COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC89) 394 final SYN-80 
Brussels, 12 September 1989 
Amended Proposal for a 
COUNCIL DIRECTIVE 
on the coordination of laws, regulations and administrative provisions 
relating to the compulsory winding up of direct insurance undertakings 
(presented by the Commission pursuant to paragraph 3 of Article 149 
of the EEC Treaty) 
A (V^/ 
EXPLANATORY MEMQRANEPM 
1. On 23 January 1987 the Commission presented to the Council a proposal 
for a Directive on the coordination of laws, regulations and 
administrative provisions relating to the compulsory winding up of 
direct insurance undertakings.1 That Directive, referred to in the 
White Paper as a measure necessary for the completion of the internal 
roarket, aims to supplement the Council's First Directives on direct 
non-life insurance2 and direct life assurance respectively.3 
It lays down rules and procedures governing the œmpulsory winding up 
of direct insurance undertakings, which, safeguard the rights of 
policyholders and the insured so as to prevent discrimination on the 
grounds of nationality, and consequently facilitate the creation of an 
internal market in insurance. 
2. The Economic and Social Committee delivered its opinion on 23 September 
1987.4 The European Parliament has completed its first reading, 
delivering its opinion on 14 March 1989 on the basis of the report 
prepared by its Legal Affairs Committee.5 Acting on the basis of the 
third paragraph of Article 149 of the Treaty, and taking account of the 
two opinions, the Commission hereby presents an amended version of its 
proposal for a Directive. 
3. All the amendments recommended by Parliament have been incorporated, in 
spirit if not to the letter. Some of the observations formulated by the 
Economie and Social Committee have been taken into account. Moreover, a 
number of additional amendments, intended to improve and clarify the 
scope of certain provisions, are proposed. 
1 O0M(86) 768 final/2, OJ No C 71, 19.3.1987. 
2 First Council Directive 73/239/EBC of 24 July 1973 on the coordination 
of laws, regulations and administrative provisions relating to the 
taking-up and pursuit of the business of direct insurance other than 
life assurance; OJ No L 228, 16.8.1973, p. 3. 
3 First Council Directive 79/267/EBC of 5 March 1979 on the coordination 
of laws, regulations and administrative provisions relating to the 
taking-up and pursuit of the business of direct life assurance; 
OJ NO L 63, 13.3.1979, p. 1. 
4 OT No C 319, 30.11.1987, p. 10. 
5 PE 124.469/fin. - Rapporteur P. PRICE. 
- 2 -
4. The amendments made to the first recital and to Article 1(1) make clear 
what Community provisions are in force and take account of the progress 
made in creating the internal market by adding a reference to the 
Second Council Directive 88/357/EEC on the freedom to provide services 
in the field of direct non-life insurance,6 adopted on 22 June 1986, 
which also amends the First Non-Life Coordination Directive. 
5. As regards normal compulsory winding up (NCW), Article 5(2) has been 
amended on the lines proposed by the Economic and Social Committee, in 
order to make more clear the purpose of this provision and thereby to 
avoid any difficulties of interpretation. 
6. Article 4(1) has also been amended in accordance with Parliament's 
opinion with the aim of increasing the extent to which the winding-up 
procedure is publicized and, consequently, of strengthening the 
protection of insurance creditors. Indeed, it would seem that 
publication of the withdrawal of authorization and of the measures 
taken under the procedure solely in the Official Journal of the 
European Communities is not enough to guarantee appropriate notice to 
insurance creditors, who do not always have easy access to the Official 
Journal. 
7. The new paragraph 1 added to Article 6 lays down that where the 
competent authorities of the country in which the insurer has its head, 
office decide to deprive the bodies of that undertaking which are 
responsible for carrying out the winding up and for appointing an 
administrator of their powers, as provided for by Article 5(2), they 
must state the grounds for such a decision. This is because it 
introduces a major modification to the ordinary NCW procedure, which 
results from an abnormal situation liable to place the very aim of NCVT 
at risk. It therefore appears desirable that the undertaking and, where 
appropriate, the courts witk which any appeal against a decision is 
lodged pursuant to Article 6(2) of the amended proposal should receive 
an accurate and clear Indication of the reasons behind that decision. 
6 Second Council Directive of 22 June 1988 on the coordination of laws, 
regulations and administrative provisions relating to direct insurance 
other than life assurance and laying down provisions to facilitate the 
effective exercise of freedom to provide services and amending 
Directive 73/239/EBC; OJ No L 172. 4.7.1988, p. 1. 
- 3 
8. Article 8(1) incorporates the amendment proposed by Parliament. Its aim 
is to enhance the universality of the effects of the winding-up 
procedure. The proposed wording requires the Member States to take 
whatever steps are necessary to ensure that the winding-up procedure is 
completed as quickly as possible in the interests of all concerned, in 
particular of insurance creditors (policyholders, insured persons, 
victims). 
9. As regards Title III of the proposal for a Directive, which governs 
special compulsory winding up (SCW), Article 10(2) has been amended in 
accordance with Parliament's opinion in the same way as Article 8(1). 
The aim is the same, i.e. to enhance the universal effects of any SCW 
ordered and carried out in the Member State in which the insolvent 
insurance undertaking has its head office. 
10. The new paragraph 2 of Article 11 is intended to lay down the necessary 
conditions governing publication of the essential documents relating to 
the special compulsory winding up of an insurance undertaking. This 
requirement, which is inspired by that laid down for normal compulsory 
winding up (Article 5(1)), is justified by considerations concerning 
the protection of the creditors of the insurance undertaking and the 
proper implementation of the procedure, particularly where an 
undertaking is wound up because of insolvency. 
Finally, the amendment to Article 13(1) brings this proposal for a 
Directive into line with the new provisions relating to the transfer of 
portfolios laid down by the Second Directive 88/357/EBC on the 
provisions of non-life insurance services. 
In introducing these amendments to the proposal for a Directive, the 
Commission has met Pari lament's wishes in full and has largely met 
those of the Economie and Social Committee. As for the observations 
made concerning application of the proposal to Iioyd's, the Commission 
considers that the scope of this proposal for a Directive must be the 
same as that of the two First Directives, which do extend to Lloyd's. 
As for the observations concerning the possibility of using 
computerized systems for keeping the register referred to in Article 2, 
the text initially proposed by the Commission is sufficiently flexible 
to allow for that possibility without its being specif loan y mentioned. 
The same applies to the comment made on the role to be played by the 
supervisory authorities of Member States in which branches of an 
insurance undertaking undergoing special compulsory winding up are 
established (Article 12). 
Amended Proposal for a 
COUNCIL DIRECTIVE 
on the coordination of laws, regulations and administrative provisions 
relating to the compulsory winding up of direct Insurance undertakings 
Initial proposal Amended proposal 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the 
European Economic Community, 
and in particular Articles 57(2) and 66 
thereof, 
Having regard to the proposal from the 
Commission, 
Having regard to the opinion of the European 
Parliament, 
having regard to the opinion of the Economic 
and Social Committee, 
Whereas coordination of the conditions 
governing the taking up and pursuit of the 
business of direct insurance has been largely 
implemented, as regard insurance other than 
life asssurance, by the First Council Direc­
tive 73/239/EEC of 24 July 1973 on the 
coordination of laws, regulations and 
administrative provisions relating to the 
taking-up and pursuit of the business (1of 
direct insurance other than life assurance / 
and, as regards life assurance, by the First 
Council Directive 79/267/EEC of 5 March 1979 
on the coordination of laws, regulations and 
administrative provisions relating to the 
taking-up and pursuit of the business of 
direct life assurance ; Having regard to the Treat/ 
estahl i shlng the European Economic 
Community, and in particular Articles 
57(2) and 66 thereof, 
Having regard to the proposal from the 
Commission, 
In cooperation with the European 
Parliament, 
Having regard to the opinion of the 
Economic and Social Committee 
Whereas coordination of the conditions 
governing the taking-up and pursuit of 
the business of direct insurance has 
been largely implemented, as regards 
insurance other than life assurance, 
by the First Council Directive 
73/239/EBC of 24 July 1973 on the 
coordination of laws, regulations and 
administrative provisions relating to 
the taking-up and pursuit of the 
business of direct insurance other 
than life assurance,1 ^ 2 pvqt. 
amfsnflflfl by Directive 88/gg7/EBg_, and 
as regards life assurance,, by the First 
Council Directive 79/267/EEC of 5 March 197 
on the coordination of laws, regulations 
and administrative provisions relating to 
the taking-up and pursuit of the business 
of direct life assurance ; 
1 OJ L 228, 16.8.1973, p. Ï 
2 OJ L 63, 13.3.1979, p. 1 1 OJ No L 228, 16.8.1973. p. 3. 
2 OJ No L 172, 4.7.1988, p. 1. 
3 OJ No L 63. 13.3.1979, p. 1. 
- 2 -
Whereas those Directives do not harmonize the 
rules on the* role of the supervisory 
authorities or those governing the treatment 
of insurance contracts in the event of the 
winding up of the undertaking or the distri­
bution of the assets representing technical 
reserves in that eventuality; 
Whereas, however, it is in the interests not 
only of creditors, in particular insurance 
creditors, but also of the supervisory 
authorities, that common solutions be found to 
the problems raised; 
Whereas harmonized provisions should therefore 
be adopted in so far as is necessary to take 
account of the specific features of insurance 
undertakings; whereas, for the rest, 
compulsory winding up remains subject to the 
law of the Member State in which the head 
office is situated; 
Whereas it is not advisable to extend the 
scope of this Directive to insurance 
undertakings that are not subject to the First 
Coordination Directives; 
Whereas direct insurance undertakings, by 
reason of their activities, are required to 
establish reserves in order to meet their 
future liabilities; whereas the existence of 
assets representing such reserves, as required 
by the First Coordination Directives and 
verified by the supervisory authorities, is an 
evident safeguard of the rights of insurance 
creditors; 
Whereas the keeping of registers of such 
assets at the head office and in each 
Community agency or branch in respect of all 
the life and non-life direct insurance and 
reinsurance business managed by such head 
office, agency or branch on the basis both of 
establishment and the provision of services 
makes it possible to identify such 
assets, to verify that they are sufficient, to 
monitor compliance with any measures 
prohibiting the free disposal of assets and to 
create, in the event of special compulsory 
winding up, a separate single life and/or 
non-life asset fund reserved as a matter of 
priority for insurance creditors whose claims 
relate to the direct life and/or non-life 
insurance or reinsurance business, as 
appropriate, managed by the head office, 
agency or branch concerned; Unchanged 
Whereas it is necessary to distinguish Unchanged 
between cases in which an undertaking is in a 
situation of proven or probable insolvency 
(special compulsory winding up) and those in 
which compulsory winding up proceedings are 
initiated because the undertaking, for any 
other reason, is no longer authorized in 
accordance with the First Directives (normal 
compulsory winding up); whereas in the latter 
case, by its very nature, the question of the 
distribution of assets does not arise and only 
rules on jurisdiction or the effects of such 
winding up on insurance contracts are 
necessary; 
Whereas it is essential that the supervisory 
authorities be closely associated with the 
implementation and supervision of the special 
compulsory winding up procedure, even where 
the opening of the procedure and the 
appointment of the liquidator fall within the 
jurisdicton of a court; 
Whereas special compulsory winding up must not 
have the effect of depriving life or non-life 
policyholders of cover immediately and 
unilaterally; whereas however it is necessary 
to guarantee that winding up operations are 
not unduly prolonged to the detriment of the 
general body of creditors; whereas provision 
must be made for possible transfers of 
portfolios in this connection; whereas partial 
transfers may be authorized under certain 
conditions; 
Whereas the value of indemnity insurance 
claims or claims resulting fro<n reinsurance 
acceptances may not be known either because 
the loss has not yet been determined or 
because losses have been incurred but have 
not yet been reported; whereas to prevent such 
a situation from impeding the progress and 
completion of a special compulsory winding up 
within a reasonable period, the supervisory 
authorities should be allowed discretion to 
authorize the lodging of a sum , set aside to 
satisfy such claims, with a trustee 
responsible for satisfying the said claims, 
under their supervision and within a 
- 4 -
prescribed period; whereas the lodging with a 
trustee of reserves in respect of losses which Unchanged 
have been incurred but have not yet been 
reported should be possible under the normal 
compulsory winding up procedure also; 
Whereas claims, other than insurance,claims, 
arising after the opening of the winding up 
represent a special category that must be 
satisfied prior to any distribution; whereas, 
on social grounds, claims in respect of wages 
and salaries, in so far as they cannot be 
satisifed from the funds resulting from the 
assets not entered in the register, should be 
accorded an entitlement to the separate funds 
that takes precedence over claims in respect 
of portions of premiums: 
Whereas the agencies and branches in the 
Community of undertakings whose head offices 
are situated outside the Community are subject 
to the First Coordination Directives; whereas 
their overall solvency is subject to 
verification only in certain conditions laid 
down in the First Coordination Directives; 
whereas in these circumstances it is advisable 
to intensify cooperation between the 
supervisory authorities concerned when 
reorganization measures are taken before 
ordering the opening of a special compulsory 
winding up, which takes effect throughout the 
Community; whereas, on the other hand, the 
normal compulsory winding up of an agency or 
branch in the Community of such an undertaking 
need not entail the normal compulsory winding 
up of the other Community agencies or branches 
of that undertaking; 
HAS ADOPTED THIS DIRECTIVE : 
- 5 -
TITLE I 
SEVERAL PFOVIS-tQK? 
Article t 
1. This Directive shall apply to insurance 
undertakings which come within the scope 
of the First Council Directive 73/239/EEC, 
hereinafter referred to as the First 
Non-life Coordination Directive, or the 
First Council Directive 79/267/EEC, 
hereinafter referred to as the First Life 
Coordination Directive. 
2. Non-Life business (direct insurance or 
reinsurance) means transactions included 
within the classes listed in Annex A to 
the First Non-Life Coordination Directive, 
and the corresponding reinsurance transac­
tions. 
Life business (direct assurance or 
reinsurance) means assurance transactions 
included within the classes listed in the 
Annex to the First Life Coordination 
Directive and the corresponding 
reinsurance transactions. 
Article 2 
1. Every undertaking shall, in each Member 
State in which it has its head office or 
an agency or branch, keep registers of the 
assets representing, in accordance with 
national rules, the technical reserves 
corresponding to the direct insurance 
transactions and reinsurance acceptances 
managed by such head office, agency or 
branch, irrespective of the country in 
which the policyholder is normally 
resident or in which the risk is situated. 1. This Directive shall apply to 
insurance undertakings which come 
within the scope of Directive 
73/239/EBC, hereinafter referred to 
as the First Non-Life Coordination 
Directive, as amended by the Second 
Council Dilutive 88/557/^^ 
hereinafter referred to aq thp 
Second Nr.p-T.if*> Directive or 
Directive 79/267/EEC, hereinafter 
referred to as the First Life 
Coordination Directive. 
2. unchanged 
Unchanged 
Unchanged 
2. Where an undertaking transacts both 
non-life business (direct insurance or 
reinsurance) and life business (direct 
assurance or reinsurance), it shall keep 
separate registers in respect of each type 
of business at the head office, agency or 
branch at which both types of business are 
transacted. Unchanged 
- 6 -
The total value of the assets entered, 
valued in accordance with national rules, 
shall at all times be not less that the 
value of the technical reserves. The 
latter shall be calculated without 
deduction of amounts reinsured, but the 
assets entered shall include claims 
against reinsurers where the Member State 
concerned allows technical reserves to be 
covered by such claims. Unchanged 
Where an asset entered in the register is Unchanged 
subject to a charge in favour of a 
creditor or another person, so that part 
of the value of the asset is not available 
for the purpose of covering commitments, 
that fact shall be recorded in the 
register and the amount not available 
shall not be included in the total value 
referred to in paragraph 3. 
Where an asset entered in the register is Unchanged 
realized or where it becomes subject to a 
charge as provided for in paragraph 4, the 
undertaking shall, where necessary in 
order to remain in compliance with the 
provisions of paragraph 3, make good the 
resulting reduction of the total value of 
assets entered by entering new assets in 
the register. 
Article 3 
The registers shall be documents internal 
to the undertaking, subject to supervision 
by the supervisory authorities of the 
Member States in which the undertaking has 
its head office or an agency or branch. 
Where the supervisory authority restricts 
or prohibits the free disposal of assets 
pursuant to Articles 29, 22 or 27 of the 
First Non-Life Coordination Directive or 
Articles 24, 26 or 31 of the First Life 
Coordination Directive, this decision may 
be invoked as against third parties. The 
authority shall at the same time require 
the lodging of the non-life or life 
register, as appropriate, of the head 
office, agency or branch concerned. Unchanged 
Unchanged 
- 7 -
3. Where?, pursuant to the preceding paragraph 
a register is lodged with the supervisory 
authority of the Member State in which the 
head office is situated or of the Member 
State responsible for verifying overall 
solvency within the meaning of Article 26 
of the First Non-Life Coordination 
Directive or Article 30 of the First Life 
Coordination Directive, the registers kept 
in the Member States in which the 
undertaking has an establishment shall 
likewise be lodged with the appropriate 
authorities of those States. Unchanged 
During such time as the register is 
lodged, any modification shall be 
conditional on the consent of the 
supervisory authorities and shall be 
entered in the register on their 
responsibility. 
Where the prohibition on the free disposal 
of assets is lifted, the register shall be 
returned to the undertaking. 
Article * unchanged 
1. Where the authorization provided for in 
Articles 6(2)(a) and 23 of the First Unchanged 
Non-Life Coordination Directive and in 
Articles 6(2)(a) and 27 of the First Life 
Coordination Directive is withdrawn or 
where the conditions for withdrawal of 
authorization are fulfilled, the insurance 
undertaking shall be automatically wound 
up. Such compulsory winding up shall take 
one of the following two forms: 
(a) normal compulsory winding up as long 
as special compulsory winding up has Unchanged 
not been ordered; 
(b) special compulsory winding up, which 
shall be ordered where it appears unchanged 
probable that the assets of the 
undertaking are no longer sufficient 
to cover its existing liabilities, or 
where the undertaking is found to be 
insolvent or to have ceased to pay its 
debts. 
2. Once authorization has been withdrawn, the 
undertaking may no longer be wound up 
voluntarily. Unchanged 
- 8 
TITLE II 
NORMAL COMPULSORY WINDING UP Unchanged 
Article 5 
Normal compulsory winding up shall be 
carried out under the supervision of the 
supervisory authority of the Member State 
in which the head office is situated, in 
cooperation with the supervisory autho­
rities of the other Member States 
concerned. 
Normal compulsory winding up shall be 
carried out by the bodies of the 
undertaking. However, where the said 
bodies do not carry out the winding up 
satisfactorily, or where there is good 
reason to believe that they may not do so, 
the supervisory authority of the Member 
State in which the head office is situated 
may, on its own initiative or at the 
request of the supervisory authorities of 
the countries in which agencies or 
branches are situated, in accordance with 
the law of the Member State, of the head 
office, deprive the bodies of the under­
taking of their powers, wholly or in part, 
or propose such deprival to the court. 
The said supervisory authority shall at 
the same time, in accordance with the law 
of the Member State, appoint an 
administrator or propose such appointment 
to the court. 
The instrument of appointment shall 
specify the powers of the administrator. 
Publication of the withdrawal of 
authorization and, where appropriate, of 
the appointment of the administrator, 
shall be effected by the bodies carrying 
out normal compulsory winding up by 
placing an announcement summarizing the 
decision concerned in the Official Journal 
of the European Communities. 
The administrator shall submit a progress 
report on the winding up to the authority 
that appointed him at least every six 
months and whenever the authority 
considers it desirable. The report shall 
be communicated to the supervisory 
authority of the Member State in which the 
head office is situated. 2. Normal compulsory winding up shall 
be carried out by the bodies of the 
undertaking. However. where fiie 
supervisory authority Qf the Member 
State in which thf? head office is 
situated finds. on its own 
yrlf.1ji.t1vp. rvr at thft raprerh of thg 
supervisory authorities of the. Mftifofir States In which agencies or branches are situated, that the 
s^ WYHre ara TWh ra.T*rying mit 
the, winding np satisfactorily, or 
vhgre thgra is gQQà rCflSOD tO 
teHgyft that thgy may Tint do so. it 
may, in accordance with the law of 
the Member State of the head 
office, deprive the bodies of the 
undertaking of their powers, wholly 
or in part, or propose such 
deprival to the court. The said 
supervisory authority sha.11 at the 
same time, in accordance with the 
law of the Member State of the head 
office, appoint an administrator or 
propose such, appointment to the 
Court. 
Unchanged 
4. Publication of the withdrawal of 
authorization and, where 
appropriate, of the appointment of 
the administrator, shall be 
effected by the bodies carrying out 
normal compulsory winding up by 
placing an announcement summarizing 
the decision concerned in the 
Official Journal of the European 
Communities and in two rationally 
fl1 ^tr1 hitft1 newspapers in tbe. 
MPmhAr states in which there are 
oredltorfi-
Unchanged 
- 9 -
Article 6 
The Member States shall adopt the measures 
necessary to enable the undertaking to 
appeal to the court against any decision 
taken pursuant to Article 5(2) depriving 
its bodies of their powers wholly or in 
part and appointing an administrator. 
The lodging of an appeal by the 
undertaking shall not have suspensory 
effect. The court hearing the appeal may, 
however, decide otherwise by way, of 
exception. 
Where the appeal is held to be well 
founded, acts carried out by the 
administrator prior to that decision shall 
remain valid, unless the court hearing the 
appeal considers that they may be declared 
void without prejudicing the interests of 
third parties who have acted in good 
faith. 1. The grounds shall >?e stated for any 
decision tafren pursuant to Article, 
5f2^) depriving au undertaking's 
bodies of their powers. 
ex 1. Unchanged 
3. ex 2. Unchanged 
4. ex 3. Unchanged 
Article 7 
Normal compulsory winding up shall not 
entail the automatic termination of 
insurance contracts, but shall preclude 
their automatic renewal. The policyholder 
may, however, terminate the contract when 
the annual premium falls due, subject to 
giving notice thereof. 
The supervisory authority of the Member 
State in which the head office is situated 
shall ensure that the winding up 
procedure is conducted satisfactorily and 
shall, in particular, exercise, where 
necessary, the power provided for in 
Article 5(2) to appoint or request the 
appointment of an administrator. 
The supervisory authorities shall ensure 
that the insurance undertaking: 
a) seeks possible transfers of portfolios; 
b) exercises existing rights to terminate 
contracts. 
The supervisory authorities may impose a 
time limit by which the bodies acting in 
the winding up must exploit the said 
possibilities. 
A. The Member States may adopt special 
measures to facilitate winding up in 
respect of long-term contracts. Article 7 
3. Unchanged 
Unchanged 
Unchanged 
Unchanged 
10 -
Article 8 
Th<> normal compulsory winding up of an 
undertaking shall take effect in all the 
Momber States. 
Where one of the conditions laid, down' in 
subparagraph (b) of Article 4(1) is 
satisfied in the course of a normal 
compulsory winding up procedure, the 
supervisory authority of the Member State 
in which the head office is situated shall 
transform or shall request the courts of 
that State Jo transform the procedure into 
a special compulsory winding up under the 
conditions laid down in Title III. 
Article 9 
Subject to Article 8(2), the provisions of 
this Title shall apply pending the final 
settlement of all insurance obligations, 
which shall, inter alia, be procured by : 
- the termination or surrender of 
contracts, or their natural maturity; 
- satisfaction of incurred and reported 
claims ; 
- the lodging with a trustee of reserves 
in respect of claims which have been 
incurred but have not yet been reported; 
- the transfer of the portfolio. 
Save as otherwise provided in special 
provisions contained in this Title, normal 
compulsory winding up shall be carried out 
in accordance with the law of the Member 
State in which the head office is 
situated. Article 6 
The normal compulsory winding up of 
an undertaking shall take effect In 
all Member States. Tt ghai i 
preclude the opening of any other 
winding-up procedure In respect of 
â& agency or branch of the 
nnflflXtffifrlng situated In another 
Member state. 
Member States shall adopt the 
nfioefyjary provisions .to ensure ttot 
tttf> nrvrmal nrmpil «nry wiTrtJTTg-np is 
effective 1n the.tr territory-
2. Unchanged 
Unchanged Article 9 
Unchanged 
- 11 -
TITLE HI 
SPECIAL COMPULSORY WINDING UP 
Article 10 
Opening of the special compulsory winding 
up of an undertaking whose head office is 
situated within the Community shall be 
ordered either by the supervisory 
authority of the Member State in which the 
head office is situated, or by the courts 
of that State after consulting the 
supervisory authority or at its request. 
A special compulsory winding up shall take 
effect in all Member States. 
Article 11 
1. Where a special compulsory winding up is 
opened, the authorities competent under 
the law of the Member State in which the 
head office is situated shall appoint one 
or more liquidators forthwith. 
2. A special compulsory winding up shall be 
carried out by the liquidators under the 
supervision of the authorities referred to 
in paragraph 1, in cooperation with the 
supervisory authorities of the other 
Member States concerned. 
3. The liquidators shall report to the 
authorities referred to in paragraph 1 on 
the position at the time of opening the 
winding up and on the progress of the 
winding up at least every six months and 
whenever those authorities consider it 
desirable. The report shall be communi­
cated to the supervisory authority of the 
Member State in which the head office is 
situated. TITLE III 
SPECIAL OQMFULSORY WXNDPr, TTP 
Article 10 
1. Unchanged 
2. A special compulsory winding up, 
ordered in accordance with 
paragraph 1 , shall 
take effect in all nember States. 
Tt shall preclude the opening of 
any nt:her wiring up procedure in 
respect of an agency or branch of 
the uTYlertaftlng situated in another 
Member State. 
Member States shall adopt the 
necessary prmri.gi.oiLq -co ensure -max 
the «persial rampnlsnry wy 
is effective in. their terri tory, 
Article 11 
1. Unchanged. 
2. Publication of &3e decision 
ordering special oranpulsory xjirH-iTig 
up. of l&fi nomination of 
Hq^rf*-*™*» âDd of essential 
documents relating to the procedure 
shfl.11 he effected by the bodies 
carrying o\»t winding *ip fry placing 
*H aBPniir>nejneiit summarizing the 
said decision. nomination or 
documents jji the Official rTonrml 
of_jft& European Communities and in 
tKQ nationally - rt1frtr1ftitecL 
newspapers in the Member States in 
which there are creditors, 
3. ex 2. Unchanged. 
4. ex 3. Unchanged. 
12 -
Article 12 
One or more assistant liquidators may be 
appointed in each Member State in which 
the undertaking has an establishment, or, 
where appropriate, in any other Member 
State. Article 12 
Unchanged. 
The assistant liquidators shall be 
appointed by the liquidator, or by the 
authorities referred to in Article 11(1) 
in accordance with the law of the Member 
State in which the head office is 
situated. Unchanged. 
The supervisory authority of any Member 
State in which the undertaking has an 
establishment may propose the appointment 
of an assistant liquidator and submit 
observations on his powers. 
The assistant liquidators shall be 
invested with specific powers and shall 
act on behalf of the liquidator only in 
respect of the Member State for which they 
have been appointed. Unchanged. 
Unchanged. 
Article 13 
In the case of a special compulsory 
winding up, the liquidators shall not 
transfer a portfolio to one or more 
insurance undertakings without the prior 
authorization of the supervisory authority 
of the Member State in which the head 
office is situated or of the courts of 
that State after consulting the 
supervisory authority and in accordance 
with the conditions laid down in Article 
21 of the First Non-Life Coordination 
Directive, or Article 25 of the First Life 
Coordination Directive, as-^appropfTa14. 
The transfer of the entire portfolio 
relating either to direct life assurance 
and life reinsurance business, or to 
direct non-life insurance and non-life 
reinsurance business, shall be permitted 
even where the other portfolio is not 
transferred. 
The transfer of only part of the portfolio 
relating to life assurance and life 
reinsurance business or to non-life 
insurance and non-life reinsurance 
business may be permitted on condition 
that such transfer does not impede the 
satisfactory conduct of the winding up 
procedure or prejudice the interests of 
the insurance and reinsurance creditors 
referred to in Article 18(1) (b) (c), and 
in the cases provided for in Article Article 19 
1. In the case of a special ccrapulsory 
winding up, the liquidators shall 
not transfer a portfolio to one or 
more insurance undertakings without 
the prior authorization of the 
supervisory authority of the Member 
State in which, the head office is 
situated or of the courts of that 
State after consulting the 
supervisory authority and in 
acoordanoe with the conditions laid 
down in Article 11 of the Second 
flPTr-Iilfff Directive, or Article 25 
of the First Life Coordination 
Directive, as appropriate. 
2. Unchanged. 
3. Unchanged. 
i J' /1 \ 46 
13 
Art H: !.?.• 1 '.. 
Special compulsory winding up shall 
automatically terminate existing non-life 
insurance contracts 30 days after 
publication of the order for such winding 
up, where such contracts have not been 
transferred during that period. 
The liquidators, may, with the consent of 
the supervisory authority of the Member 
State in which the head office is situated 
or of the courts of that State after 
consulting the supervisory authority, 
extend the period provided for in 
paragraph 1 and suspend policyholders' 
rights of termination if genuine 
negotiations concerning the transfer of an 
entire portfolio are in progress. 
Member States may introduce or retain an 
official system for transferring the 
portfolio of an undertaking whose head 
office is situated in their territory or 
of an agency or branch situated therein, 
entailing automatic extension of the time 
limit provided for in paragraph 1 and the 
suspension of policyholders* rights of 
termination. Article 14 
1. Unchanged. 
2. Unchanged. 
3. Unchanged. 
Article 15 
Special compulsory winding up shall 
entail the automatic termination 
existing life assurance contracts. not 
of 
The liquidators may, with the permission 
of the supervisory authority of the Member 
State in which the head office is situated 
or of the courts of that State after 
consulting the supervisory authority, 
reduce the obligations of the insurer 
arising from life assurance contracts, 
particularly with a view to effecting a 
transfer of portfolio. 
Failing a transfer under the conditions 
laid down in Article 13, the liquidators 
may, after obtaining permission under the 
conditions laid down in the preceding 
paragraph, terminate the contracts in the 
interests of he general body of life 
assurance creditors. Such termination may 
be imposed by the supervisory authority of 
the Member State in which the head office 
is situated or by the courts of that State 
after consulting the supervisory 
authority. 
In such cases, the amount of their claims! 
shall correspond to the total value of the; 
mathematical reserves and other benefits 
attaching to their contract, without: 
deduction of administrative or termination; Unchanged. 
Unchanged. 
Unchanged. 
- 14 -
Article 16 
1 . Contracts by virtue of which the 
undertaking being wound up accepts 
reinsurance risks shall not be renewed 
after the opening of a special compulsory 
winding up has been ordered. Article 16. 
Unchanged. 
The liquidators shall seek appropriate 
reinsurance cover throughout the special 
compulsory winding up procedure. 
Special compulsory winding-up shall not 
preclude the offsetting of reinsurance 
claims and liabilities. Unchanged. 
Unchanged. 
Article 17 
1. The composition of the assets entered in 
accordance with Article 2 at the time when 
special compulsory winding up is opened in 
all the registers kept in respect of 
direct life assurance and life reinsurance 
business and in all the registers kept in 
respect of direct non-life insurance and 
non-life reinsurance business shall not 
thereafter be changed. 
2. No alteration other than the correction of 
purely technical errors shall be made in 
the registers. 
3. Notwithstanding paragraph 2, the 
liquidators shall add to the said assets 
the yield therefrom and the value of 
premiums received in respect of the class 
of business concerned up to the time any 
transfer of portfolio is effected in the 
case of direct life assurance and life 
reinsurance transactions and during the 
period provided for in Article 1A or up to 
the time any transfer of portfolio is 
effected in the case of direct non-life 
insurance and non-life reinsurance. Article 17 
Unchanged. 
Unchanged. 
Unchanged. 
- le -
Failing transfer of the portfolio, the 
assets entered in all the registers kept 
in respect of non-life and life business 
shall be realized, and the proceeds 
therefrom shall constitute the non-life 
and life asset funds which . shall', be 
distributed to creditors for the claims 
specified in Article 18 in accordance with 
Article 19(1) and Article 19 (2) 
respectively. 
Where the proceeds of realizing the assets 
are less than the amount at which they are 
valued in the registers, the liquidators 
shall justify that circumstance to« the 
supervisory authority of the Member State 
in which the head office is situated or to 
the courts of that State, which shall 
inform the supervisory authority 
accordingly. 
Article 18 
The claims eligible to participate in the 
distribution of the asset funds defined in 
Article 17(4) shall be the following: Unchanged. 
unchanged. 
Article 18 
unchanged. 
(a) Claims, other than insurance claims, 
arising after the opening of the 
special compulsory winding up and 
relating to the winding-up operations 
in so far as they relate to costs 
actually incurred for the benefit of 
the claims referred to in 
subparagraphs (b) or (c) ; where a 
strict allocation is impossible, an 
equitable portion thereof shall be 
payable. 
Where redundancies occur after such 
winding up is opened, such claims 
shall not include that portion of any 
redundancy payments due, calculated 
by reference to the period of 
employment prior to the opening. 
(b) Indemnity and lump-sum insurance 
claims, and claims in respect of the 
repayment of unused portions of 
premiums paid arising from direct 
life assurance or non-life insurance 
business managed by the head office, 
or an agency or branch situated 
within the Community. 
(c) Claims in respect of reinsurance 
acceptances arising from life or 
non-life reinsurance business managed 
by the head office, or an agency or 
branch situated within the Community 
insofar as they are not extinguished 
by offsetting pursuant to Article 
16(3). 
- 16 -
(d) Claims in respect of wages and 
salaries arising before or after the 
opening, to the extent that, in the 
latter case, they are not included in 
the claims referred to subparagraph 
(a), if the funds resulting from 
assets not entered in the registers 
are insufficient to satisfy them. 
The claims referred to in subparagraphs 
(a) to (d) of paragraph 1 shall be 
satisfied out of the life and non-life 
asset funds according to the class of 
business to which they, in fact, relate 
or, where strict allocation is impossible 
in proportion to the size of the asset 
funds available for distribution. unchanged. 
Article 19 
1. The non-life asset fund constituted in 
accordance with the conditions laid down 
in Article 17(4) shall be distributed 
among the creditors by the liquidators in 
satisfaction of claims relating to 
non-life business in the following order: Article 19 
Unchanged. 
(a) claims arising after the opening of 
the special compulsory winding up and 
referred to in Article 18(1) (a) and 
(2) ; 
(b) indemnity insurance claims in favour 
of policyholders and entitled third 
parties or, as the case may be, 
guarantee funds; 
(c) claims resulting from reinsurance 
acceptances, subject to the limits 
laid down in Article 18(1)(c); 
(d) claims in respect of wages and 
salaries, subject to the limits laid 
down in Article 18(1)(d); 
(e) claims in respect of 
portions of premiums paid. unused 
2. The life asset fund constituted in 
accordance with the conditions laid down 
in Article 17(4) shall be distributed by 
the liquidators in satisfaction of claims 
relating to life business in the following 
order: Unchanged. 
(a) claims arising after the opening of 
the special compulsory winding up and 
referred to in Article 18(1)(a) and 
(2) : 
17 -
(b) claims in respect of lump-sum 
benefits, annuities, surrender 
values, mathematical reserves or 
other benefits in favour of 
policyholders and beneficiaries; 
(c) claims resulting from reinsurance 
acceptances, subject to the limits 
laid down in Article 18(1)(c); 
(d) -claims in respect of wages and 
salaries not included in subparagraph 
(a) subject to the limits laid down 
in Article 18(1)(d); 
4. (e) claims in respect of unused portions 
of premiums paid. 
Where the value of insurance claims or 
claims resulting from reinsurance 
acceptances is not known, or where losses 
have been incurred but not yet reported, 
the liquidators shall set aside a sum to 
satisfy such claims. Where after payment 
of the other claims listed in Article 
18(1), the value of such claims is still 
not known or losses have still not been 
reported, the liquidators may, with the 
consent of the supervisory authority of 
the Member State in which the head office 
is situated or of the courts of that State 
after consulting the supervisory 
authority, lodge that sum with a trustee 
appointed for the purpose who shall be 
responsible for satisfying the said claims 
under the supervision of the said 
authorities, on condition that such claims 
are made within a period which they shall 
prescribe. 
The creditors referred to in paragraphs 
(1) and (2) may participate in the 
distribution of the assets not entered in 
the registers defined in Article 2 as 
unsecured creditors in respect of any 
unsatisfied portion of their claim. 
Any residue of either of the asset funds, 
and any amount lodged with the trustee 
pursuant to paragraph (3) and not claimed 
within the prescribed period, shall be 
added to the assets not entered in the 
registers. 
Article 20 
This Title shall apply either to the 
satisfaction of claims other than those 
referred to in Article 18(1), nor to the 
realization and distribution of assets not 
entered in the registers referred to in Unchanged. 
Unchanged, 
Unchanged. 
Article 2p 
Unchanged. 
- 18 -
Save as otherwise provided in special Unchanged, 
provisions contained in this Title, the 
special compulsory winding up of 
undertakings to which this Directive 
applies shall be carried out in 
accordance with the provisions of- the law 
of the Member State in which the head 
office is situated. 
19 -
TITLE IV 
NON-COMMUNITY UNDERTAKINGS 
Article 21 
1. Subject to the provisions that follow, 
this Directive shall apply to agencies or 
branches established in the' territory of 
a Member State of undertakings whose head 
office is situated outside the Community. 
2. For the purpose of applying the 
provisions of Title II of this Directive 
to the establishments referred to in 
paragraph 1 "supervisory authority of the 
Member State in which the head office is 
situated" means the authority ' that 
granted the authorization referred to in 
Article 23 of the First Non-Life; 
Coordination Directive and Article 27 ofj 
the First Life Coordination Directive, 
and "Member State in which the head 
office is situated" means the 
corresponding Member State. 
3. The special compulsory winding up of an 
agency or branch of an undertaking whose 
head office is situated outside the 
Community shall be opened either by the 
supervisory authority of the Member State 
which withdrew the authorization or by 
the courts of that State after the 
supervisory authority has given its 
opinion or at that authority*s request. 
Where Article 26 of the First Non-Life 
Coordination Directive or Article 38 of 
the First Life Coordination Directive has 
been applied the special compulsory 
winding up shall be opened either by the 
supervisory authority of the Member State 
which is responsible for supervising the 
solvency margin or by the courts of that 
State after the supervisory authority has 
given its opinion or at that authority's 
request. 
4. For the purpose of applying the 
provisions of Title III, "supervisory 
authority of the Member State in which 
the head office is situated" means the 
supervisory authority referred to in the 
previous paragraph and "Member State in 
which the head office is situated" means 
the corresponding Member State. 
5. Without prejudice to the second paragraph 
of Article 27 of the First Non-Life 
Coordination Directive and the second 
subparagraph of Article 31(2) of the 
First Life Coordination Directive, the THEE IV 
IQT-CTMMUNITY UNDERTAKINGS 
Article 31 
Unchanged. 
Unchanged. 
Unchanged. 
Unchanged. 
Unchanged. 
- 20 
supervisory authority of a Member State 
in whose territory a non-Community 
undertaking has an agency or branch shall 
inform the supervisory authorities of the 
other Member States in whose territory 
the undertaking has an establishment of 
the reorganization measures it proposes 
to take under Articles 20 and 27 of the 
First Non-Life Coordination Directive and 
Articles 24 and 31 of the First Life 
Coordination Directive with a view to 
cooperating in the implementation of 
those measures. 
7. It shall consult the same authorities 
before withdrawing authorization. 
The opening of compulsory winding up or 
the withdrawal of authorization in 
respect of the head office shall 
necessarily entail withdrawal of the 
authorization granted by Member States to 
the agencies or branches of the 
undertaking in question. 
Without prejudice to the application of 
paragraph 6, the normal compulsory 
winding up of an agency or branch 
established in the territory of a Member 
State shall not entail the normal 
compulsory winding up of agencies and 
branches established in the territory of 
the other Member States. unchanged. 
Unchanged. 
-i - 21 -
TITLE V TITLE V 
FINAL PROVISIONS FINAL PROVISIONS 
Article 22 Article 22 
Member States shall bring into force the 
measures necessary to comply with this 
Directive not later than ... 
They shall forthwith inform the Commission 
thereof. Unchanged. 
The provisions adopted pursuant to 
the first paragraph shall nraka^cx^cas^. 
reference to this Directive. 
Article 23 Article 23 
This Directive is addressed to the Member 
States. Unchanged. 
Done at Brussels # For the Council 
V. 
•"S*. 

ISSN 0254-1475 
COM (89) 394 final 
DOCUMENTS 
EN 06 18 
Catalogue number : CB-CO-89-399-EN-C 
ISBN 92-77-52849-4 
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L-2985 Luxembourg 
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