Insurance Second Amendment Act

1. The following section is hereby inserted after section 19 of’ the lnsur:mce Act. 1943: 66 Circumstances under which domestic insurer may hold shares in its 5 holding cumpany 19A. ( 1 ) If’ the assets which a domestic ‘insurer holds in respect of’ its long-term insurance business in any of’ its policyholder funds include shares in its holding compat]y- ((/) such shares shall. for the purposes of’ siction 39(2) of’ the Companies Act, 1973 (Act No. 6 I of’ 1973), be dwnect to be held by the said insurer in ;{ representative cilpacity or :is a trustee for the sole benefit of’ the owners of the policies for which the relevant policyholder fund exists; (h) such sb:mes shall only be held by tb.~ saici insurer with the prior approval ot’ the registrar and subject to: uch conditions m the registrar m:iy impose; and (c) the said insurer shall not have the right to vote at meetings of the relevant holding company or at meeti lgs of’ any class of members thereof. (2) For the purposes of’ subsection ( 1 )— (</) ‘holding company’ means a holding company as defined in section I of the Companies Act, 1973; and (/~) ‘policyholder fund’ means a fund refer “ed to in paragraph ((/), (b) or (() of’ section 29(4) of the lnconw T;(x Act, 1962 (Act No, 58 of 1962).”. 1 () 15 Z() 25 4 N,l. 1~)2.55 (ioVFiRNf4FNT GAZFiTTti 9 SEPTEMBER 1998 Act N(I. 51, 1998 INS[[I<ANCE: S1;CONI) AMENDMENT ACT, 1998 Substitution of section 25 of Act 27 of 1943, as amenced by section 22 of Act 73 of 1951, section 8 of Act 39 of 1969, section 10 of Act 103 of 1979, section 11 of Act 99 of 1980, section 1 of Act 54 of 1991, section 4 of Act 83 of 1992 and section 8 of Act 1(M of 1993

2. The following section is hereby substituted for section 25 of the Insurance Act, 5 1943: “Amalgamation or transfer of insuranc~ business or conversion of domestic insurer 25. ( 1 ) A proposed timalgamatirm of tl [e whole or any port ot’ any business carried on by a domestic insurer w: h the whole or any part of my business carried on by any other person (im spective of whether that other person does [or does not] carry on insuranc~ business or not) or a proposed transfer of’ the whole or any part of any busil less from a domestic insurer to such other person or the proposed transfer (f the whole or any p art of any business lrom such other perwm to a do,nestic insurer or a proposed conversion of a domestic insurer which is not a company having a share capital into a public company having a sh; re capital shall not be of any force or etiect unless the transaction in respect of the tllll;tlg:~[llzitioll, [or] transfer or conversion has been confirrned– - (a) except in the case of a transfer contenlplated in section 25A, by the court, if any party to the transaction in question is or was carrying on long-term insurance bwsiness in the Rc public immediately before the commencement of or during the transaction; (b) by the registrar. if no purty to the trzu saction is or was carrying on l(mg-term imsurtince business in the Republic immediately before the commencement of or during the transaction; (<) in the case of’ a transfer contemplated i]) section 25A, by the registrar. [z) A &)t]les[ic insllrer who is a party to a transaction to which subsection. ( I )((i) applies shall, before application i: made to the court for the conlirmati(m of the transaction. and a dome ;tic insurer who is a party to a transaction to which subsection ( I )(b) or [( I )](() applies shall, prior to or simultaneously with the application to the r{ ’gistrar for confirmation of the transaction. furnish the registrar with a copy :~f the scheme for the proposed :Irll:llgarll[ltit)n, [m-] transfer or conversion a d with a copy of every report or statement [uponl on which the scheme is based or which is taken into account for the purposes of the scheme, and any party to the transaction in question shall thereafter at the request of the registrar furnish the latter with such other [information] particulws relatin~{ to the scheme W+ the registrar may [specify] require and m may be a\ ailable to the relevant party [concerned]. — (3) The registrar may iippoint a compe ent person (who shall be an independent actuary if subsection ( 1 )((1 or [(l)](c) applies to the tran&ction in question) to investigate and report [upon] on the said scheme. The parties to tbe transaction shall I!ear in equal share=he cost, or if there is only one party, that party shall bear tbe full cost, of th= investigation and report and of any copy of the report which the registrar may [have deemed] consider desirable to send to the said parties or party, and the court or the registrar shall not confirnl the transaction unless the said cost has been paid or guaranteed to the satisfaction of the registrar. (4) on the direction of the registrar my party to the [proposed] transaction in question shall send to every (Iwner of a policy under which the party is liable an(i to every shareholder o] creditor of any business under 1() 15 2tl 25 30 35 40 45 50 6 N{). 19255 (K)VERN vlENT GAZETTE. 9 SEPTEMBER 1998 — Act N(I. 51.1998 INSURANCE SECOND AME {DMENT ACT. 1998 his control, to which the said scheme relate;, a copy of the scheme and of any statement or report mentioned in subse :tion (2) or (3). (5) The court or the registrar shall not confirm the transaction in question unless every party thereto who has a princi~,al [office] or head office in the Remtblic has— (a)’ throughout the period of [twenty-one] Q days which commenced not more than [ninety] 90 days and not le A than [thirty] 30 days before the date upon whic~application is m:lde to the court~f subsection ( i ) (a) applies in connection with the (rmsaction); or (b) throughout any period of [twenty -ont’] 21 days which the registrar [deems] considers suitable (if subsection~l )(b) or [(1 )](c) applies in connection with the transaction). made available, at the said office, free of charge, to any owner of a policy, shareholder or creditor mentioned in subsection (4), for his inspection, a copy of each of the documents mentioned i I subsection (4). (6) The court or the registrar shall not confirm the transaction in question unless any person who is a party thereto ha;, upon a date not less than ten diiys and not more than [thirty] 30 days be ‘ore the commencement of the period of [twenty-one] 21 days mentioned [n subsection (5), caused to be published in the Gace&and in such newspaper or newspapers as the registrar may direct, a notice— (a) (b) indicating the nature of the said scheme; and stating that the relevant party or parties intend to apply to the court or to the registrar, m the case may be, for ~onfirmation of the transaction; and stating the date and hour when, and tbe place where, the application will be made (if subsection ( I )(a) applies to the transaction): and indicating the place or places where, and specifying the period during which, the documents mentioned in subsection (5) (which shall be specified in the notice) will be available for inspection [in terms ofl in — accordance with subsection (5). (c) (d) (7) The registrar, or any person representi ng the registrar, and any owner of a policy, shareholder or creditor affected or likely to be affected by the said scheme, shall be entitled to appear and to be beard on any application to the court [under] in terms of this section. and may make an application to the court on any matter in connection wi h the scheme. — (8) w On an application to the court for confirmation of the transaction in question, the court may confirm the transi.ction as proposed or with such modifications as the court may think fit to make. (b) If a domestic insurer which is not a c ~mpany having a share capital applies to the court for confirmation of a transaction or combination of transactions in respect of a scheme which pr~poses or is in connection with the demutualisation of the said insurer, such scheme may include, and the court may confirm, the following matters, ramely— (i) the allotment, issue or transfer to ony person by any party to such scheme of shares in the said insurer or in a company which is to become the holding company of any such party, whether in substitution for membership of the said insurer or otherwise; (ii) the cessation of membership of tke said insurer; (iii) the date on which such scheme takes effect, which date may be a date before or after the date of confirmation by the court. (9) On an application to the registrar for confirmation of the transaction in question, the registrar may confirm the [transaction as proposed, or he may suggest that tbe relevant party or parties [concerned] modify the 5 10 15 ’20 25 30 35 40 45 50 x N{). 1°255 ,\ct No. 51, 199!t (; OVI..RN rlENT GAZETTE, 9 SEPTEMBER 1998 INS(JRAN(”t.. SEC’ONI) AME 41)MENT ACT. 1998 [proposed] transaction in certain respects, and if [they] the purty or parties do st), be may cxmfirm the transact i(m as t mii ficd or be may decline to confirm it. ( I ()) If’ the registrar has declined to confi m the [proposed] tmnsaction, the relevant party or parties [thereto] may !nake an application to the court for confirmation of the [proposedl tm Isaction, and thereupon the provisions of subsections (7) and (8) shall t pply. (11 ) [A transaction confirmed by the court or by the registrar in accordance with this section shall be bin~ling on all persons, and shall have effect] A domestic insurer may p ropos~ , conclude or give effect to any transaction or combination of transtictiom contemplated in this section notwithstanding anything provided or not 1,rovicled in the law, memoran- dum or other document under which any par[y to the relevant trmsaction or trwrsactions is constituted or in the articles >f association or other rules Z any such party, and the transaction or ctlmbination of’ transactions, if confirmed by the court or by the registrar umler this section, shtill have legal force and be binding on all persons. ( 12) When a transaction has been conti med m aforesaid, the person controlling the amalgamated business or th~ person to whom any business has been transferred by the transaction or the domestic insurer converted thereunder, as the case may be, shall withfi sixty] 60 days as from the date of’ confirmation by the registrar m the date m whi~h the transaction takes %ect in terms of the order of court confi ming it, as the case may be. furnish the registrar with— a statement of the assets imd Iiab Iities of every party to the transaction- (i) as at the close of business immt diately preceding the date on which [the amalgamation or tra ~sfer takes effect in terms of] the transaction takes effect; and (ii) as at the commencement of busin :ss on [such] the said date, which statement shall be attested b { the auditor of’ [the party concerned] any such party as exhibiting:! truly and fairly the said assets and 1 inabilities according to the books and records of that party, and any other [information] particulars which may be necessary for that purpose; and a copy, certified by the registrar of tile court, of the transaction as corrtirmed by the court and of the ( ,~der of court confirming the transaction (if the transaction was conlirmed by the court); and a declaration signed by the chairman of every such party, and, if a foreign insurer is such a party, by [ hisl & public otlicer in the Republic, that to tbe best of his belief every payment made or to be made or other valuable consideration given or to be given to any person whatsoever on account of the ~unalgamation, [or] transfer g conversion is fully set forth in the tran wction as confirmed. ( 13) Any arrangement entered into between two or more insurers whereby a liability of any one of such insurtrs towards owners of policies is to be substituted for a liability of any other such insurer towards such owners (whether or nut the liability of the first-mentioned insurer is expressed in or created by the said policies ( r by new policies, or the terms of such new policies are the same as or different from the terms of the origimd policies), shall be deemed for the [urposes of this section to be a scheme for the transfer of the insurance business in question, unless the registrar has expressed himself satisfied th.~t the said owners of policies have been or will be made aware of’ the natur~ of [such] ~ substitution and have signified or’ will signify their consent thereto in writing. — ( 14) (u) If [in terms of] in accordance w~ this section any business of any insurer has been amalgamated with any “Wsiness of any other insurer or transferred to any other insurer. every oftic:r (including any Registrar of Deeds, any Master of the Supreme Court ard the Registrar of Companies) 5 () 5 20 25 30 35 40 45 50 55 I o N() 19255 Act N(). 51, 199tl GOVERNf4ENT GAZETTE, 9 SEPTEMBER 1998 [NSI.IRANCT SECOND AMS2{DMENT ACT, 1998 in charge ot’ any office in which property or any mortgage or other right is registered in the name of or [by] in favour o: the first-mentioned insurer or an ~ppointment of or [in favrmr ofl & the first-mentioned insurer was made or a Iicence was issued to or in favour of the first-mentioned insurer, upon production to him of a certificate in w)ich the registrar states that he 5 or the court, as the case may be, confirmed the amalgamation or transfer [in terms on under this section and upon prod~lction to him of the title deed, mortgage bond, deed, certificate, letter of .~ppointrnent, Iicence or other document in question, shall make such endorsement thereon and such entries in his registers or other books as may ‘>e necessary to effect or record 10 the transfer of the property, mortgage, other I ight, appointment or licence in question to the amalgamated business or the insurer to whom any business was transfemed, as tbe case may be, and no transfer or stamp duty or registration, licence or other fees shall b: payable in respect of any endorsement or entry made as aforesaid. 15 [b) The provisions of paragraph (a) shali, with the necessary changes, apply in respect of a domestic insurer ~jhich has been converted in accordance with this section into a public ccmpany having a share capital. ( 15)Any domestic insurer converted in accordance with this section shall continue its corporate existence in the form of a public company 20 incorporated under the Companies Act, 197? (Act No. 61 of 1973), and the Registrar of Companies shall register its memorandum and articles in accordance with section 63 of the said Act.”. Short title

3. This Act shall be called the Insurance Second Ameldment Act. 1998 25