Companies Act 1967

Insolvency and Winding up

79 Margin of solvency for general business.

(1) For subsection (1) of section 13 (margin of solvency) of the principal Act, there shall be substituted the following subsection:—

“(1) An insurance company to which this Act applies, being a company which carries on (whether within or outside Great Britain) general business, shall be deemed for the purposes of section two hundred and twenty-two of the [1948 c. 38.] Companies Act 1948 (which authorises the court to wind up a company unable to pay its debts), to be unable to pay its debts if, at any time in its first financial year, the value of its assets does not exceed the amount of its liabilities by £50,000, or if, at any time after the expiration of that year, the value of its assets does not exceed the amount of its liabilities by the amount which is the relevant amount for the purposes of section 62(1)(a) of the Companies Act 1967 ; and the provisions of this Act as to winding up shall have effect accordingly”.

(2) Subject to the provisions of the following subsection, the Board of Trade may, at any time before the expiration of the period of two years beginning with the day on which this Act is passed, direct that, until the expiration of such period (expiring not later than the expiration of the period aforesaid) as may be specified in the direction, the subsection substituted by the foregoing subsection shall, in its application to an insurance company so specified, being one which, immediately before the passing of this Act, was carrying on (whether within or outside Great Britain) business which then constituted general business for the purposes of the principal Act, have effect subject to such relaxative modifications as may be so specified.

(3) The power conferred by the last foregoing subsection on the Board of Trade shall not be exercisable in relation to a company so long as a petition to wind it up is before the court.

80 Provision for securing that a company's solvency is maintained.

(1) If it appears to the appropriate authority that the business of an insurance company to which the principal Act applies is being so conducted that there is a risk of the company's becoming insolvent, that authority may impose on the company all or any of the following requirements, namely:—

(a) a requirement that the company shall not make investments of a specified class and shall, before the expiration of a specified period (or such longer period as the appropriate authority may allow), realise investments of that class held by it immediately before the requirement is imposed;

(b) a requirement that assets of the company to a value not less at any time than the amount of its domestic liabilities at that time shall be maintained in the United Kingdom;

(c) a requirement that assets of the company of a specified description, free from any mortgage or charge and to a value not less at any time than whichever is the greater of the following amounts, that is to say, the amount of a specified proportion of the domestic liabilities of the company, society or body at that time and £50,000, shall be maintained in the United Kingdom and that those assets, or, in the case of any of them to which there are documents of title, those documents, shall be held in the custody of a person approved for the purposes of this section by the appropriate authority ;

(d) a requirement that the company shall take all such steps as are requisite to secure that the aggregate of the premiums to be received by it in consideration of the undertaking by it, during a specified period beginning not earlier than twenty-eight clear days after the requirement is imposed, of liabilities in the course of carrying on business of a specified class (being one of the classes relevant for the purposes of this Part of this Act) shall not exceed a specified amount;

(e) a requirement that the company shall, at specified times or intervals, furnish to the appropriate authority information about specified matters, being, if that authority so require, information verified in a specified manner.

(2) Subsections (2) and (3) of section 65 of this Act shall have effect for the purposes of this section subject to the modifications that, in the said subsection (2), for the reference to paragraph (b) or (c) of section 65(1), there shall be substituted a reference to paragraph (b) or (c) of subsection (1) of this section, and, for the reference to the Board of Trade, there shall be substituted a reference to the appropriate authority, and, in the said subsection (3), for the reference to paragraph (c) of section 65(1), there shall be substituted a reference to paragraph (c) of subsection (1) of this section ; and section 66 of this Act shall have effect where a requirement is imposed by virtue of paragraph (c) of subsection (1) above as it does where a requirement is imposed by virtue of paragraph (c) of section 65(1) of this Act, subject to the modifications that, for any reference to paragraph (c) of the said section 65(1), there shall be substituted a reference to paragraph (c) of subsection (1) of this section, and for the reference to the Board of Trade, there shall be substituted a reference to the appropriate authority.

(3) In relation to a company which carries on in Great Britain no insurance business other than industrial assurance business, paragraph (d) of subsection (1) above shall have effect with the substitution, for the words " business of a specified class (being one of the classes relevant for the purposes of this Part of this Act) " , of the words " industrial assurance business ".

(4) A requirement imposed under this section may be rescinded by the appropriate authority if it appears to it that it is no longer necessary for the requirement to continue in force.

(5) When the appropriate authority imposes under subsection (1)(c) of this section a requirement on a company or rescinds a requirement so imposed, it shall forthwith serve—

(a) except where the requirement is one imposed on a registered society (other than one registered in Northern Ireland), on the registrar of companies ;

(b) in the said excepted case, on the appropriate registrar as defined by section 73(1) of the [1965 c. 12.] Industrial and Provident Societies Act 1965;

written notice stating that fact and, in the case of a notice of the imposition of a requirement, setting out the terms of the requirement and, in the case of a notice of the rescission of a requirement, identifying the requirement.

(6) Subsections (7) and (8) of section 65 of this Act shall have effect for the purposes of this section subject to the modification that, for any reference to a notice served in pursuance of subsection (6) of that section, there shall be substituted a reference to a notice served in pursuance of the last foregoing subsection.

(7) In this section, " appropriate authority ", in relation to a company, means—

(a) except in the case of a company which carries on in Great Britain no insurance business other than industrial assurance business, the Board of Trade ; and

(b) in the said excepted case, the Industrial Assurance Commissioner;

and " domestic liabilities " shall be construed in accordance with section 65(9) of this Act.

81 Board of Trade's powers to petition for winding up of insurance company.

For subsection (2) of section 15 of the principal Act (which empowers the Board of Trade, with the leave of the court, to present a petition for the winding up, in accordance with the [1948 c. 38.] Companies Act 1948, of an insurance company subject to be Wound up under that Act, on the ground that it is unable to pay its debts or that an investigation under section 14 of the principal Act by an inspector appointed by the Board has been obstructed), there shall be substituted the following subsection:—

“(2) The Board of Trade may present a petition for the winding up, in accordance with the Companies Act 1948, of an insurance company to which this Act applies, being a company which may be wound up by the court under the provisions of the said Act of 1948, on the ground—

(a) that the company is unable to pay its debts within the meaning of sections two hundred and twenty-two and two hundred and twenty-three of the said Act of 1948 ; or

(b) that the company has failed to satisfy an obligation to which it is subject by virtue of section four, five or seven of this Act or that there has, in the case of the company, been a failure to comply with subsection (1), (3), (5) or (6) of section eight of this Act or with section nine of this Act or any provision applied by regulations made for the purposes of that section ; or

(c) that the company, being under the obligation imposed by section one hundred and forty-seven of the said Act of 1948 with respect to the keeping of proper books of account, has failed to satisfy that obligation or to produce books kept in satisfaction of that obligation and that the Board of Trade are unable to ascertain the financial position of the company”.