5.—(1) After subsection (1) of section 5 of the 1982 Act (submission of proposals etc.) insert—
“(1A) The Secretary of State shall not issue an authorisation under section 3 above to an applicant which is a UK or non-EC company if it appears to him that the criteria of sound and prudent management are not or will not be fulfilled with respect to the applicant.”
(2) After subsection (3) of that section insert—
“(4) In this Act—
‘criteria of sound and prudent management’ means the criteria set out in Schedule 2A to this Act;
‘EEA State’ means a State which is a Contracting Party to the EEA Agreement but, until the EEA Agreement comes into force in relation to Liechtenstein, does not include the State of Liechtenstein;
‘EFTA State’ means an EEA State which is not a member State;
‘non-EC company’ means an insurance company—
whose head office is not in a member State;
which is authorised under section 3 or 4 above; and
whose business in the United Kingdom is not restricted to reinsurance business;
‘UK company’ means an insurance company—
which is incorporated in the United Kingdom;
whose head office is in the United Kingdom;
which is authorised under section 3 or 4 above;
whose business is not restricted to business to which subsection (5) below applies; and
which is not excluded from each Directive mentioned in that subsection by Article 3 of that Directive;
and any reference in this Part to an applicant or body which is a UK or non-EC company includes a reference to an applicant or body which would be such a company if the authorisation sought by it were issued.
(5) This subsection applies to—
(a)reinsurance business;
(b)business which is excluded from the first long term insurance Directive by Article 2(2) or (3) of that Directive;
(c)business which is excluded from the first general insurance Directive by Article 2(2)(b) of that Directive; and
(d)business which is exempted from the authorisation requirements contained in this Part of this Act by subsections (2) to (5) of section 2 above.”
(3) After Schedule 2 to the 1982 Act insert Schedule 1 to these Regulations (criteria ofsound and prudent management), as Schedule 2A.