part I of the Third Schedule, and, without prejudice to anything contained in any other law, includes -

(a) the effecting and carrying out, by a person not carrying on business of banking, of -

(i) contracts for fidelity bonds, performance bonds, administration bonds, bail bonds or customs bonds or similar contracts of guarantee, being contracts effected by way of business (and not merely incidentally to some other business carried on by the person effecting them) in return for the payment of one or more premiums;

(ii) capital redemption contracts based on actuarial calculation whereby, in return for single or periodic payments agreed in advance, commitments of specified duration and amount are undertaken;

(iii) contracts to manage the investments of pension funds, and, in relation to contracts to manage the investments of pension funds, the expression "a person not carrying on business of banking" includes "a person not carrying on investment services";

(b) any business carried on in connection with or ancillary to business of insurance;

(c) unless otherwise specified, business of reinsurance; "captive insurance undertaking" means an authorised insurance undertaking, owned either by a financial undertaking, other than an insurance or reinsurance undertaking or a group of insurance or reinsurance undertakings within the meaning of article 2, or by a non-financial undertaking, the purpose of which is to provide insurance cover exclusively for the risks of the undertaking or undertakings to which it belongs or of an undertaking or undertakings of the group of which it is a member; "captive reinsurance undertaking" means an authorised reinsurance undertaking, owned either by a financial undertaking, other than an insurance or reinsurance undertaking or a group of insurance or reinsurance undertakings within the meaning of article 2, or by a non-financial undertaking, the purpose of which is to provide reinsurance cover exclusively for the risks of the undertaking or undertakings to which it belongs or of an undertaking or undertakings of the group of which it is a member; "cell" has the same meaning as is assigned to it by the Companies Act; "cell company" has the same meaning as is assigned to it by the Companies Act; "close links" means a situation in which two or more natural or legal persons are linked by control or participation, or a situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship;

"commitment" means a commitment represented by any one or more of the kinds of classes of long term business contained in the Second Schedule; "competent authority" means the Malta Financial Services Authority established by the Malta Financial Services Authority Act; "conditions" includes obligations and restrictions; "Conduct of Business Rules" means Rules relating to conduct of business issued by the competent authority under various articles of this Act and under any regulations made thereunder; "contract of insurance" and "contract", in relation to business of insurance, mean an agreement in which an insurer agrees, for a consideration, to pay to or for the account of the insured a sum of money or other consideration, whether by way of indemnity against loss, damage or liability or otherwise, on the happening of a specified event with respect to which there is an element of uncertainty as to when or whether it will take place; "control" means the relationship between a parent undertaking and a subsidiary undertaking, as set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/ 660/EEC and 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking; "controller", in relation to a body corporate, is a person who, alone or together with others, exercises the power to determine the financial and operating policies of the body corporate;

"country of the commitment" means any country where the policyholder has his habitual residence or, if the policyholder is a legal person, the country where the latter’s establishment, to which the contract relates, is situated; "country outside Malta" means and includes any country, territory or place outside Malta; "director", in relation to an undertaking, includes an individual occupying the position of a director of the undertaking, by whatever name he may be called, empowered to carry out substantially the same functions in relation to the direction of the undertaking as those carried out by a director and, in respect of a third country insurance undertaking or a third country reinsurance undertaking, includes a member of a local board, and the person designated as the representative of that undertaking for the purpose of article 11(1)(b)(i);

"document" or "documentation" includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form; "EEA State" means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2 May, 1992 as amended by the Protocol signed at Brussels on the 17th March, 1993 and as amended from time to time; "EIOPA" means the European Insurance and Occupational Pensions Authority established in terms of article 1 of Regulation

(EU) No 1094/2010; "establishment" means the head office, or any branches of an authorised insurance undertaking or an authorised reinsurance undertaking;

"European insurance undertaking" means an undertaking having its head office in a Member State or an EEA State, other than Malta, pursuing the activity of direct insurance within the meaning of Article 2 of the Solvency II Directive, which has received authorisation in accordance with Article 14 of the Solvency II Directive; "European regulatory authority" means the supervisory authority or supervisory authorities as defined in Article 13 of the Solvency II Directive, designated by a Member State or EEA State, other than Malta, empowered by law or regulation to supervise insurance or reinsurance undertakings; "European reinsurance undertaking" means an undertaking having its head office in a Member State or an EEA State, other than Malta, pursuing business restricted to reinsurance within the meaning of Article 2 of the Solvency II Directive which has received authorisation in accordance with Article 14 of the Solvency II Directive; "European right" means the entitle-ment of an authorised insurance undertaking, authorised reinsurance undertaking, European insurance undertaking or a European reinsurance undertaking to establish a branch, or provide services, in a Member State or an EEA State, other than that in which it has its head office -

(a) in accordance with the Treaty of Rome as applied in a Member State or an EEA State;

(b) subject to the requirements of the Solvency II Directive and subject to any regulations made under this Act, or Insurance Rules issued by the competent authority pursuant to this Act, implementing such requirements; "European Systemic Risk Board" means the European Systemic Risk Board established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board; "financial undertaking" means any of the following entities:

(a) a credit institution, a financial institution or an ancillary banking services undertaking within the meaning of sub-paragraphs (1), (17) and (22) of paragraph (1) of Article 3 of Directive 2013/36/EU respectively;

(b) an insurance undertaking, or a reinsurance undertaking or an insurance holding company within the meaning of Article 212(1)(f) of the Solvency II Directive;

(c) an investment firm or a financial institution within the meaning of point 1 of Article 4(1) of Directive 2014/65/ EU; or

(d) a mixed financial holding company within the meaning of Article 2(15) of Directive 2002/87/EC; "financial year" shall be construed in accordance with article 19(4);

"functions" includes responsibilities, powers and duties; "general business" has the meaning assigned to it by article 5(1);

"group" means a group of undertakings that:

(a) consists of a participating undertaking, its subsidiaries and the entities in which the participating undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a relationship as set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/ EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/ EEC; or

(b) is based on the establishment, contractually or otherwise, of strong and sustainable financial relationships among those undertakings, and that may include mutual or mutual-type associations, provided that:

(i) one of those undertakings effectively exercises, through centralised coordination, a dominant influence over the decisions, including financial decisions, of the other undertakings that are part of the group; and

(ii) the establishment and dissolution of such relationships for the purposes of Title III of the Solvency II Directive are subject to prior approval by the group supervisor, where the undertaking exercising the centralised coordination shall be considered as the parent undertaking, and the other undertakings shall be considered as subsidiaries; "guarantee fund" means the body referred to in Article 10(1) of Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability; "holding company" has the same meaning as is assigned to the term "parent company" in the Companies Act; "inspector" means a person appointed as such by the competent authority under article 30(1); "insurance agent" means a person enrolled as such under the Insurance Distribution Act; "Insurance Distribution Directive" means Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (recast), as amended from time to time, and includes any delegated acts and any technical standards that have been or may be issued thereunder; "insurance manager" means a person enrolled as such under the Insurance Distribution Act;

"Insurance Rules" means rules in respect of the business of insurance issued by the competent authority under various articles of this Act and under any regulations made thereunder; "insured" means the party to whom, or on whose account, or to whose beneficiaries, a sum of money or other consideration is payable under a contract of insurance on the happening of a specified event; "insurer" means the party to a contract of insurance who agrees to pay a sum of money or other consideration on the happening of a specified event; "Lloyd’s" means the society and corporation incorporated by Lloyd’s Act, 1871, of the United Kingdom; "long term business" has the meaning assigned to it by article 5(1); "Malta’s international commitments" means Malta’s commitments, responsibilities and obligations arising out of membership of the European Union and membership of, or affiliation to, or relationship with, any international, global or regional organisations or grouping of countries or out of any treaty, convention or other international agreement, however called, whether bilateral or multilateral, including Memoranda of Understanding, to which Malta is a party; "Member State" means a Member State of the European Communities; "Minister" means theMinister responsible for the regulation of Financial Services; "money laundering" has the same meaning as is assigned to it by the Prevention of Money Laundering Act; "motor vehicle" has the same meaning as assigned to it by article 2 of the Motor Vehicle Insurance (Third Party Risks) Ordinance; "motor vehicle liability insurance business" means the business of insurance in class 10 as specified in Part I of the Third Schedule; "officer", in relation to an undertaking, includes a director, manager or company secretary or any person effectively acting in such capacity whether formally appointed or not; "outsourcing" means an arrangement of any form between an authorised insurance or reinsurance undertaking and a service provider, whether a supervised entity or not, by which that service provider performs a process, a service or an activity, whether directly or by sub-outsourcing, which would otherwise be performed by the authorised insurance or reinsurance undertaking itself, and "outsource" shall be construed accordingly; "overseas regulatory authority" means an authority in a country or territory outside Malta, that is not a Member State or EEA State, which exercises any regulatory or supervisory function in relation to financial services corresponding to a function of the competent authority as defined in the Malta Financial Services Authority Act;

"own funds" shall be construed in accordance with Insurance Rules made by the competent authority for the purposes of this Act;

"participation" means the ownership, direct or by way of control, of 20% or more of the voting rights or capital of an undertaking;

"participating undertaking" means an undertaking which is either a parent undertaking or other undertaking which holds a participation, or an undertaking linked with another undertaking by a relationship as set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC; "policy", in relation to business of insurance, means and includes a policy or a similar document, by whatever name it may be called, evidencing a contract of insurance; "policyholder" means the person who for the time being is the legal holder of the policy for securing the contract with the insurer; "premium" means the consideration paid or payable by an insured under a contract of insurance; "prescribed" means prescribed by regulations made under this Act; "qualifying shareholding" means a direct or indirect holding in an undertaking which represents ten per centum or more of the share capital or of the voting rights, taking into account the voting rights as set out in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, and amending Directive 2001/34/EC, as well as the conditions regarding aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the undertaking in which that holding subsists, and "qualifying shareholder" shall be construed accordingly: Provided that, in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which investment firms or credit institutions may hold as a result of providing the underwriting of financial instruments and, or placing of financial instruments on a firm commitment basis in terms of point (6) of Section A of Annex 1 to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/ 61/EU (recast), provided that those rights are, on the one hand, not exercised or otherwise used to intervene in the management of the issuer and, on the other, disposed of within one year of acquisition; "reconstruction" has the same meaning as in the Companies Act; "regulated market" means either of the following:

(a) in the case of a market situated in Malta, a market authorised in terms of the Financial Markets Act;

(b) in the case of a market situated in a Member State or an EEA State, other than Malta, a regulated market as defined in point (21) of Article 4(1) of Directive 2014/65/ EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/ EU (recast), as amended from time to time; or

(c) in the case of a market situated in a non-Member State or non-EEA State, a financial market which fulfils the following conditions:

(i) it is recognised by the competent authority and fulfils requirements comparable to those laid down Directive 2014/65/EU; and

(ii) the financial instruments dealt in on that market are of a quality comparable to that of the instruments dealt in on the regulated market or markets in Malta; "Regulation (EU) No 1094/2010" refers to Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC;

"reinsurance" means one of the following:

(a) the activity consisting in accepting risks ceded by an insurance undertaking or third-country insurance undertaking, or by another reinsurance undertaking or third-country reinsurance undertaking; or

(b) the provision of cover by a reinsurance undertaking to an institution that falls within the scope of Directive

(EU) 2016/2341 of the European Parliament and of the Council; "risk situated in Malta" means and includes -

(a) in the case where the insurance relates either to buildings or to buildings and their contents, in so far as the contents are covered by the same insurance policy, any risk related to property situated in Malta;

(b) in the case where the insurance relates to vehicles of any type, any risk related to any vehicles registered in Malta: Provided that, where a motor vehicle is dispatched from a Member State or an EEA State into Malta, the risk is deemed to be situated in Malta, immediately upon acceptance of delivery by the purchaser for a period of thirty days, even though the vehicle has not been formally registered in Malta;

(c) in the case where the insurance relates to travel or holiday risks, whatever the class concerned, any risk related to travel or holiday if the policy covering the risk is of a duration of four months or less and the policy is taken out in Malta;

(d) in the case where the insurance relates to any risk of any kind, other than a risk specified in the foregoing paragraph (a), (b) or (c), any risk of any such kind if the policyholder has his habitual residence in Malta or, where the policyholder is a legal person if the establishment, to which the contract relates, is situated in Malta: Provided that, for the purposes of this paragraph, Malta shall include an exclusive economic zone area and environment protection area as defined in the Exclusive Economic Zone Act; "risk situated outside Malta" means a risk which is not a risk situated in Malta; "subsidiary" has the same meaning as is assigned to the term "subsidiary undertaking" by the Companies Act; "Solvency II Directive" means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (recast), as amended from time to time, and includes any delegated acts and any technical standards that have been or may be issued thereunder;

"technical provisions" shall be construed in accordance with article 18E;

"third country insurance undertaking" means an undertaking, other than a European insurance undertaking, which would require authorisation as an authorised insurance undertaking pursuant to article 7 as if its head office were situated in Malta; "third country reinsurance undertaking" means an undertaking, other than a European reinsurance undertaking, which would require authorisation as an authorised reinsurance undertaking in accordance with article 7 as if its head office were situated in Malta; "undertaking" refers to an undertaking whose head office is in Malta or in a country outside Malta; "undertaking whose head office is in Malta" means a limited liability company formed and registered in Malta in accordance with the Companies Act;

"working days" shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act.

(2) The objective of this Act is, in part, to transpose and implement the provisions of:

(a) the Solvency II Directive;

(b) the Omnibus II Directive: Directive 2014/51/EU of the European Parliament and of the Council of 16 April 2014 amending Directives 2003/71/EC and 2009/138/ EC and Regulations (EC) No 1060/2009, (EU) No 1094/2010 and (EU) No 1095/2010 in respect of the powers of the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority);

(c) Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009, relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability, as amended from time to time; and

(d) any other European Union Directives and Regulations that may be issued and amended from time to time relating to the regulation of and the prudential requirements applicable to insurance and reinsurance undertakings, and consequently this Act and any regulations and Insurance Rules issued thereunder shall be interpreted and applied accordingly.

(3) In this Act and in any regulations made thereunder, if there is any conflict between the English and the Maltese texts, the English text shall prevail.