CELEX: 51989PC0394
Language: en
Date: 1989-09-12
Title: 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)

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 ---pagebreak--- COMMISSION OF THE EUROPEAN CCMMUNITIES
                                          COM ( 89 ) 394 final SYN-80
                                          Brussels , 12 September 1,989
                                                          /.
                           Amended Proposai 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 )
 ---pagebreak---                                                  Λ
                                                                toYV\
                               EXPLANATORY MEMORANDUM
  1. On 23 Jaxruaxy 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 wi nding up of
     direct insurance undertakings . 1 That Directive , referred to in the
     White Paper as a measure necessary for the completion of the internal
     market , aims to supplement the Council 's First Directives on direct
1    non-life insurance and direct life assurance respectively . 3
     It lays down rules and. procedures governing the compulsory winding up
     of direct insurance undertakings , which safeguard the rights of
     policyholders and the insure! 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
     Economic 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  COM(86 ) 768 final / 2 , OJNo C 71 , 19.3.1987 .
  2  First Council Directive 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 of direct insurance other than
     life assurance ; GJ No L 228 , 16.8.1973 , p. 3 .
  3  Fl-st 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 ;
     GJ No L 63 , 13.3.1979 , p. 1 .
  4  GT No C 319 , 30.11.1987 , p. 10 .
  5  PE 124 . 469/ fin . - Rapporteur P. PRICE .
 ---pagebreak---                                           - 2 -
  4. The amendments made to the first recital and to Article 1(1 ) male clear
     what ComxrrunitY provisions are in force and take account of the prog^ecs
     made in creating the internal market by adding a reference to the
     Second Council Directive 88/357/EBC on the freedom to provide service:-:
     in the field of direct non-life insurance,® adopted on 22 June 1983 ,
     which also amends the First Non-Life Coordination Directive .
  5. As regards normal compulsory winding up (NCW ), Article 5(2 ) has leer ,
     amended on the lines proposed by the Economic and Social Committee , in
     order to make more clear the purpose of this provision ar>d thereby tc
     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 NCW
     at risk . It therefore appears desirable that the undertaking and , where
     appropriate , the courts with which any appeal against a decision is
     lodged pursuant to Article 6(2) of the amended proposal should receive
6    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 / EEC ; OJ No L 172 , 4.7.1988 , p. 1 .
                                                                               3
 ---pagebreak---                                       - 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 end 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
     retirement , 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/EEC on the
     provisions of non-life insurance services .
     In introducing these amendments to the proposal for a Directive , the
     Commission has met Parliament ' s wishes in full and has largely met
     these of the Economic and Social Committee . As for the observations
     made concerning application of the proposal to Lloyd '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 specifically mentioned .
     The same applies to the comment made on the role to be played by the
     supervisors’' authorities of Member States in which branches of an
     insurance ^undertaking undergoing special compulsory winding up are
     established (Article 12 ).
                                                                              k
 ---pagebreak---                                                              - 1 -
                                                   Amendée! Proposai for a
                                                      COUNC I L DIRECTIVE
                   on the coordination of laws , regulations and administrative pr 0 ^ » 01 OH3
                   relating to the compulsory wind Ing up of direct Insurance uncer takings
   Initial, proposai                                             Amended proposal
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the                     Having;     regard     to      tlie     Trw://.
European Economic Community ,                                    establishing the European F/..x nomG
                                                                 Community , and in particular Article.:;
and   in   particular      Articles      57(2 )   and   66       57(2 ) and 66 thereof ,
thereof ,
Having    regard    to    the      proposal     from   the       Having regard to the proposal, from hoe
Commission ,                                                     Commission ,
Having regard to the opinion of the European                     In    cooperation with       the     European
Parliament ,                                                     Parliament ,
having regard to the opinion of the Economic                     Having regard to the opinion of the
and Social Committee ,                                           Economic and Social Committee
Whereas     coordination        of     the    conditions         Whereas coordination of the conditions
governing the taking up and pursuit of the                       governing the taking -up and pursuit of
business of direct insurance has been largely                    the business of direct insurance has
implemented , as regard insurance other than                     been largely implemented , as regards
life asssurance , by the First Council Direc­                    insurance other than life assurance ,
tive 73 / 239 / EEC of 24 July 1973 on the                       by the First Council Directive
coordination      of     laws ,       regulations      and       73/ 239/ EEC Of 24 July 1973 on the
administrative     provisions         relating    to   the       coordination of laws , regulations and
taking-up and pursuit of the business (1 <j>f                    administrative provisions relating to
direct insurance other than life assurance /                     the    taking-up   and   pursuit       of    the
and ,  as regards life assurance ,          by the First         business    of  direct    insurance       other
Council Directive      79 / 267 / EEC of   5 March    1979       than     life    assurance , 1      as     1 ast.
on the coordination of laws , regulations and                    amended by Directive 88/557/ EEC , and
administrative provisions relating to the                        as regards Life assurance , by the First
                                                                 Council Directive 79 / 267 / EEC of 5 March 197'
taking-up and pursu ^.^ ; of the business of
direct life assurance                                            on the coordination of Laws , regulations
                                                                 and administrative provisions relating to
                                                                 the taking-up and pursuit of the business
                                                                 of direct life assurance 3;
  1 OJ L 228 , 16.8.1973 , p. 3 .                                1 OJNo L 228 , 16.8 . 1973 , p . 3
  2 GT L 63 , 13.3.1979 , p. 1                                   2 OJ No L 172 , 4.7.1988 , p. 1 .
                                                                 3 OJ No L 63 , 13.3.1979 , p. 1 .
                                                                                                                   JT
 ---pagebreak---                                                               - 2 -
whereas those Directives do not harmonize the
rules on        the     role of        the supervisory
                                                                  Unchanged
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 ;
 ---pagebreak---                                                            O
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 from 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
 ---pagebreak---                                                - 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 :
 ---pagebreak---                                                            O
                      TITLE I
                 GENERAL PROVISIONS
                      Article 1
1.  This Directive shall apply to insurance
    undertakings which come within the scope                 1 . This Directive         shill   apply    to
    of the First Council Directive 73 / 239 / EEC ,              insurance luriertakings whi/ h carte
    hereinafter referred to as the First                         within the scope of Directive
    Non-life Coordination Directive , or the                     73 / 239 / ESC , hereinafter referred to
    First     Council      Directive      79 / 267 / EEC ,       as the First Non-Life Coordination
    hereinafter referred to as the First Life                    Directive , as ncn lodjby jhe_ Second
    Coordination Directive .                                     Council         Directive    68/ 357/ EWQ ,
                                                                 hereinafter_____referral to_____ _____tr ^
2.  Non-Life     business    ( direct   insurance       or       Second. Non-Life_____Directive ,.       or
    reinsurance )    means    transactions     included          Directive 79 / 267 / ESC ,   hereinafter
    within   the   classes   listed   in Annex      A   to       referred to as the           First Life
    the First Non-Life Coordination Directive ,                  Coordination Directive .
    and the corresponding reinsurance transac­
    tions .                                                  2 . Unchanged
    Life     business     ( direct     assurance        or       Unchanged
    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             Unchanged
    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 .
2.  Where     an    undertaking      transacts        both       Unchanged
    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 .
                                                                                                             3
 ---pagebreak---                                                - 6 -
3. The total value of the assets entered ,            Unchanged
   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 .
4. 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 .
5. 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                                  Article 3
1. The registers shall be documents internal         Unchanged
   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 .
2. Where the supervisory authority restricts         Unchanged
   or prohibits the free disposal of assets
   pursuant to Articles 20 , 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 .
 ---pagebreak---                                                        - 7 -
3.  Where , pursuant to the preceding paragraph               Unchanged
    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 .
4.  During such time as the register                  is      Unchanged
    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 4
 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    Unchanged
     voluntari ly .
 ---pagebreak---                    TITLE   II
                                                        Unchanged
        NORMAL COMPULSORY WINDING UP
                    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          2 . Normal compulsory winding up shall
 cooperation with the supervisory autho­                be carried out by the bodies of the
 rities     of    the     other    Member    States
 concerned .                                            supervisory authority of the Member
                                                        State in which the head office is
 Normal compulsory winding up shall be                  situated    finds .     on   its    own
 carried out by            the bodies of the            initiative or at the request of the
 undertaking .        However , where the said          supervisory authorities of the
 bodies do not carry out the winding up                 Member States; in which agenciesi or
 satisfactorily , or where there is good                branches are situated . that the
 reason to believe that they may not do so ,            said bodies are not carrying çut
 the supervisory authority of the Member                the winding up satisfactorily^ 0Γ
 State in which the head office is situated             where there is £ood reason to
 may ,    on its own initiative or at the               believe that they nay not do so ., it
 request of the supervisory authorities of              may , in accordance with the law of
 the countries in which agencies or                     the   Member   State     of  the   head
 branches are situated , in accordance with             office , deprive the bodies of the
 the law of the Member State , of the head              undertaking of their powers , wholly
office ,     deprive the bodies of the under­           or in part , or propose such
 taking of their powers , wholly or in part ,           deprival to the court . The said
or propose such         deprival to     the court .     supervisory authority shall at the
The said supervisory authority shall at                 same time , in accordance with the
the same time ,      in accordance with the law         law of the Member State of the head
of     the Member State ,             appoint    an     office , appoint an administrator or
administrator or propose such appointment               propose such appointment to the
to the court .                                          Court .
The      instrument     of    appointment     shall     Unchanged
specify the powers of the administrator .
                                                    4 . Publication of     the withdrawal    of
Publication        of     the     withdrawal     of     authorization         and ,       where
authorization and , where appropriate , of              appropriate , of the appointment of
the appointment of the administrator ,                  the     administrator ,     shall    be
shall be effected by the bodies carrying                effected by the bodies carrying out
out     normal    compulsory     winding    up   by     normal compulsory winding up by
placing an announcement summarizing the                 placing an announcement summarizing
decision concerned in the Official Journal              the   decision   concerned     in   the
of the European Communities .                           Official Journal of the European
                                                        Communities and in two nati ona.l 1 y
The administrator shall submit a progress               di stributed   newspapers      in   the
report on the winding up to the authority               Member   States in which there are
that appointed him at least every six                   creditors .
months      and     whenever      the    authority
considers it desirable .         The report shall       Unchanged
be     communicated       to    the    supervisory
authority of the Member State in which the
head office is situated .
 ---pagebreak---                                                              - g _
                     Art. 1 c 1 o 6
                                                                                 Artic!e_fi
                                                                 1 . The grounds sliall be stated for any
                                                                     decision taken pursuant to Article
                                                                     5(2 ) depriving an undertaking 's
                                                                     bodies of their powers .
1 .  The Member States shall adopt the measures                  2 . ex 1 . Unchanged
     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 .
2.   The     lodging      of      an    appeal      by    the    3 . ex 2 . Unchanged
     undertaking shall            not    have   suspensory
     effect .   The court       hearing the appeal may ,
     however ,     decide       otherwise by way of
     exception .
3 . Where the appeal is held to be well                          4 . ex 3 . Unchanged
     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 .
                        Article 7                                                 Article 7
1 .  Normal    compulsory        winding up      shall    not        Unchanged
     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 .
2.   The  supervisory authority of              the Member           Unchanged
     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 .
 3 . The supervisory authorities shall ensure                        Unchanged
     that the insurance undertaking :
     a ) seeks possible transfers of portfolios ;
     b ) exercises existing rights to terminate
     contracts .
     The supervisory authorities may impose a                        Unchanged
      time limit by which the bodies acting in
      the winding up must exploit the said
     possibi 1 it ies .
 A.  The     Member     States       may   adopt     special
     measures     to     facilitate       winding      up   in
      respect of long-term contracts .
 ---pagebreak---                                                       10 -
                     Article 8
                                                                           Article fl
1. The normal compulsory winding up of an
   undertaking shall take effect in all the              1 • The normal compulsory winding up of
   Member 1 States .                                          an undertaking shall take effect in
                                                             all Member States . It. wha.i i
2. Where one of the conditions laid , down' in                preclude–the openi ng of any other
   subparagraph      (b)  of   Article     4(1 )  is         Wind i ng-up procedure in respect of
   satisfied     in   the  course    of   a   normal         âû–agSICy_____or     branch of   the
   compulsory winding up procedure ,             the         undertaking–situated in another
                                                             Member State .
   supervisory authority of the Member State
   in which the head office is situated shall
   transform or shall request the courts of                  Member Stat es shall adopt the
   that State to transform the procedure into                necessary provisions to ensure that
   a special compulsory winding up under the                 the normal compulsory winding-up i «
   conditions laid down in Title III .                       effective in their territory .
                     Article 9                          2 . Unchanged
                                                                          Article 9
1. Subject to Article 8(2 ), the provisions of
   this Title shall apply pending the final
   settlement of all insurance obligations ,                 Unchanged
   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 .
2. Save    as   otherwise   provided    in   special
   provisions contained in this Title , normal
   compulsory winding up shall be carried out               Unchanged
   in accordance with the       law of the Member
   State     in which     the    head    office    is
   situated .
 ---pagebreak---                                                          11
                       TITLE   III
                                                                                 TTTLE_.III
          SP E C IAL C0MPUL50RY UINDING U P
                                                                    SPROJAT . OCMPULSORY WINDING UP
                       Artncde_____L®
                                                                                Article 10
1 .  Opening of the special compulsory winding
     up of an undertaking whose head office is              1 . Unchanged
     situated within the Community shall be
     ordered       either     by      the    supervisory         A special compulsory winding tip ,
     authority of the Member State in which the                   ordered        in     accordance     with
     head office is situated , or by the courts                   paragraph 1 , shall
     of   that      State    after consulting the                 take effect in all Member States .
     supervisory authority or at its request .                    Tt. phall preclude the opening__Q f
                                                                  any other winding up _prg£adure_Jn
2.   A special compulsory winding up shall take                                                Or_brcn£h_Qf
     effect in all Member States .                                the undertake
                                                                  Member State.,
                                                                   Member      States    shall  adopt   the
                                                                   is effective in their territory^
                         Article 1 1
  1.  Where a special compulsory winding up is               1 . Unchanged .
      opened ,     the authorities       competent under
      the  law of the      Member State in which the         2 . publication of             thQ_____decision
      head office is situated shall appoint one                    ordering special CQmpulgQry mEding
      or more liquidators forthwith .                              rp        nf the nomination_____Qi
                                                                   li gn i dators and Qf_____fSS£nti&l
 2.   A special compulsory winding up shall be                     (iOCUiD®tsjelatii3g_tQ_Bie_EEQQedur£
      carried out by the liquidators under the                     shall be effected by the__JbQdi£S.
      supervision of the authorities referred to                   carrying out winding up . byupjaging.
      in paragraph 1 ,        in cooperation with the               an    announcement summarizing–
      supervisory authorities             of the     other          said      decision .    nomlnatlQn-----Q£
      Member States concerned .                                     documents in the Official Journal,
                                                                    of the European Cr>mmurdtigs_an<Lln
 3.   The   liquidators       shall     report    to   the          two        national 1 y – distributed
      authorities referred         to in paragraph 1    on          newspapers inith£_Jlssb£r__£ta1t^_jn!
      the position at the          time of opening     the          v;hioh there are creditors .
      winding up and on          the progress of       the
      winding up at least          every six months    and    3 . ex 2       Unchanged .
      whenever      those   authorities      consider   it
      desirable .       The report shall be communi­           4.   ex  3    Unchanged .
      cated to the supervisory authority of the
      Member State      in which the head office is
      situated .
 ---pagebreak---                                                              12 -
                       Article 12
                                                                                 Article 12
1. One or more assistant liquidators may be
   appointed       in each Member State          in which           Uncharged .
   the undertaking has an establishment ,               or ,
   where appropriate ,          in any other Member
   State .
2. The      assistant       liquidators       shall       be
   appointed by the liquidator ,              or by the             Uncharged .
   authorities referred to in Article 11(1 )
   in accordance with the law of the Member
   State      in    which    the     head office          is
   situated .
3. The supervisory authority of any Member
   State in which the undertaking hhs an                            Uncharged .
   establishment may propose the appointment
   of an assistant liquidator                and    submit
   observations on his powers .
4. The      assistant       liquidators        shall      be
   invested with specific powers and shall                          Uncharged .
   act on behalf of the liquidator only in
   respect of the Member State for which they
   have been appointed .
                       Article 13
                                                                                 Article 13
1. In the case of a special compulsory
   winding up ,         the liquidators shall not               1 . In the case of a special compulsory
   transfer a portfolio to one or more                              winding up , the liquidators shall
   insurance undertakings without the prior                         not transfer a portfolio to one or
   authorization of the supervisory authority                       more insurance undertakings without
   of the Member State in which the head                             the prior authorization of the
   office is situated or of the courts of                            supervisory authority of the Member
   that        State      after       consulting         the         State in which the head, office is
   supervisory authority and             in accordance               situated or of the courts of that
   with the conditions laid down in Article                          State     after     consulting    the
   21   of the First Non-Life Coordination                           supervisory     authority    and   in
   Directive , or Article 25 of the First Life                       accordance with the conditions laid
   Coordination Directive , as-appropfiat?.                          down in Article 11 of the Second
                                                                     Non-life Directive ,   or Article 25
2. The transfer of the entire portfolio                              of  the    First  Life   Coordination
   relating either to direct life assurance                          Directive , as appropriate .
   and life reinsurance business ,                  or to       2 . Uncharged .
   direct non-life insurance and non-life
   reinsurance business , shall be permitted
   even where the other portfolio is not
   transferred .
3. The transfer of only part of the portfolio                   3 . Uncharged .
   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
    14(3 ).
 ---pagebreak---                                                                  13
                       Art icle   I /,
l . Special     compulsory         winding         up shall                         Article 14
    automat ica l ly terminate existing non-life
    insurance       contracts           30    days      after       1 . Unchanged .
    publication of the order for such winding
    up ,   where    such    contracts have          not  been
    transferred during that period .
2.  The liquidators , may , with the consent of
    the supervisory authority of the Member
    State in which the head office is situated                      2 . Unchanged .
     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 .
 3.  Member States may introduce or retain an
     official     system for transferring the
     portfolio of an undertaking whose head                         3 . Unchanged .
     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 15
                                                                                    Article 15
 1.  Special compulsory winding up shall not
     entail     the     automatic          termination      of
     existing life assurance contracts .                                Uncharged .
 2.  The liquidators may , with the permission
     of the supervisory authority of the Member
     State in which the head office is situated                         Uncharged .
     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 .
 3.  Failing a      transfer under the conditions
     laid down in Article 13 ,              the liquidators
     may , after obtaining permission under the                         Unchanged .
     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 administrat ive or termination :
     expenses .                                                j
 ---pagebreak---                                                          14 -
                       Article   16
                                                                          Article 16
1 . Contracts       by     virtue    of    which    the
    undertaking        being     wound    up    accepts       Uncharged .
    reinsurance      risks    shall   not  be   renewed
    after the opening of a special compulsory
    winding up has been ordered .
 2.  The     liquidators shall seek appropriate
     reinsurance cover throughout the special                 Uncharged .
     compulsory winding up procedure .
 3.  Special    compulsory      winding-up shall not
     preclude     the    offsetting    of   reinsurance       Uncharged .
     claims and liabilities .
                        Article 17
                                                                          Article 17
 1.  The composition of the assets entered in
     accordance    with Article 2 at the time when |          Uncharged .
     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                 Uncharged .
     the registers .
 3.  Notwithstanding          paragraph      2,      the
     liquidators shall add to the said assets                 Uncharged .
     the yield therefrom and the value of
     preoiiums 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 1 4 or up to
     the   time    any transfer      of portfolio     is
     effected     in the     case of direct non-life
     insurance and non-life reinsurance .
 ---pagebreak---                                                       15 -
                                                           Unchanged .
4. Failing transfer of the portfolio ,           the
   assets entered in ail 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 .
                                                           Unchanged .
5. Where the proceeds of realizing the assets
   are less than the amount at uhich 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 i
   inform      the      supervisory       authority
   accordingly .
                    Article 18                                         Article 18
1. The claims eligible to participate in the               Unchanged .
   distribution of the asset funds defined in :
   Article 17(4 ) shall be the following :
    (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 ) .
 ---pagebreak---                                                      - 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 th'e registers
           are insufficient to satisfy them .
2. The claims referred to in subparagraphs                  Unchanged .
   ( 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 .
                       Article 19                                       Artide 19
1. The     non-life     asset    fund  constituted   in     Unchanged
                                                            uncnangea .
   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 :
   ( 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   unused
               portions of premiums paid .
2. The       life    asset     fund   constituted    in     Unchanged ,
   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 :
   (a)     claims arising after the opening of
           the special compulsory winding up and
           referred to in Article 18(1 ) ( a ) and
            (2) ;
 ---pagebreak---                                                               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 ) ;
   (e)    claims in respect of unused portions
          of premiums paid .
3. Where the        value of      insurance claims or
                                                                    Unchanged .
   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 .
                                                                   Unchanged .
A.  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 .
5.  Any residue of either of the asset funds ,
                                                                   Unchanged .
    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
                         Article 20
                                                                  Unchanged .
1.  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
    Article 2 .
 ---pagebreak---                                        - 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 .
 ---pagebreak---                                                               19
                     Tl TL F.  TV
          NON-COMMUNITY UNDERTAKINGS                                             LTL'LE IV
                     Article 21                                     Ig'N (JLIMMUN : Yr 1 : N ! Y " I i'AKINr
1. Subject to the provisions that follow ,                                     Artic_le_2 !
   this Directive shall apply to agencies or
   branches established in the' territory of                     Unchanged ,
   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    Unchanged ,
   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 of |
   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     Unchanged .
   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 30 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 .
A. For     the     purpose         of     applying        the
   provisions of Title III ,                 " supervisory
   authority of the Member State in which                        Unchanged ,
   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     Unchanged ,
   subparagraph of Article 31(2 ) of                      the
    First Life Coordination Directive ,                   the
 ---pagebreak---                                                 - 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 .
   It  shall   consult    the   same   authorities
   before withdrawing authorization .
                                                     Unchanged
6. 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 .
                                                     Unchanged
7. 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 .
 ---pagebreak---                                            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  ...               Unchanged .
They shall forthwith inform the Commission
thereof .
                                              The provisions adopted pursuant to
                                              the first paragraph shall make express
                                              reference to this Directive .
                 Article 23                             Article 23
This Directive is addressed to the Member     Unchanged .
States .
  Done at Brussels ,                                      For the Council
                                                                                     i
 ---pagebreak---                                                                       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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