Cap. 487 Art. 2Interpretation and scope.

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

"advertisement", in relation to insurance distribution activities, 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 a person registered or enrolled under this Act, carrying out insurance distribution activities, to a client or potential client; "Agents List" means the list of persons acting as insurance agents established and maintained under article 9; "Agents Register" means the insurance agents register established and maintained under article 7; "ancillary insurance intermediaries activities", in relation to a person registered and enrolled as an ancillary insurance intermediary, means the insurance distribution activities listed in paragraph (5) of the Third Column of the Schedule; "Ancillary Insurance Intermediaries Company Register" in relation to an authorised undertaking and an enrolled insurance broker means the Ancillary Insurance Intermediaries Company Register established and maintained by an authorised undertaking or an enrolled insurance broker under article 43B(1); "Ancillary Insurance Intermediaries List" means the list of ancillary insurance intermediaries established and maintained under article 43D(1); "ancillary insurance intermediary" means any natural or legal person, other than a credit institution or an investment firm, as defined by points (1) and (2) of Article 4(1) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012, carrying out the insurance distribution activities listed in paragraph (5) of the Third Column of the Schedule; "approved auditor" and "auditor" have the meaning assigned to them by article 28(10); "authorised insurance undertaking" has the same meaning as is assigned to it by article 2(1) of the Insurance Business Act; "authorised reinsurance undertaking" has the same meaning as is assigned to it by article 2(1) of the Insurance Business Act;

"authorised undertaking" means an authorised insurance undertaking or an authorised reinsurance undertaking which has received authorisation pursuant to article 7 of the Insurance

Business Act or any person deemed authorised under the said Act, to carry on business of insurance and includes a company enrolled under this Act to act as an insurance agent of the undertaking, as "binding authority agreement" means an agreement between a member of Lloyd’s or a person acting on its behalf and a coverholder under which the coverholder may, in accordance with the terms thereof, accept risks or commitments on behalf of that member of Lloyd’s;

"body corporate" means an entity having a legal personality distinct from that of its members and also includes a foreign corporation; "branch" means premises of the company, other than its head office, from which insurance distribution activities or reinsurance distribution activities are carried out; "Brokers List" means the list of persons carrying on business as insurance brokers established and maintained under article 9; "Brokers Register" means the insurance brokers register established and maintained under article 7; "business of insurance" has the same meaning as is assigned to it by article 2(1) of the Insurance Business Act; "business of insurance broking", in relation to a registered insurance broker or an enrolled insurance broker, means the activities listed in paragraph (1) of the Third Column of the Schedule; "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; "certificate of enrolment" -

(a) in relation to a person acting as an insurance agent, means a certificate issued by the competent authority under article 14 to the person evidencing enrolment of that person in the Agents List; and

(b) in relation to a person acting as an insurance manager, means a certificate issued by the competent authority under article 14 of this Act to the person evidencing enrolment of that person in the Managers List;

(c) in relation to a person carrying on business as insurance broker, means a certificate issued by the competent authority under article 14 to the person evidencing enrolment of that person in the Brokers List;

(d) in relation to a person registered as a tied insurance intermediary in the Tied Insurance Intermediaries Company Register of any authorised undertaking, means a certificate issued by the competent authority under article 37 to the authorised undertaking enrolling that person evidencing enrolment of that person in the Tied enrolled insurance broker, means a certificate issued by the competent authority under article 43E to the authorised undertaking or the insurance broker enrolling that person evidencing enrolment of that person in the Ancillary Insurance Intermediaries List; "certificate of registration" -

(a) in relation to an individual registered as an insurance agent, means a certificate issued by the competent authority under article 14 of this Act to that individual evidencing registration of that individual in the Agents Register;

(b) in relation to an individual registered as an insurance manager, means a certificate issued by the competent authority under article 14 to that individual evidencing registration of that individual in the Managers Register; and

(c) in relation to an individual registered as an insurance broker, means a certificate issued by the competent authority under article 14 to that individual evidencing registration of that individual in the Brokers Register; "class" -

(a) in relation to long term business, means any of the classes specified in the Second Schedule to the Insurance Business Act; and

(b) in relation to general business, means any of the classes specified in Part I of the Third Schedule to the Insurance Business 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" and "country of the commitment" have the same meanings as are assigned to them by article 2(1) of the Insurance

Business Act; "company" includes a local company and a foreign company; "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" have the same meanings as are assigned to them by article 2(1) of the Insurance Business

Act; 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;

"coverholder" means a person authorised under a binding authority agreement to accept or to issue documents related to contracts of insurance evidencing the acceptance of risks or commitments on behalf of a member of Lloyd’s granting such authority pursuant to such agreement;

"director", in relation to a company, includes an individual occupying the position of a director of the company, by whatever name he may be called, empowered to carry out substantially the same functions in relation to the direction of the company as those carried out by a director and, in respect of a foreign company, includes a member of a local board, an agent and the person designated as the representative of that company for the purpose of article 12(1)(b)(ii);

"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;

"enrolled" -

(a) in relation to a person acting as an insurance agent, means enrolled in the Agents List under article 13;

(b) in relation to a person acting as an insurance manager, means enrolled in the Managers List under article 13;

(c) in relation to a person carrying on business as insurance broker, means enrolled in the Brokers List under article 13;

(d) in relation to a person registered as a tied insurance intermediary, means enrolled in the Tied Insurance Intermediaries List under article 37; and

(e) in relation to a person registered as an ancillary insurance intermediary, means enrolled in the Ancillary Insurance Intermediaries List under article 43E, and, in each case, "enrolment" shall be construed accordingly; "European insurance undertaking" means an undertaking having Directive; "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; "financial year" shall be construed in accordance with article 27(4); "foreign company" means a company or a partnership en commandite or similar or equivalent body corporate, the capital of which is divided into shares, registered, incorporated or constituted outside Malta under the laws of any country provided that such company or partnership en commandite has complied with the provisions of any law which may from time to time be in force in Malta relating thereto; Provided that, unless otherwise specified, the term "foreign company" shall not include a European insurance intermediary registered under article 3 of the Insurance Distribution Directive; "functions" includes responsibilities, powers and duties; "group" and "group of classes", in relation to general business, means any group of classes or part classes specified in Part II of the Third Schedule to the Insurance Business Act; "insurance agent" means a person carrying out activities listed in paragraph (2) of the Third Column of the Schedule; and in relation to Lloyd’s, means a person enrolled as such under article 13 appointed by or on behalf of a member of Lloyd’s to be its coverholder in Malta in respect of business of insurance with authority to enter into contracts of insurance on behalf of that member under the terms of a binding authority agreement;

"insurance-based investment product" means an insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations, and does not include:

(a) insurance products falling within the classes of general business specified in Part I of the Third Schedule to the Insurance Business Act;

(b) insurance contracts falling within the classes of long-term business specified in the Second Schedule to the Insurance Business Act, where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or disability;

(c) pension products which are recognised as having the primary purpose of providing the investor with an income on retirement, and which entitle the investor to certain benefits; for occupational retirement provision, as amended from time to time, or of the Solvency II Directive;

(e) individual pension products for which a financial contribution from the employer is required by law and where the employer or the employee has no choice as to the pension product or provider; "insurance broker" means a person carrying on business of insurance broking; "insurance distribution activities" means the activities of advising on, proposing, or carrying out other work preparatory to the conclusion of contracts of insurance, of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim, including the provision of information concerning one or more contracts of insurance in accordance with criteria selected by the clients, through a website or other media and the compilation of an insurance product ranking list, including price and product comparison, or a discount on the price of a contract of insurance, when the client is able to directly or indirectly conclude a contract of insurance using a website or other media, and includes the activities listed in paragraphs (1) to (5) of the Third Column of the Schedule, the distribution activities carried out by an authorised insurance undertaking and any other activities as may be prescribed;

"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 Distribution Rules" means rules in respect of insurance distribution activities and reinsurance distribution activities, issued by the competent authority under various articles of this Act and under any regulations issued thereunder; "insurance intermediary" means any natural or legal person, other than an authorised insurance undertaking or an authorised reinsurance undertaking or their employees, and other than an ancillary insurance intermediary, who, for remuneration, takes up or pursues insurance distribution activities; "insurance manager" means a person carrying out activities listed in paragraph (3) of the Third Column of the Schedule; "insurer" has the same meaning as assigned to it by article 2(1) of the Insurance Business Act; "local company" means a limited liability company formed and registered under the Companies Act and includes, subject to sub-article (2), a partnership en commandite, the capital of which is divided into shares, formed and registered under the said Act; "Managers Register" means the insurance managers register established and maintained under article 7;

"Member State" means a Member State of the European Communities;

"Minister" means the Minister 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; "officer", in relation to a company, includes a director, partner, manager or company secretary or any person effectively acting in such capacity whether formally appointed or not; "own funds" shall be construed in accordance with Insurance Distribution Rules made for the purpose of this Act to determine the amounts and components which make up the enrolled person’s own funds; "participation" means the ownership, direct or by way of control, of 20% or more of the voting rights or capital of an undertaking; "prescribed" means prescribed by regulations under this Act;

"qualifying shareholding" means a direct or indirect holding in a company which represents ten per centum or more of the share capital issued by such company or of the voting rights attaching to such share capital or which makes it possible to exercise a significant influence over the management of the company, and "qualifying shareholder" shall be construed accordingly; "registered" -

(a) in relation to a person registered as an insurance agent under article 13, means registered in the Agents Register;

(b) in relation to a person registered as an insurance manager under article 13, means registered in the Managers Register;

(c) in relation to a person registered as an insurance broker under article 13, means registered in the Brokers Register;

(d) in relation to a person registered as a tied insurance intermediary under article 37, means registered in the Tied Insurance Intermediaries Company Register of any one or more authorised undertakings; and

(e) in relation to a person registered as an ancillary insurance intermediary under article 43E, means registered in the Ancillary Insurance Intermediaries Company Register of any one or more authorised undertakings or one enrolled insurance broker,

(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 in 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 distribution activities" means the activities of advising on, proposing, or carrying out other work preparatory to the conclusion of contracts of reinsurance, of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim, including the activities carried out by an authorised reinsurance undertaking without the intervention of a reinsurance intermediary, the activities listed in paragraphs (1) to (3) of the Third Column of the Schedule, and any other activities as may be prescribed; "reinsurance intermediary" means any natural or legal person, other than an authorised reinsurance undertaking or its employees, who, for remuneration takes up or pursues reinsurance distribution activities; "remuneration" means any commission, fee, charge or other payment, including an economic benefit of any kind or any other financial or non-financial advantage or incentive offered or given in respect of insurance distribution activities;"; and "representative" shall be construed in accordance with article 12 of the Insurance Business Act; "risk situated in Malta" has the same meaning as is assigned to it by article 2(1) of the Insurance Business Act;

"Schedule" means the Schedule to this Act; and includes any delegated acts and any technical standards that have been or may be issued thereunder; "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 of the Insurance Business Act, 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 of the Insurance Business Act, as if its head office were situated in Malta; "tied insurance intermediaries activities", in relation to a person registered and enrolled as a tied insurance intermediary, means the insurance distribution activities listed in paragraph (4) of the Third Column of the Schedule, including any person who carries on such activities in addition to his main activity; "Tied Insurance Intermediaries Company Register" in relation to an authorised undertaking means the Tied Insurance Intermediaries Company Register established and maintained by an authorised undertaking under article 34(1); "Tied Insurance Intermediaries List" means the list of tied insurance intermediaries established and maintained under article 36(1); "tied insurance intermediary" means a person carrying on tied insurance intermediaries activities; "Tribunal" means the Financial Services Tribunal referred to in article 21 of the Malta Financial Services Authority Act.

(2) The objective of this Act is, in part, to transpose and implement the provisions of the Insurance Distribution Directive and any other European Union Directives and Regulations that may be issued and amended from time to time relating to insurance distribution activities and reinsurance distribution activities, and consequently this Act and any regulations, Insurance Distribution Rules and Conduct of Business Rules issued thereunder, shall be interpreted and applied accordingly.

(3) The provisions of this Act shall apply to a partnership en commandite or to a similar or equivalent body corporate subject to such modifications as the competent authority may, from time to time, make in any provision thereof, which modifications shall not materially detract from the main object of the provisions so modified.

(4) 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.

provisions of this Act.

(2) The Minister may, after consultation with the competent authority, make regulations as may be required for carrying into effect any of the provisions of this Act and without prejudice to the generality of the foregoing, the Minister may, by such regulations, in particular, make provisions in respect of any one or more of the following matters:

(a) the implementation of the Insurance Distribution Directive;

(b) the transposition of any requirement or provision as may arise under a Directive, Regulation or Decision of the European Union or any other similar measure relevant for the purposes of this Act. Any such regulations made under this paragraph and strictly related to transposition as aforesaid, may provide that in so far as any of the provisions of the regulations are inconsistent with the provisions of this Act or of any other law, the provisions of the regulations shall prevail, and the provisions of this Act or of any other law shall, to the extent of the inconsistency, not apply;

(c) the amendment or revocation of the Schedule;

(d) the payment by any person, body or cell created by a cell company, as the case may be, of any fees, duties and such other charges payable to the competent authority in respect of any matter provided for, by or under the Act, or any regulations made under this article;

(e) the registration or enrolment of persons, other than persons registered or enrolled by virtue of this Act, carrying out insurance distribution activities or reinsurance distribution activities or providing services ancillary to business of insurance as may be prescribed;

(f) any matter relating to or connected with any provision contained in the Schedule;

(g) any matter that may or is to be prescribed under any provision of this Act;

(h) the administrative measures and administrative penalties in respect of infringements as may be prescribed, which may be imposed and recovered by the competent authority without recourse to a court hearing, and such administrative penalties shall be due to the competent authority as a civil debt;

(i) the penalties or other punishments to which persons contravening or failing to comply with any provision of any regulation made under this Act shall become not exceeding two hundred and thirty euro (€230) for each day during which the offence continues;

(j) any matter incidental to or connected with any of the above;

(k) any matter relating to the establishment, co-ordination, amalgamation and otherwise of compensation schemes.

(2A) The regulations made under paragraph (h) of sub-article (2) may impose:

(a) administrative penalties which may not be greater than a financial penalty of one hundred and fifty thousand euro (€150,000) for each infringement or failure to comply, as the case may be, and, where such infringement or failure to comply continues, a further penalty not exceeding one hundred and sixteen euro (€116) for each day during which the infringement or failure to comply continues;and

(b) administrative penalties and fines higher than one hundred and fifty thousand euro (€150,000), where deemed necessary or appropriate, for any contravention of or failure of compliance with the Insurance Distribution Directive or any EU Regulation issued thereunder, or with any regulations, Insurance Distribution Rules or Conduct of Business Rules issued under this Act to transpose or to give effect to such Directive or Regulation.

(3) The Minister may, after consulting the competent authority, make regulations exempting any person from all or any of the provisions of this Act or any regulations made thereunder, subject to such conditions or requirements including the requirement of other forms of registration or enrolment and notification procedures as may be prescribed.

(4) The Minister may also by regulations under this article, after consultation with the competent authority, extend and make applicable any of the provisions of this Act to any other insurance or reinsurance distribution activity as may be prescribed which in his opinion ought, in the public interest, to be regulated by such provisions.

(5) Regulations made under this article may make such exemptions, conditions or modifications as may be specified therein in respect of different cases, circumstances or purposes and may give the competent authority such power of adaptation of the regulations as may be specified therein.

(6) In the event of a doubt as to whether an activity constitutes the carrying out of insurance distribution activities or reinsurance distribution activities, or whether such insurance distribution activities article shall be subject to any obligations or restrictions arising from Malta’s international commitments.

(8) Regulations made under this Act and any amendment or revocation of such regulations, may be published in the English language only.