Chapter 4

Requirements made under the Membership Byelaw

Admission to membership – Part A of the Membership Byelaw
Categories of membership – paragraph 2 of the Membership Byelaw
1.

Within the category of non-underwriting membership, there shall be a class ofmembers called non-underwriting working members.

2.

The criteria for eligibility to be a non-underwriting working member are that the nonunderwriting working member –(a)that the individual is not an underwriting member; and
(i)
(ii)

that the individual occupies himself principally with the conduct ofbusiness at Lloyd’s by a Lloyd’s broker or an underwriting agent; orthat the individual has gone into retirement but immediately before hisretirement occupied himself principally with the conduct of business at
Lloyd’s by a Lloyd’s broker or an underwriting agent;(b)that the individual was nominated (in accordance with such procedures as the
Secretary to the Council may from time to time prescribe) to be a nonunderwriting working member for a period of one year by the chairman or
chief executive officer of a Lloyd’s broker or an underwriting agent on behalfof that firm as one of the firm’s annual allocation of non-underwriting
working members;(c)in the case of an individual nominated under paragraphs 2(a)(i) and (b) above
on behalf of an underwriting agent, at the time of that nomination theindividual was –
(i)
(ii)
(iii)
(iv)

(v)
(d)

the chairman of that underwriting agent;in the case of a managing agent, an active underwriter of a syndicate
managed by that managing agent;
an executive director of that underwriting agent;a person who works for that underwriting agent provided that theindividual had worked for an underwriting agent or Lloyd’s broker fora period or periods in aggregate of at least 5 years prior to his
nomination; oran executive director of a parent company of the underwriting agent’s

in the case of an individual nominated under paragraphs 2(a)(i) and (b) above
on behalf of a Lloyd’s broker, at the time of that nomination the individual
was –
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(i)
(ii)
(iii)

(iv)

the chairman of that Lloyd’s broker;
an executive director (or equivalent within a limited liability
partnership) of the Lloyd’s broker;
a person who works for that Lloyd’s broker provided that theindividual had worked for an underwriting agent or Lloyd’s broker fora period or periods in aggregate of at least 5 years prior to his
nomination; oran executive director (or equivalent within a limited liability
partnership) of a parent company of the Lloyd’s broker

For the purposes of the criteria set out above –(a)“parent company” shall have the meaning given at section 1162 of Companies
Act 2006 or its equivalent in the context of a Limited Liability Partnership;(b)

an individual shall remain eligible to be registered as a non-underwriting
working member for the period in respect of which he was nominatednotwithstanding that following nomination he left the position in respect ofwhich he was nominated;(c)an individual shall cease to be eligible to be a non-underwriting working
member at the end of the period for which he was nominated unless he isvalidly re-nominated; and(d)a firm’s annual allocation of non-underwriting working members shall becalculated as follows –(i)each Lloyd’s broker shall be entitled to nominate 1 individual eligible
for nomination under paragraphs 2(a)(i) and (d) above plus 1 additionalsuch individual for each £200,000,000 (or part thereof) of calendar
year premium placed at Lloyd’s through its settlement number in theyear prior to nomination plus 1 individual eligible for nomination
under paragraph 2(a)(ii) above;(ii)

subject to (iv) below each managing agent shall be entitled tonominate a minimum of 3 individuals eligible for nomination underparagraphs 2(a)(i) and (c) above plus 1 additional such individual foreach £50,000,000 (or part thereof) of aggregate syndicate capacity
under its management in the year of nomination plus 1 individual
eligible for nomination under paragraph 2(a)(ii) above;(iii)

each members’ agent shall be entitled to nominate a minimum of 3
individuals eligible for nomination under paragraphs 2(a)(i) and (c)above plus 1 additional such individual for each £50,000,000 (or part
thereof) of the aggregate of members’ syndicate premium limits foreach member for which they act in the year of nomination plus 1
individual eligible for nomination under paragraph 2(a)(ii) above;(iv)

each managing agent that solely manages run-off syndicates shall be2

entitled to nominate a minimum of 3 individuals eligible fornomination under paragraphs 2(a)(i) and (c) above plus 1 additionalsuch individual for each £50,000,000 (or part thereof) of aggregate
syndicate capacity under its management in the year prior tonomination plus 1 individual eligible for nomination under paragraph2(a)(ii) above.
(e)a firm’s annual allocation of non-underwriting working members shall becalculated as at the allocation record date determined by the Secretary to theCouncil.

Criteria for deciding whether a candidate is suitable to be admitted to the membership of theSociety – paragraph 11 of the Membership Byelaw
3.

In deciding whether a candidate which is a body corporate is suitable to be
admitted as a member the Council shall have regard to the following criteria and allother relevant matters –
a.
b.
c.
d.
e.
f.
g.
h.
i.

4.

the competence, reputation, character and suitability of each of the directors of
the body corporate;
the collective suitability of the board of directors of the body corporate and ofeach of its committees;
the competence, reputation, character and suitability of the officers and staff ofthe body corporate;
the competence, reputation, financial standing, character and suitability of any
controller of the body corporate;
the competence, reputation, financial standing, character and suitability of any
connected company of the body corporate;
the competence, reputation, character and suitability of any director of or
partner in any controller of the body corporate;
the competence, reputation, character and suitability of any director of orcontroller of a connected company of the body corporate;
the adequacy of the capital of the body corporate; andthe location of the accounting and other records of the body corporate.

In deciding whether a candidate which is a Scottish limited partnership is suitable tobe admitted as a member the Council shall have regard to the following criteria and allother relevant matters –a.

the competence, reputation, character and suitability of each of the directors of
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b.
c.
d.
e.

f.

g.
h.

i.
j.

any general partner;
the collective suitability of the board of directors of the general partner andeach of its committees;
the competence, reputation, character and suitability of the officers and staff of
the Scottish limited partnership;
the competence, reputation, financial standing, character and suitability of any
controller of the Scottish limited partnership or any general partner;
the competence, reputation and financial standing, character and suitability of
any connected company of the Scottish limited partnership or any generalpartner;the competence, reputation, character and suitability of any director of or
partner in any controller of the Scottish limited partnership or any generalpartner;the competence, reputation, character and suitability of any managementcompany;
the competence, reputation, character and suitability of any director of orcontroller of a connected company of the Scottish limited partnership or thegeneral partner;
the adequacy of the capital of the Scottish limited partnership and any generalpartner; andthe location of the accounting and other records of the Scottish limited
partnership and any general partner.

Conditions and Requirements for admission of corporate candidates to membership of theSociety – paragraphs 6 and 7 of the Membership Byelaw
5.

The requirements prescribed under paragraphs 6 and 7 of the Membership Byelaw for
the purpose of admission of candidates which are body corporates to membership of
the Society are the Membership and Underwriting Requirements (corporate members)
as set out in Market Bulletin Y2086 (Membership and Underwriting Requirements)
issued on 5 July 1999.

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Funds at Lloyd’s – Part B of the Membership Byelaw
Conditions and requirements for the provision of Funds at Lloyd’s – paragraph 16 of theMembership Byelaw
6.

The requirements prescribed under paragraph 16 of the Membership Byelaw inrespect of funds at Lloyd’s are set out in Market Bulletin Y3612 (Membership andUnderwriting Conditions and Requirements (Funds at Lloyd's)) issued on 8 August
2005.

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Notification of and consent to changes – Part D of the Membership Byelaw
Consent to changes – paragraph 27 of the Membership Byelaw
7.

No member shall knowingly permit any of the following events to occur without theprior written consent of the Council –
(a)

(b)
(c)
(d)
(e)

the acquisition of any interest in securities of another corporate member, acontroller of a corporate member, Lloyd’s broker or underwriting agent
provided that a member may acquire an interest in securities of anothercorporate member where the acquisition is the consequence of accepting an
invitation to participate in a surrender arrangement or share swap arrangement
which complies with the requirements made under paragraph (5)(1) of theConversion and Related Arrangements Byelaw (No. 22 of 1996) for the time
being in force
a change in the controller of the member;the appointment of a director of the member;a merger between the corporate member and another body corporate;
the appointment of a corporate member as a director of another corporate
member.

Notification of changes - paragraph 29 of the Membership Byelaw
8.

A member shall without delay notify the Council in writing if any of the following
events occur –(a)in the case of an individual member –
(i)
(ii)

(b)

a change of his address;a decision to change his nationality;

in the case of a corporate member –
(iii)
(iv)
(v)
(vi)

a director ceases to be a director;
it becomes aware that a person has ceased or is proposing to cease to
be a controller of that member;the appointment of an auditor;
the auditor of the corporate member vacates office, in which case thecorporate member shall also provide a copy of any notice given or6representations or statements made by the auditor (under theCompanies Act 1985 or otherwise) on or in connection with the auditor
vacating office;(vii) a decision to change the date to which the accounts of the corporate
member are prepared;(viii) any change to the corporate member’s memorandum and articles ofassociation;(ix)
any reduction in the corporate member’s issued share capital;(x)
a decision to appoint an agent, or terminate the appointment of anagent appointed by the member, for service of notices under paragraph
13 of these requirements;(c)in the case of any members –(xi)

a material change in the information provided to the Council inconnection with any application by that member for membership or inconnection with a review under paragraph 35 of the Membership
Byelaw of that member and not required to be disclosed under any
other provision of this paragraph;(xii) an insolvency event;(xiii) the member or director of the member or any controller or director ofor partner in any controller of the member or, in relation to a Scottish
limited partnership, a general partner, director of a general partner ora controller of a general partner or a management company being
convicted of a reportable criminal offence by a court in the United
Kingdom or elsewhere, in which case the member shall also provide
full details of the offence and any sentence that was imposed.

7Corporate Members: Accounting, Audit and
Declarations of Compliance – Part E of the Membership Byelaw

Audit – paragraph 31 of the Membership Byelaw
9.

A person shall be eligible to act as auditor for a corporate member if –
(a)

(b)

(c)

in the case of a corporate member to which Part VII of the Companies Act
1985 applies, he has been appointed as the auditor of that corporate member inaccordance with the provisions of the Companies Act 1985;
in the case of a corporate member which is incorporated in any member stateof the European Community other than the United Kingdom, he is qualified toact as an auditor of a company for the purposes of the legislation of thatmember state which implements the Eighth Council Directive (84/253/EEC);
in any other case, the Council has given its prior written consent.

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Dispute resolution – Part I of the Membership Byelaw

Dispute resolution – paragraph 51 of the Membership Byelaw
10.

The following arrangements and procedures are designed to resolve disputes between
a syndicate (through the managing agent which manages that syndicate) and theCouncil in the event that, as part of the calculation of the syndicate members’ capitalrequirements, the Council decides to substitute a higher number for the syndicate ICA
submitted by the managing agent.
1.

“Minded to” decision

1.1

Before such a decision (a “relevant decision”) is taken on behalf of theCouncil the decision taker will, unless he considers the circumstances make itinappropriate or impractical to do so –
(a)
(b)
(c)

inform the managing agent that the decision taker is minded to decide
the matter in that way;provide the managing agent with the decision taker’s reasons for
deciding the matter in that way; andallow the managing agent 5 working days to make representations to
the decision taker prior to the relevant decision being taken.

2.

Provision of reasons for the decision

2.1

When a relevant decision has been taken the decision taker will, unless heconsiders the circumstances make it inappropriate or impractical to do so,
provide the managing agent with his reasons for deciding the matter in that
way.

3.

Request to review a relevant decision

Step 1 – submitting a request for the decision to be reviewed
3.1

Where the managing agent reasonably and objectively considers the relevant
decision to be unreasonable it may request that the decision is reviewed (a“request”).

3.2

A request shall be made in writing within 5 working days of the receipt of therelevant decision. The request shall include an explanation as to why the
managing agent considers that the relevant decision is unreasonable. The
9request shall be made on behalf of the board of directors of the managing
agent and shall be signed by a director of the managing agent. The request
shall be submitted to the decision taker.
Step 2 – review of the decision by the original decision taker
3.3

Following receipt of the request, the decision taker shall review the request
and may, where he considers appropriate, amend, modify or withdraw therelevant decision.

Step 3 – Review of the decision by the Chief Financial Officer
3.4

Where the decision taker does not propose to amend, modify or withdraw therelevant decision he shall refer the request to the Chief Financial Officer (the“Director”). The request shall be reviewed by the Director and where the
Director considers appropriate, the relevant decision may be amended,
modified or withdrawn.

Step 4 – Review of the decision by the Market Supervision and Review Committee
3.5

If, following the review of the request by the Director, the managing agent
still reasonably and objectively considers the decision to be unreasonable, themanaging agent may within 5 working days apply to the Market Supervision
and Review Committee (“MSARC”) to review the request. The application
shall be made on behalf of the board of directors and shall be signed by two
directors of the managing agent. The application shall be submitted to theSecretary to the Council.

3.6

MSARC may give such directions as it considers appropriate for thedetermination of the request. MSARC shall review the request and may,where it considers appropriate, direct that the relevant decision isredetermined by the decision taker and may give the decision taker any
directions it considers appropriate in respect of that redetermination, or in
exceptional circumstances, MSARC may amend, modify or withdraw therelevant decision.

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Miscellaneous and Transitional Provisions – Part J of the Membership Byelaw

Service of notices on members – Paragraph 53 of the Membership Byelaw
11.

All notices and other communications by the Society which require to be served on or
given to an individual member of the Society shall for all purposes be deemed to beeffectively served on such member if sent through the post to or left at the address of
his members’ agent. If an individual member does not at any time have a member’s
agent, such notices and communications shall be deemed to be effectively served on
the member if given to him personally or sent to him by post at the latest
correspondence address of the member shown in the records of the Society.

12.

Where an individual member is deceased or bankrupt, all notices and othercommunications shall be deemed to have been effectively served on his personal
representatives or trustee in bankruptcy if sent through the post to the address
supplied to the Society by such personal representatives or trustee in bankruptcy or(until such address has been supplied) if sent through the post to the latest
correspondence address of the individual member shown in the records of the Society.

13.

Each corporate member which is incorporated in a jurisdiction outside the United
Kingdom shall at all times maintain an agent for service of process in England whichshall be any member’s agent appointed by the corporate member or such other personwith a place of business in the United Kingdom as the corporate member may haveappointed for the purpose of this paragraph and whose name and address has been
notified to the Society.

14.

All notices and communications by the Society to be sent to or served on a corporate
member shall be deemed to have been effectively served on the corporate member –
(a)
(b)

15.

if it has a member’s agent, if it is sent through the post to or left at the addressof its members’ agent;
if it has no members’ agent, in the case of a corporate member incorporated in
the United Kingdom, if sent through the post to or left at the registered officefor the time being and in the case of a corporate member incorporated outside
the United Kingdom, if sent through the post to or left at the address of theagent appointed under paragraph 13.

Any notices or other communications which are –(a)sent to a member or its agent by post shall be deemed to have been effectively
served by properly addressing, prepaying and posting such proceedings, notice
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(b)

(c)

or communication and shall be deemed to have been received 72 hours fromthe time of posting;left at the address if the members’ agent or left for collection by the members’
agent at the address of the Society in accordance with arrangements madebetween the agent and the Society shall have been deemed to have been
received on the date so left;
left at the address of an agent appointed under paragraph 13 or at theregistered office of the corporate member shall be deemed to have been
received on the date so left.

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