INSURANCE BUSINESS (CUSTODIAN OF ASSETS) REGULATIONS (custodianofassets)

SUBSIDIARY LEGISLATION 403.02

INSURANCE BUSINESS (CUSTODIAN OF ASSETS)

REGULATIONS

30th March, 1999

LEGAL NOTICE 62 of 1999, as amended by Legal Notice 426 of 2007.

The title of these regulations is the Insurance Business

(Custodian of Assets) Regulations.

L.N. 426 of 2007.

(Regulation 4)

CUSTODIANS OF ASSETS

The following persons shall act as custodians of assets for the purposes of

article 18 of the Act and hold in custody for companies’ account assets specified in

this Schedule and assigned to their custody.

1. The Central Bank of Malta shall act as custodian of assets consisting of the

following description -

(a) investments approved by the Authority listed or dealt in on a foreign

stock exchange or regulated market acceptable to the Authority; and

(b) currency deposits acceptable to the Authority in a bank or credit

institution of first class standing lawfully carrying on the business of

banking in a country outside Malta.

Any document of title of such assets of a company shall be made in the name

of the Central Bank of Malta for the account of the company and be deposited with

and held by the Central Bank or any of its appointed agents as custodian for the

company.

2. Any bank or credit institution of first class standing lawfully carrying on the

business of banking in Malta shall act as custodian of assets consisting of currency

deposits whether in euro or any other convertible currency.

Any such deposits made by a company shall be in the name of the Malta

Financial Services Authority for the account of the company.

3. For the purposes of this Schedule -

"bank" and "credit institution" have the same meanings as are assigned to them by

article 2 of the Banking Act;

"convertible" has the same meaning as is assigned to it by article 2 of the Central

Bank of Malta Act;

"deposit" has the same meaning as is assigned to it by article 2 of the Banking Act;

"regulated market" means a market which is characterised by -

(a) regular operation;

(b) the fact that regulations issued or approved by the competent authority

of the state where the market is situated -

(i)

define the conditions for the operation of and access to the

market;

(ii) define the conditions to be satisfied by a financial instrument in

order for it to be effectively dealt in on the market; and

(iii) require compliance with reporting and transparency requirements

comparable to those set out in an international regulated market of

good repute; and

(c) the fact that the financial instruments dealt in are of a quality

comparable to those in an international regulated market of good repute.

(1)

In these regulations, unless the context otherwise

requires -

"the Act" means the Insurance Business Act;

"assets", in relation to a custodian, shall be construed in

accordance with the provisions of the Schedule;

"Authority" means the Malta Financial Services Authority

established by article 3 of the Malta Financial Services Authority

Act and appointed under article 3 of the Act to be the competent

authority for the purposes of the Act;

"Central Bank of Malta" or "Central Bank" means the bank

established by article 3 of the Central Bank of Malta Act;

"custodian of assets" or "custodian", in relation to assets held or

required to be held in custody for a company’s account by virtue of

any provision of the Act, shall be construed in accordance with the

provisions of regulation 4 and the Schedule.

(2) Words and expressions which are also used in the Act have

the same meanings as in the Act.

(1) Where there is imposed on an authorised company by

virtue of any provision of the Act a requirement that the whole or a

specified proportion of the assets required to be maintained in

Malta by the company under any provision of the Act shall be

deposited with and held in custody for the company’s account by a

person as custodian of assets for the company, the company shall

deposit such assets with a person prescribed by regulation 4 as

custodian of assets and that person shall hold such assets in custody

f o r t h e c o m p a n y ’s a c c o u n t i n a c c o r d a n c e w i t h a n y w r i t t e n

arrangements made between the company, that person and the

Authority.

(2) The arrangements referred to in subregulation (1) shall be

made in such form and manner as to satisfy the provisions of the

Act relevant to such requirement, these regulations and any such

directive which the Authority may, from time to time, either

generally or specifically, issue in writing with respect to the

purpose or security of those assets.

(3) The Authority shall be party to those arrangements solely

for the purpose of ensuring the enforceability of the provisions of

those arrangements and the Act; and any expenses incurred by or

under those arrangements shall be borne by the company

concerned.

(4) Assets of an authorised company held in custody for the

company’s account by a person as custodian for the company shall

be taken to be held by that person in compliance with a requirement

imposed by virtue of any provision of the Act if, and only if, they

are assets in whose case the company has made with that person

and the Authority written arrangements in the form and manner

specified in subregulation (2) that they are to be held by that person

in compliance with such a requirement or they are assets into which

assets in whose case the company has made with that person and

the Authority such written arrangements have, by any transaction

or series of transactions, been transposed by that person on the

instructions of the company and with the approval of the Authority

given in writing.

(5) No assets held in custody for a company’s account by a

p e r s o n a s c us t o di a n f or th e c o m p a n y i n c o m pl i a n c e w it h a

requirement imposed by virtue of any provision of the Act shall, so

long as the requirement is in force, be released except with the

approval of the Authority given in writing.

(6) If a hypothec or charge is created by a company at a time

when there is in force a requirement imposed on the company by

virtue of any provision of the Act, being a hypothec or charge

conferring a security on any assets which are held in custody for

the company’s account by a person as custodian for the company in

compliance with the requirement, the hypothec or charge shall, to

the extent that it confers such a security, be void against the

liquidator and any creditor of the company.

(7) The provisions of this regulation shall not apply to a

company if the business carried on by that company is restricted to

reinsurance or affiliated insurance.

For the purposes of article 18 of the Act any person listed

in the Schedule shall act as custodian of assets for an authorised

company and hold in custody for the company’s account assets of a

description specified in the said Schedule and therein assigned to

that person’s custody.

Where assets of an authorised company held in custody for

the company’s account by virtue of any provision of the Act by a

person as custodian for the company are held by the Central Bank

of Malta or any of its appointed agents, such assets shall be deemed

to have been deposited with and held by the Central Bank if, and

only if, the documents of title of such assets are unassailable in that

the assets held in custody are not subject to any court injunction or

encashment by the registered holder without the knowledge of the

Central Bank on the basis of a duplicate certificate.

(1) Any assets of a company whose head office is in a

country outside Malta held by the company under article 5(1)(b) or

article 22(1) of the Insurance Business Act, 1981 ("the 1981 Act"),

repealed by the Act, shall, on the appointed date or on the date of

conforming with the provisions of the Act, whichever is earlier, be

deemed to be assets or a proportion of assets which the company is

required to maintain in Malta by virtue of any provision of the Act;

and, with respect to those assets, it shall further be deemed that the

Authority has imposed on the company under article 18 of the Act

an additional requirement that the whole of such assets shall be

deposited with and held in custody for the company’s account by a

person as custodian for the company.

(2) Until such time as the amount of assets required to be

maintained in Malta under the provisions of the Act is prescribed or

determined, the amount of assets held in custody for the company’s

account in accordance with subregulation (1) shall continue to be

calculated in accordance with the provisions of the 1981 Act

relating to the maintenance of such assets as if such provisions

were provisions prescribed under the Act; and such assets shall at

all times be not less than the amount held by the company under the

1981 Act on the appointed date or on the date of conforming with

the provisions of the Act, whichever is earlier.

(3) For the purpose of subregulation (1), any person who holds

assets of a company as aforesaid shall, for so long as the provisions

of the said subregulation remain in force on the company, continue

to hold such assets and, with respect to such assets, such person

shall be deemed to be custodian of such assets for the company for

the purposes of this regulation notwithstanding the fact that such

person may not be included in the list of custodians contained in

the Schedule.

(4) The provisions of this regulation shall remain in force on a

company as aforesaid and on a person acting as custodian as

aforesaid until such time as regulations governing the maintenance

of assets in Malta are prescribed and the company, the person who

shall act as custodian for the company under regulation 3 and the

Authority have, with respect to those assets, made arrangements as

are envisaged in regulation 3, or the company has, with the

approval of the Authority given in writing, applied those assets to

satisfy any obligation to which it is subject by virtue of any

provision of the Act, or the company has obtained from the

Authority the release of those assets.

INSURANCE BUSINESS (CUSTODIAN OF ASSETS)

Amended by