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

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)
 ---pagebreak---                                            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.
 ---pagebreak---                                   -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.
 ---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 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 specifloan 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).
 ---pagebreak---                                           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          Having        regard    to    the    Treat/
European Economic Community,                          estahl i shlng the European Economic
                                                      Community, and in particular Articles
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 the
                                                      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/EBC of 24 July 1973 on the
administrative provisions relating to the             coordination of laws, regulations and
taking-up and pursuit of the business (1of            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    ^ 2 pvqt.
on the coordination of laws, regulations and          amfsnflflfl by Directive 88/gg7/EBg_, and
administrative provisions relating to the             as regards life assurance,, by the First
taking-up and pursuit of the business of              Council Directive 79/267/EEC of 5 March 197
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 ;
   1                                                   1
     OJ L 228, 16.8.1973, p. Ï                           OJ No L 228, 16.8.1973. p. 3.
   2                                                  2
     OJ L 63, 13.3.1979, p. 1                            OJ No L 172, 4.7.1988, p. 1.
                                                      3
                                                         OJ No L 63. 13.3.1979, p. 1.
 ---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--- 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
 ---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---                                                  - 5 -
                   TITLE I
              SEVERAL PFOVIS-tQK?
                   Article t
1. This Directive shall apply to insurance
   undertakings which come within the scope          1. This Directive shall apply to
   of the First Council Directive 73/239/EEC,           insurance undertakings which come
   hereinafter referred to as the First                 within the scope of Directive
   Non-life Coordination Directive, or the              73/239/EBC, hereinafter referred to
   First    Council    Directive     79/267/EEC,        as the First Non-Life Coordination
   hereinafter referred to as the First Life            Directive, as amended by the Second
   Coordination Directive.                              Council      Dilutive     88/557/^^
                                                        hereinafter referred to aq thp
2. Non-Life business (direct insurance or               Second    Nr.p-T.if*> Directive  or
   reinsurance) means transactions included             Directive 79/267/EEC, 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.
 ---pagebreak---                                        - 6 -
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.
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   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.
 Where the supervisory authority restricts   Unchanged
 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.
 ---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.
    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 *
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
    voluntarily.
 ---pagebreak---                                            - 8
               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           undertaking. However. where fiie
concerned.                                         supervisory authority Qf the Member
                                                   State in which thf? head office is
Normal compulsory winding up shall be              situated finds. on its own
carried   out by      the bodies of the            yrlf.1ji.t1vp. rvr a t thft   raprerh   of thg
undertaking.      However, where the said          supervisory        authorities        of    the.
bodies do not carry out the winding up             Mftifofir States In which agencies or
satisfactorily, or where there is good             branches are situated,              that     the
reason to believe that they may not do so,         s ^      WYHre    ara   TWh     ra.T*rying   mit
the supervisory authority of the Member            the, winding np satisfactorily, or
State in which the head office is situated         vhgre thgra is gQQà rCflSOD tO
may, on its own initiative or at the               teHgyft that thgy may Tint 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 sha.11 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 rationally
The administrator shall submit a progress           fl1 ^tr1hitft 1       newspapers         in     tbe
report on the winding up to the authority           MPmhAr states in which there are
that appointed him at least every six               oredltorfi-
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---                                               - 9-
                  Article 6
                                                 1. The grounds shall >?e stated for any
                                                    decision tafren pursuant to Article,
                                                    5f2^) depriving   au   undertaking's
                                                    bodies of their powers.
   The Member States shall adopt the measures       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.
   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.
   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
   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.
   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
    possibilities.
A.  The Member States may adopt special
   measures to facilitate winding up in
    respect of long-term contracts.
 ---pagebreak---                                                  10 -
                 Article 8                                             Article 6
Th<> normal compulsory winding up of an                The normal compulsory winding up of
undertaking shall take effect in all the               an undertaking shall take effect In
Momber States.                                         all      Member      States.         Tt    ghai i
                                                       preclude the opening of any other
Where one of the conditions laid, down' in             winding-up procedure In respect of
subparagraph     (b) of Article        4(1) is         â&     agency      or       branch      of    the
satisfied     in the course of a normal                nnflflXtffifrlng situated In             another
compulsory     winding    up procedure,     the        Member state.
 supervisory authority of the Member State
 in which the head office is situated shall            Member      States       shall      adopt the
 transform or shall request the courts of
 that State Jo transform the procedure into            nfioefyjary provisions .to ensure ttot
 a special compulsory winding up under the             tttf> nrvrmal n r m p i l « n r y wiTrtJTTg-np i s
 conditions laid down in Title III.                    effective 1n the.tr territory-
                                                    2. Unchanged
                  Article 9
                                                                       Article 9
 Subject to Article 8 ( 2 ) , the provisions of
 this Title shall apply pending the final              Unchanged
 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           Unchanged
   in accordance with the law of the Member
   State   in which      the head     office is
   situated.
 ---pagebreak---                                               - 11 -
                    TITLE H I
                                                                          TITLE III
          SPECIAL COMPULSORY WINDING UP
                                                        SPECIAL OQMFULSORY WXNDPr, TTP
                    Article 10
                                                                         Article 10
     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    2. A special compulsory winding up,
    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 nember States.
    supervisory authority or at its request.         Tt shall preclude the opening of
                                                     any nt:her wiring up procedure in
    A special compulsory winding up shall take       respect of an agency or branch of
    effect in all Member States.                     the uTYlertaftlng situated in another
                                                     Member State.
                                                     Member S t a t e s s h a l l adopt the
                                                     necessary prmri.gi.oiLq -co ensure -max
                                                     the «persial rampnlsnry wy
                                                     i s e f f e c t i v e in. their terri tory,
                    Article 11
                                                                         A r t i c l e 11
 1. Where a special compulsory winding up is
     opened, the authorities competent under      1. Unchanged.
     the law of the Member State in which the
     head office is situated shall appoint one    2. Publication                of       &3e    decision
     or more liquidators forthwith.                  ordering special oranpulsory xjirH-iTig
                                                     up.         of        l&fi         nomination    of
2.  A special compulsory winding up shall be         Hq^rf*-*™*»               âDd       of    essential
    carried out by the liquidators under the         documents r e l a t i n g to the procedure
    supervision of the authorities referred to       shfl.11 he effected by the bodies
     in paragraph 1, in cooperation with the         carrying o\»t winding *ip fry placing
    supervisory authorities of the other             *H    a
                                                             BPniir>nejneiit           summarizing   the
    Member States concerned.
                                                     said decision.                     nomination or
3.  The liquidators shall report to the              documents jji the Official rTonrml
    authorities referred to in paragraph 1 on        of_jft& European Communities and in
    the position at the time of opening the          tKQ            nationally - rt1frtr1ftitecL
    winding up and on the progress of the            newspapers in the Member States in
    winding up at least every six months and         which there are creditors,
    whenever those authorities consider it        3. ex 2. Unchanged.
    desirable.     The report shall be communi-
    cated to the supervisory authority of the     4. ex 3. Unchanged.
    Member State in which the head office is
    situated.
 ---pagebreak---                                                  12 -
                   Article 12
                                                                  Article 12
One or more assistant liquidators may be
appointed in each Member State in which               Unchanged.
the undertaking has an establishment, or,
where appropriate,         in any other Member
State.
The        assistant    liquidators shall     be
appointed by the liquidator, or by the                 Unchanged.
authorities referred to in Article 11(1)
in accordance with the law of the Member
State in which the head office is
situated.
The supervisory authority of any Member
State in which the undertaking has an                  Unchanged.
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                Unchanged.
act on behalf of the liquidator only in
respect of the Member State for which they
have been appointed.
                   Article 13
                                                                  Article 19
In the case of a special compulsory
winding up, the liquidators shall not               1. In the case of a special ccrapulsory
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             acoordanoe with the conditions laid
Coordination Directive, as-^appropfTa14.               down in Article 11 of the Second
                                                       flPTr-Iilfff Directive, or Article 25
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. Unchanged.
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          3. Unchanged.
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
i J' / 1 \                                                                                  46
 ---pagebreak---                                                       13
                Art H: !.?.• 1 '..
Special   compulsory          winding up shall                         Article 14
automatically 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.
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.
 Member States may introduce or retain an
 official system for transferring the
                                                        3. Unchanged.
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 15
 Special compulsory winding up shall not
 entail   the automatic             termination of
                                                           Unchanged.
 existing life assurance contracts.
 The liquidators may, with the permission
 of the supervisory authority of the Member                Unchanged.
 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                 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 administrative or termination;
 ---pagebreak---                                                   - 14 -
                  Article 16
                                                                    Article 16.
1 . Contracts    by   virtue   of    which    the
    undertaking   being   wound    up    accepts         Unchanged.
    reinsurance risks shall not be renewed
    after the opening of a special compulsory
    winding up has been ordered.
     The   liquidators shall seek appropriate
     reinsurance cover throughout the special            Unchanged.
     compulsory winding up procedure.
     Special compulsory winding-up shall not
     preclude the offsetting of reinsurance              Unchanged.
     claims and liabilities.
                   Article 17
                                                                    Article 17
 1. The composition of the assets entered in
     accordance with Article 2 at the time when          Unchanged.
     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            Unchanged.
     the registers.
 3.  Notwithstanding    paragraph     2,      the
     liquidators shall add to the said assets            Unchanged.
     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.
 ---pagebreak---                                           - le -
                                                 Unchanged.
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.
                                                 unchanged.
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                                   Article 18
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 the registers
         are insufficient to satisfy them.
   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                                   Article 19
1. The non-life asset fund constituted in             Unchanged.
   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.
                                                       Unchanged.
   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.
                                                      Unchanged,
4. 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.
                                                      Unchanged.
    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                                   Article 2p
                                                      Unchanged.
    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
 ---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 -
                    TITLE IV
          NON-COMMUNITY UNDERTAKINGS                             T H E E IV
                    Article 21                         IQT-CTMMUNITY UNDERTAKINGS
1.  Subject to the provisions that follow,                      Article 31
    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 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             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 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          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.
    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 nraka^cx^cas^.
                                                   reference to this Directive.
                  Article 23                                 Article 23
   This Directive is addressed to the Member       Unchanged.
   States.
                                                              For the Council
     Done at Brussels  #
                                                                      V.
                                                                           •"S*.
-i
 ---pagebreak---  ---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
Office for Official Publications of the European Communities
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