SCHEDULE 1 [SCHEDULE 13A TO 1992 ACT]
SUPERVISION OF CONTROLLERS OF FRIENDLY SOCIETIES TO WHICH SECTION 37(2) OR (3) APPLIES
Regulation 14

Approval of person proposing to become controller
1 (1) No person shall become a controller of a friendly society to which section 37(2) or (3) above applies unless–
(a) he has served on the Commission a notice stating–
(i) that he intends to become a controller of the society; and
(ii) the details of the voting rights which he proposes to acquire; and
(b) either the Commission has, before the expiration of the period of three months beginning with the date of service of that notice, notified him that there is no objection to his becoming a controller of the society, or that period has elapsed without the Commission having served on him a notice of objection.
(2) The Commission may serve a notice of objection under sub–paragraph (1) above on the ground–
(a) that it appears to the Commission that the person concerned is not a fit and proper person to become a controller of the society; or
(b) that it appears to it that, if that person were to acquire such voting rights, the criteria of prudent management would not or might not continue to be fulfilled in respect of the society.
(3) Before serving such a notice the Commission shall serve on the person proposing to become a controller a preliminary notice stating–
(a) that the Commission is considering the service on that person of a notice of objection on that ground; and
(b) that the person may, within the period of one month from the date of service of the preliminary notice, make written representations to the Commission and, if that person so requests, oral representations to an officer of the Commission appointed for the purpose by the Commission.
(4) The Commission shall not be obliged to disclose to any person any particulars of the ground on which he is considering the service on him of a notice of objection.
(5) Where representations are made in accordance with this paragraph the Commission shall take them into consideration before serving the notice of objection.

Approval of acquisition of notifiable voting rights
2 (1) No person who is a controller of a friendly society to which section 37(2) or (3) above applies shall acquire notifiable voting rights in the society unless–
(a) he has served on the Commission a notice stating–
(i) that he intends to acquire such voting rights; and
(ii) the details of the voting rights which he proposes to acquire; and
(b) either the Commission has, before the expiration of the period of three months beginning with the date of service of that notice, notified him that there is no objection to his proposed acquisition of the voting rights, or that period has elapsed without the Commission having served on him a notice of objection.
(2) The Commission may serve a notice of objection under sub–paragraph (1) above on the ground–
(a) that it appears to the Commission that the person concerned is not a fit and proper person to acquire such voting rights; or
(b) that it appears to it that, if that person were to acquire such voting rights, the criteria of prudent management would not or might not continue to be fulfilled in respect of the society.
(3) Sub–paragraphs (3) to (5) of paragraph 1 above shall, with the necessary modifications, apply for the purposes of this paragraph as they apply for the purposes of that paragraph.

Provisions supplementing paragraphs 1 and 2
3 (1) This paragraph applies where a person who proposes—
(a) to become a controller of a friendly society to which section 37(2) or (3) above applies; or
(b) to acquire notifiable voting rights in such a society,
has served notice on the Commission under sub-paragraph (1)(a) of paragraph 1 or 2 above (“the relevant paragraph”).
(2) The Commission may by notice require the person serving the notice to provide such additional information or documents as the Commission may reasonably require for the purpose of deciding whether to serve–
(a) a notice of objection under the relevant paragraph; or
(b) a notice imposing conditions under paragraph 5 below.
(3) Where additional information or documents are required from any person by a notice under sub–paragraph (2) above, the time between the giving of that notice and the receipt of the information or documents shall be added to the period mentioned in sub–paragraph (1)(b) of the relevant paragraph.
(4) The notice shall be of no effect for the purposes of sub–paragraph (1) of the relevant paragraph if either the notice is withdrawn or–
(a) in the case of a notice under paragraph 1(1)(a) above, the person by whom it was served does not become a controller of the society; or
(b) in the case of a notice under paragraph 2(1)(a) above, the person by whom it was served does not acquire the voting rights specified in the notice,
before the end of the period of one year beginning with the date mentioned in sub–paragraph (5) below.
(5) The date referred to in sub–paragraph (4) above is as follows–
(a) in the case where the Commission has, before the end of the period mentioned in sub– paragraph (1)(b) of the relevant paragraph, given to the person serving the notice such a notification as is mentioned in that provision, the date of that notification;
(b) in a case where the Commission has, before the end of that period, served a notice imposing conditions on that person in accordance with paragraph 5 below, the date of the service of that notice; and
(c) in any other case, the date immediately following the end of that period.
(6) The period mentioned in sub–paragraph (1)(b) of the relevant paragraph shall be deemed not to expire until fourteen days after the end of the period within which representations may be made in accordance with that paragraph.

Notice of objection where requisite notice not given
4 (1) This paragraph applies where a person–
(a) becomes a controller of a friendly society to which section 37(2) or (3) above applies; or
(b) acquires notifiable voting rights in such a society,
in contravention of sub-paragraph (1)(a) of paragraph 1 or 2 above; and references in this paragraph to the person in breach shall be construed accordingly.
(2) The Commission–
(a) may serve the person in breach with a notice of objection at any time within three months after it becomes aware of the contravention; and
(b) for the purpose of deciding whether to serve the person in breach with such a notice or with a notice imposing conditions under paragraph 5 below, may require that person by notice to provide such information or documents as the Commission may reasonably require.
(3) Before serving a notice of objection under sub–paragraph (2) above, the Commission shall serve on the person in breach a preliminary notice–
(a) stating that the Commission is considering serving a notice of objection on the person in breach; and
(b) specifying the matters mentioned in sub–paragraph (5) below as respects which the Commission is not satisfied.
(4) A person served with a preliminary notice under sub–paragraph (3) above may, within the period of one month from the date of service of that notice–
(a) make written representations to the Commission; and
(b) if that person so requests, oral representations to an officer of the Commission appointed for that purpose by the Commission.
(5) The Commission shall not serve a notice of objection under sub–paragraph (2) above unless it appears to the Commission–
(a) that the person in breach is not or may not be a fit and proper person to be a controller of the society or to retain the notifiable voting rights in the society; or
(b) that the interests of members and potential members of the society are or may in some other manner be jeopardised by that person’s ability to influence the society.
(6) Where representations are made in accordance with this paragraph the Commission shall take them into consideration before a notice of objection.
(7) The Commission shall not be obliged to disclose to the person in breach any particulars of the ground on which he is considering the service of a notice of objection.
(8) The period mentioned in sub–paragraph (2)(a) above shall be deemed not to expire until fourteen days after the end of the period within which representations may be made in accordance with this paragraph.

Notices imposing conditions
5 (1) This paragraph applies where either–
(a) paragraph 3 above applies and the Commission is entitled to serve a notice of objection under the relevant paragraph; or
(b) paragraph 4 above applies;
and expressions in this paragraph which are also used in paragraph 3 or 4 above have the same meanings as in that paragraph.
(2) If the Commission considers that, if certain conditions were complied with–
(a) by the person serving the notice under sub–paragraph (1)(a) of the relevant paragraph; or
(b) by the person in breach,
the criteria of prudent management would continue to be or, as the case may be, would be fulfilled in respect of the society, it may, instead of serving a notice of objection under the relevant paragraph or paragraph 4 above, serve on that person a notice requiring those conditions to be complied with by that person (“the person concerned”).
(3) Before serving a notice under sub–paragraph (2) above, the Commission shall serve on the person concerned a preliminary notice stating–
(a) that the Commission is considering serving a notice under sub–paragraph (2) above;
(b) the conditions which would be required by such a notice to be complied with by that person;
(c) the criteria of prudent management which it considers would not be fulfilled in respect of the society if neither such a notice nor a notice of objection were served on that person; and
(d) that the person may, within the period of one month from the date of service of the preliminary notice–
(i) make written representations to the Commission; and
(ii) if that person so requests, oral representations to an officer of the Commission appointed for the purpose by the Commission.
(4) Where representations are made in accordance with this paragraph the Commission shall take them into consideration before serving a notice under sub–paragraph (2) above.
(5) The Commission shall not be obliged to disclose to the person concerned any particulars of the ground on which it is considering service on that person of a notice under sub–paragraph (2) above or a notice of objection under the relevant paragraph or, as the case may be, paragraph 4 above.

Objection to existing controller
6 (1) Where it appears to the Commission, as respects a friendly society to which section 37(2) or (3) above applies, that the criteria of prudent management are not or may not be fulfilled in respect of the society by reason of the ability of a person who is a controller of the society to influence the society, it may serve on that person a notice of objection to that person continuing to be a controller of the society.
(2) Before serving a notice of objection under this paragraph, the Commission shall serve on the person concerned a preliminary notice stating that the Commission is considering serving a notice of objection under this paragraph.
(3) A notice under sub–paragraph (2) above shall–
(a) give particulars of the rights conferred by sub–paragraph (4) below; and
(b) specify the criteria of prudent management which are not or may not be fulfilled in respect of the society.
(4) A person served with a notice under sub–paragraph (2) above may, within the period of one month beginning with the day on which the notice is served–
(a) make written representations to the Commission; and
(b) if that person so requests, oral representations to an officer of the Commission appointed for the purpose by the Commision.
(5) Where representations are made in accordance with this paragraph, the Commission shall take them into account in deciding whether to serve a notice of objection.
(6) The Commission shall not be obliged to disclose to the person concerned or to the society any particulars of the ground on which it is considering the service of a notice of objection.

Restrictions etc. as respects voting rights
7 (1) This paragraph applies where a person–
(a) has contravened paragraph 1 or 2 above by becoming a controller of a friendly society to which section 37(2) or (3) above applies, or by acquiring notifiable voting rights in such a society;
(b) having become such a controller or acquired such voting rights in contravention of paragraph 1 or 2 above, continues to be such a controller or to retain those voting rights after being served with a notice of objection under paragraph 4 above;
(c) having been served with a notice imposing conditions under paragraph 5 above, has failed to comply with any of the conditions specified in that notice; or
(d) having been served with a notice of objection under paragraph 6 above to his continuing to be such a controller, continues to be such a controller;
and references in this paragraph to the person in breach shall be construed accordingly.
(2) The Commission may by notice served on the person in breach direct that–
(a) no voting rights shall be exercisable by that person;
(b) that any vote cast by that person shall be ineffective;
(c) that any resolution adopted, in relation to which that person voted, shall be ineffective and treated as void;
(d) any appointment of that person as a delegate shall be void;
(e) that person may be disqualified from membership of the society.
(3) A copy of the notice served on the person in breach under sub–paragraph (2) above shall be served on the society to whose voting rights it relates.

Notification of changes of controller
8 (1) A person who becomes or ceases to be–
(a) a controller of a friendly society to which section 37(2) or (3) above applies; or
(b) a 10 per cent. controller, a 20 per cent. controller, a 33 per cent. controller, a 50 per cent. controller or a majority controller of such a society,
shall, before the expiration of the period of seven days beginning with the day next following that on which he does so, notify the society of that fact.
(2) If, after ceasing to be a controller of any description mentioned in sub–paragraph (1) above, a person will still be a controller of the society, his notice under that sub–paragraph shall state the percentage of the voting power which he will (alone or with any associate or associates) hold or be entitled to exercise or control.
(3) A friendly society to which section 37(2) or (3) above applies shall give notice to the central office of the fact that any person has become or ceased to be–
(a) a controller of the society; or
(b) a controller of the society of any description mentioned in sub–paragraph (1) above;
and that notice shall be given before the expiration of the period of one month beginning with the day next following that on which that fact comes to the society’s knowledge.
(4) Any notice under this paragraph shall state–
(a) the person’s full name and address;
(b) the date on which he became, or ceased to be, a controller of the society, or a controller of the society of any description mentioned in sub–paragraph (1) above; and
(c) in the case of a person becoming such a controller, the date of his birth.
(5) Any person who fails to comply with sub–paragraph (1) or (3) above shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale.
(6) On receipt of a notice under this paragraph, the central office shall record the name of the person to whom the notice relates and the date on which he became or, as the case may be, ceased to be a controller of any description, in the public file of the society.

SCHEDULE 2 [SCHEDULE 13B TO 1992 ACT]
RECOGNITION IN OTHER EEA STATES OF FRIENDLY SOCIETIES TO WHICH SECTION 37(2) OR (3) APPLIES
Regulation 15

PART I FRIENDLY SOCIETIES CARRYING ON BUSINESS ETC, IN OTHER MEMBER STATES

Requirements for carrying on insurance business
1 (1) A friendly society to which section 37(2) or (3) above applies shall not carry on direct insurance business of a class or part of a class through an overseas branch in a member State other than the United Kingdom unless–
(a) the society is authorised under section 32 above to carry on insurance business of that class or part of a class; and
(b) the requirements of this paragraph have been complied with in relation to that branch.
(2) The requirements of this paragraph are–
(a) that the society has given to the Commission a notice containing both the requisite EC details and the requisite UK details;
(b) that the Commission has given to the supervisory authority in the member State in which the overseas branch is to be established (“the member State of the branch”)–
(i) a notice which contains the requisite EC details; and
(ii) a certificate in accordance with sub–paragraph (3) below; and
(c) that either–
(i) that authority has informed the Commission of the conditions which, in the interest of the general good, must be complied with by the society in carrying on insurance business through the branch; or
(ii) the period of two months beginning with the day on which the Commission gave that authority the certificate mentioned in paragraph (b) above has elapsed.
(3) A certificate is in accordance with this sub–paragraph if it–
(a) attests that the society has the minimum margin of solvency calculated in accordance with such of the following as are appropriate–
(i) Articles 16 and 17 of the first general insurance Directive, and
(ii) Articles 19 and 20 of the first life Directive; and
(b) indicates the classes of insurance business which the society is authorised to carry on in the United Kingdom.
(4) The Commission shall, within the period of three months beginning with the date on which the society’s notice was received–
(a) give the notice and certificate referred to in sub–paragraph (2)(b) above; or
(b) refuse to give either or both of those documents.
(5) The Commission shall, within the period of three months referred to in sub–paragraph (4) above, notify the society–
(a) that it has given the notice and certificate referred to in sub–paragraph (2)(b) above, stating the date on which it did so; or
(b) that it has refused to give either or both those documents, stating the reasons for the refusal.
(6) The Commission shall not refuse to give the notice referred to in sub–paragraph (2)(b) above unless, having regard to the business to be carried on through the overseas branch, it appears to it that the criteria of prudent management would not or might not continue to be fulfilled in respect of the society.
(7) Where the supervisory authority in the member State of the branch has informed the Commission as mentioned in paragraph (2)(c)(i) above, the Commission shall forward the information to the society.
2 (1) A friendly society to which section 37(2) or (3) above applies shall not change the requisite EC details of an overseas branch–
(a) which has been established by it in a member State other than the United Kingdom (“the member State of the branch”); and
(b) through which it carries on direct insurance business,
unless the requirements of this paragraph have been complied with in relation to its making of the change.
(2) Subject to sub–paragraph (3) below, the requirements of this paragraph are–
(a) that the society has given a notice to the Commission, and to the supervisory authority in the member State of the branch, stating the details of the proposed change not less than one month before the change is to take place;
(b) that the Commission has sent to that authority a notice in accordance with sub–paragraph (4)(a) below; and
(c) that either–
(i) that authority has informed the society of any consequential changes in the conditions which, in the interest of the general good, must be complied with by the society in carrying on insurance business through the branch; or
(ii) the period of two months beginning with the day on which the society gave that authority the notice of the proposed change in accordance with paragraph (a) above has elapsed.
(3) In the case of a change occasioned by circumstances beyond the society’s control, the requirements of this paragraph are that the society shall as soon as practicable (whether before or after the change) give a notice to the Commission, and to the supervisory authority in the member State of the branch, stating the details of the change.
(4) The Commission shall, as soon as practicable after receiving a notice under sub–paragraph (2)(a) above–
(a) give notice to the the supervisory authority in the member State of the branch informing it of the proposed change; or
(b) refuse to give such notice.
(5) The Commission shall, as soon as practicable after making a decision under sub–paragraph (4) above, notify the society–
(a) that it has given the notice referred to in that sub–paragraph, stating the date on which it did so; or
(b) that it refused to give the notice, stating the reasons for that refusal.
(6) The Commission shall not refuse to give the notice referred to in sub–paragraph (4)(a) above unless, having regard to the proposed change, it appears to it that the criteria of prudent management would not or might not continue to be fulfilled in respect of the society.
3 (1) A friendly society to which section 37(2) or (3) above applies shall not change the requisite UK details of an overseas branch–
(a) which has been established by it in a member State other than the United Kingdom; and
(b) through which it carries on direct insurance business,
unless the requirements of this paragraph have been complied with in relation to its making of the change.
(2) Subject to sub–paragraph (3) below, the requirements of this paragraph are that the society has given a notice to the Commission stating the details of the proposed change not less than one month before the change is to take place.
(3) In the case of a change occasioned by circumstances beyond the society’s control, the requirements of this paragraph are that the society shall as soon as practicable (whether before or after the change) give a notice to the Commission stating the details of the change.

Requisite details for purposes of paragraphs 1 to 3
4 (1) The requisite EC details for the purposes of paragraphs 1 and 2 above are–
(a) the member State in which the overseas branch is to be or has been established (“the member State of the branch”);
(b) the address of the branch and confirmation that that address is an address for service on the society’s authorised agent;
(c) the name of the society’s authorised agent;
(d) the classes and parts of classes of insurance business to be carried on, and the nature of the risks or commitments to be covered, in the member State of the branch;
(e) details of the structural organisation of the branch;
(f) the guiding principles as to reinsurance of business to be carried on in the member State of the branch, including the society’s maximum retention per risk or event after all reinsurance ceded;
(g) estimates of the following, namely–
(i) the costs of installing administrative services and the organisation for securing business in the member State of the branch; and
(ii) the resources available to cover those costs;
(h) for each of the first three financial years following the establishment of the branch–
(i) estimates of the society’s margin of solvency and the margin of solvency required, and a statement showing how both have been calculated;
(ii) in the case of a society which intends to carry on long term business, the details mentioned in sub–paragraph (2) below as respects the business to be carried on in the member State of the branch; and
(iii) in the case of a society which intends to carry on general business, the details mentioned in sub–paragraph (3) below as respect the business to be so carried on; and
(i) in the case of a society which intends to cover health insurance risks, the technical bases which will be used for calculating premiums in respect of such risks.
(2) The details referred to in sub–paragraph (1)(h)(ii) above are–
(a) a statement showing, on both optimistic and pessimistic bases, for each type of contract or treaty–
(i) the number of contracts or treaties expected to be issued;
(ii) the total premium income, both gross and net of reinsurance ceded;
(iii) the total sums assured or the total amounts payable each year by way of annuity;
(b) a statement setting out, on both optimistic and pessimistic bases, detailed estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions; and
(c) estimates relating to the financial resources intended to cover underwriting liabilities.
(3) The details referred to in sub–paragraph (1)(h)(iii) above are–
(a) estimates relating to expenses of management (other than costs of installation), and in particular those relating to current general expenses and commissions;
(b) estimates relating to premiums or contributions (both gross and net of all reinsurance ceded) and to claims (after all reinsurance recoveries); and
(c) estimates relating to the financial resources intended to cover underwriting liabilities.
(4) The requisite UK details for the purposes of paragraphs 1 and 3 above are–
(a) the names of the society’s managers and main agents in the member State of the branch;
(b) particulars of any association which exists or is proposed to exist between–
(i) the committee of management and the controllers (if any) of the society; and
(ii) any person who will act as an insurance broker, agent, loss adjuster or reinsurer for the society in the member State of the branch;
(c) the names of the principal reinsurers of business to be carried on in the member State of the branch;
(d) the sources of business in the member State of the branch (for example, insurance brokers, agents, own employees or direct selling) with the approximate percentage expected from each of those sources;
(e) copies or drafts of the following, namely–
(i) any separate reinsurance treaties covering business to be written in the member State of the branch;
(ii) any standard agreements which the society will enter into with persons who will be sources of business in the member State of the branch;
(iii) any agreements which the society will enter into with persons (other than employees of the society) who will manage the business to be carried on in the member State of the branch;
(f) in the case of a society which intends to carry on long term business–
(i) the technical bases which the appointed actuary proposes to use for each class of business to be carried on in the member State of the branch, including the bases needed for calculating premium rates and mathematical reserves;
(ii) a statement by that actuary as to whether he considers that the premium rates that will be used in the member State of the branch are suitable;
(iii) a statement by that actuary as to whether he agrees with the information provided under sub–paragraphs (1)(f) and (2)(b) and (c) above; and
(iv) the technical bases used to calculate the statements and estimates referred to in sub– paragraph (2) above; and
(g) in the case of a society which intends to carry on general business, copies or drafts of any agreements which the society will have with main agents in the member State of the branch.
(5) In this paragraph “authorised agent” means an agent or employee of the society who has authority–
(a) to bind the society in its relations with third parties; and
(b) to represent the society in its relations with supervisory authorities and courts in the member State of the branch.

Requirements for providing insurance
5 (1) A friendly society to which section 37(2) or (3) above applies shall not provide insurance of any class or part of a class in a member State other than the United Kingdom unless–
(a) the society is authorised under section 32 above to carry on insurance of that class or part of a class; and
(b) the requirements of this paragraph have been complied with in relation to the provision of the insurance in that member State.
(2) The requirements of this paragraph are–
(a) that the society has given to the Commission a notice containing the requisite details; and
(b) that the Commission has given to the supervisory authority in the member State in which the insurance is to be provided–
(i) a notice which contains the requisite details; and
(ii) a certificate in accordance with sub–paragraph (3) below.
(3) A certificate is in accordance with this sub–paragraph if it–
(a) attests that the society has the minimum margin of solvency calculated in accordance with such of the following as are appropriate–
(i) Articles 16 and 17 of the first general insurance Directive, and
(ii) Articles 19 and 20 of the first life Directive; and
(b) indicates the classes of insurance business which the society is authorised to carry on in the United Kingdom.
(4) Where the society intends to provide insurance in more than one member State, the requisite details may be contained in a single notification but must be set out separately in relation to each member State.
(5) The Commission shall, within the period of one month beginning with the date on which the society’s notice was received–
(a) give the notice and certificate referred to in sub–paragraph (2)(b) above to the supervisory authority in the member State in which the society intends to provide insurance; or
(b) refuse to give either or both of those documents.
(6) The Commission shall, within the period of one month referred to in sub–paragraph (5) above, notify the society–
(a) that it has given the notice and certificate referred to in sub–paragraph (2)(b) above to the supervisory authority in the member State in which the society intends to provide insurance, stating the date on which it did so; or
(b) that it has refused to give either or both of those documents, stating the reasons for the refusal.
(7) The Commission shall not refuse to give the notice referred to in sub–paragraph (2)(b) above unless, having regard to the insurance to be provided in the member State, it appears to it that the criteria of prudent management would not or might not continue to be fulfilled in respect of the society.
6 (1) A friendly society to which section 37(2) or (3) above applies shall not change the requisite details of the provision of insurance in a member State other than the United Kingdom unless the requirements of this paragraph have been complied with in relation to its making of the change.
(2) The requirements of this paragraph are–
(a) that the society has given a notice to the Commission stating the details of the proposed change;
(b) that the Commission has sent to the supervisory authority in the member State in which the insurance is provided a notice in accordance with sub–paragraph (4)(a) below.
(3) In the case of a change occasioned by circumstances beyond the society’s control, the requirements of this paragraph are that the society shall as soon as practicable give a notice to the Commission stating the details of the change.
(4) The Commission shall, as soon as practicable after receiving a notice under sub–paragraph (2)(a) above either–
(a) give notice to the supervisory authority in the member State in which the insurance is provided informing it of the proposed change; or
(b) refuse to give such notice.
(5) The Commission shall, as soon as practicable after making a decision under sub–paragraph (4) above, notify the society–
(a) that it has given the notice referred to in that sub–paragraph, stating the date on which it did so; or
(b) that it has refused to give the notice, stating the reasons for the refusal.
(6) The Commission shall not refuse to give the notice referred to in sub–paragraph (4)(a) above unless, having regard to the proposed change, it appears to it that the criteria of prudent management would not or might not continue to be fulfilled in respect of the society.

Requisite details for purposes of paragraphs 5 and 6
7 The requisite details for the purposes of paragraphs 5 and 6 above are–
(a) the member State in which the insurance is to be provided;
(b) the nature of the risks or commitments which the society proposes to cover in that State; and
(c) in the case of a society which intends to cover health insurance risks, the technical bases which will be used for calculating premiums in respect of such risks.

Requirement to notify cessation of business etc.
8 A friendly society to which section 37(2) or (3) above applies which has ceased–
(a) to carry on insurance business through an overseas branch in a member State other than the United Kingdom; or
(b) to provide insurance in such a member State,
shall as soon as practicable notify the Commission in writing that it has done so.

PART II FRIENDLY SOCIETIES PROVIDING INSURANCE IN EFTA STATES

Notification to Commission
9 (1) Where a friendly society to which section 37(2) or (3) above applies intends to provide insurance in an EFTA State, it shall before doing so notify the Commission of its intention.
(2) The notification shall indicate–
(a) the EFTA State in which the insurance is to be provided;
(b) the EEA State in which the establishment through which the risks or commitments will be covered is situated (“the EEA State of establishment”); and
(c) the nature of the risks or commitments which the society proposes to cover.
(3) Where the society intends to provide insurance in more than one EFTA State, the information specified above may be contained in a single notification but must be set out separately in relation to each such State.
(4) Where–
(a) a friendly society to which section 37(2) or (3) above applies has duly notified the Commission of its intention to provide insurance in an EFTA State; and
(b) the society subsequently intends to extend its activities to risks or commitments the nature of which was not indicated in the notification,
it shall before doing so comply with sub-paragraphs (1) to (3) above in relation to those risks or commitments.

Issue of certificates by Commission
10 (1) A friendly society to which section 37(2) or (3) above applies which intends to provide insurance in an EFTA State may apply to the Commission for a certificate–
(a) attesting that the society possesses for its activities as a whole the minimum solvency margin calculated in accordance with the relevant provisions;
(b) indicating the classes of business which the society is authorised to carry on in the United Kingdom;
(c) stating that the Commission does not object to the society providing the insurance; and
(d) attesting that the society’s authorisation to carry on business in the United Kingdom, issued in accordance with Article 7(1) of the relevant Directive, enables the society to carry on business outside the EEA State of establishment.
(2) If it appears to the Commission that a certificate applied for under sub–paragraph (1) above ought to be issued, it shall issue the certificate accordingly.
(3) If the Commission refuses to issue a certificate, it shall inform the society in writing of its decision and of the reasons for it.
(4) In sub–paragraph (1) above “the relevant Directive” and “the relevant provisions” means respectively–
(a) if the society intends to cover risks, the first general insurance Directive and Articles 16 and 17 of that Directive;
(b) if the society intends to cover commitments, the first life Directive and Articles 19 and 20 of that Directive.

PART III FRIENDLY SOCIETIES PROVIDING INSURANCE IN THE UNITED KINGDOM THROUGH OVERSEAS BRANCHES IN OTHER EEA STATES
11 (1) Where a friendly society to which section 37(2) or (3) above applies intends to provide insurance in the United Kingdom, it shall before doing so notify the Commission of its intention.
(2) The notification shall indicate–
(a) the EEA State in which is situated the overseas branch through which the society intends to provide insurance in the United Kingdom; and
(b) the nature of the risks or commitments which the society proposes to cover in the United Kingdom.
(3) Where the EEA State in which is situated the overseas branch through which the society intends to provide insurance in the United Kingdom is an EFTA State, the notification shall be accompanied by a certificate, issued by the supervisory authority in that State, which–
(a) indicates the classes of insurance business which the society has been authorised to undertake through that branch;
(b) states that the authority does not object to the society providing insurance in the United Kingdom; and
(c) where the society intends to provide long term insurance in the United Kingdom, confirms that all the commitments which the society intends to cover fall within the classes of insurance business which the society has been authorised to undertake through that branch.
(4) The society shall notify the Commission in writing if–
(a) it changes either of the details notified to the Commission under sub–paragraph (2) above; or
(b) it ceases to provide insurance in the United Kingdom.

PART IV SUPPLEMENTAL

Offences
12 (1) A friendly society to which section 37(2) or (3) above applies commits an offence if–
(a) it carries on insurance business in a member State other than the United Kingdom in contravention of paragraph 1 above;
(b) in contravention of paragraph 2 or 3 above, it changes the requisite EC details or, as the case may be, the requisite UK details of an overseas branch established by it in such a member State;
(c) it provides insurance in such a member State in contravention of paragraph 5 above;
(d) in contravention of paragraph 6 above, it changes the requisite details relating to the provision of insurance in such a member State; or
(e) it makes default in complying with, or with a requirement imposed under, any other provision of this Schedule.
(2) A person commits an offence if he causes or permits to be included in a notification sent to the Commission under paragraph 1, 2, 3, 5 or 6 above a statement which he knows to be false in a material particular or recklessly causes or permits to be so included a statement which is false in a material particular.
(3) A person committing an offence under this paragraph shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

Interpretation
13 (1) In this Schedule–
(a) references in Part I to the provision of insurance in a member State other than the United Kingdom are references to the covering (otherwise than by way of reinsurance) of a risk or commitment situated in that member State through an establishment in another member State;
(b) references in Part II to the provision of insurance in an EFTA State are references to the covering (otherwise than by way of reinsurance) of a risk or commitment situated in that EFTA State through an establishment in another EEA State;
(c) references in Part III to the provision of insurance in the United Kingdom are references to the covering (otherwise than by way of reinsurance) of a risk or commitment situated in the United Kingdom–
(i) through an establishment in another member State; or
(ii) through an establishment in an EFTA State.
(2) In sub–paragraph (1)(b) and (c)(ii) above–
(a) references to a risk are references to a risk falling within head B of Schedule 2 to this Act (general business), other than class 1, so far as it relates to accidents at work; and
(b) references to a commitment are references to a commitment falling within head A of Schedule 2 to this Act (long term business), other than class VII.
(3) In this Schedule “health insurance risks”, in relation to a member State, means risks falling within class 2 of Schedule 2 to this Act (sickness) where–
(a) insurance contracts covering those risks serve as a partial or complete alternative to the health cover provided by the statutory social security system in that State; and
(b) the law of that State requires such contracts to be operated on a technical basis similar to life assurance in accordance with all the conditions listed in the first sub–paragraph of Article 54(2) of the third general insurance Directive.

SCHEDULE 3 [SCHEDULE 13C TO 1992 ACT]
INFORMATION FOR MEMBERS OF FRIENDLY SOCIETIES TO WHICH SECTION 37(2) OR (3) APPLIES
Regulation 21

Information before contract of long term insurance
1 (1) Subject to sub–paragraph (2) below, this paragraph applies to a contract entered into by a friendly society to which section 37(2) above applies the effecting of which constitutes–
(a) the carrying on in the United Kingdom of long term business which is not reinsurance business; or
(b) the provision there of long term insurance.
(2) This paragraph does not apply to a contract entered into by an authorised person the effecting of which constitutes the carrying on in the United Kingdom of investment business; and in this sub–paragraph expressions which are also used in the Financial Services Act 1986 have the same meanings as in that Act.
1986 c. 60.
(3) Before entering into a contract to which this paragraph applies, the society shall furnish the other party to the contract in writing with the information required by sub–paragraph (4) below.
(4) The information required by this sub–paragraph is–
(a) the name and legal form of the society;
(b) a statement that the society’s registered office is the United Kingdom and, where appropriate, the member State in which is situated the overseas branch through which the contract is to be entered into;
(c) the address of the society’s registered office and, where appropriate, the address of the overseas branch through which the contract is to be entered into;
(d) a definition of each benefit and option;
(e) the term of the contract and the means by which it may be terminated;
(f) the method of paying premiums and the duration of the payments;
(g) the method of calculating bonuses and the distribution of bonuses;
(h) an indication of surrender and paid–up values and the extent to which such values are guaranteed;
(i) an indication of the premiums for each benefit, whether a main or supplementary benefit;
(j) in the case of a contract for a unit–linked policy, a definition of the units to which benefits are linked and an indication of the nature of the underlying assets;
(k) information as to the following, namely–
(i) the arrangements with respect to the period within which the other party may cancel the contract;
(ii) the tax arrangements applicable to the contract or any policy to be effected by it;
(iii) the arrangements for handling any complaints concerning the contract, whether by the other party or any other person who is a life assured or beneficiary; and
(iv) any compensation or guarantee arrangements which will be available if the society is unable to meet its liabilities under the contract; and
(m) whether the parties to the contract are entitled to choose the law applicable to the contract and–
(i) if so, the law which the society proposes to choose; and
(ii) if not, the law which will be so applicable.
(5) Any information required by sub–paragraph (4) above shall be furnished in English except that, where the other party to the contract so requests, it may instead be furnished in an official language of a member State other than the United Kingdom.

Information during contract of long term insurance
2 (1) This paragraph applies where a friendly society to which section 37(2) above applies has, on or after 1st September 1994, entered into a contract the effecting of which constitutes–
(a) the carrying on in the United Kingdom of long term business which is not reinsurance business; or
(b) the provision there of long term insurance.
(2) If during the term of the contract there is any change in the information required by paragraphs (a) to (j) of paragraph 1(4) above, the society shall inform the other party to the contract in writing of the effect of the change.
(3) If the contract provides for the payment of bonuses, the society shall, at least once in every calendar year except the first, inform the other party to the contract in writing of the amount of any bonus–
(a) which has become payable under the contract, and
(b) of which that party has not been previously informed under this sub–paragraph.
(4) There is a sufficient compliance with sub–paragraph (3) above if the society furnishes the other party to the contract with such information as will enable him to determine the amount of any such bonus as is mentioned in that sub–paragraph, or if the society informs that party of–
(a) the rates of bonus which have been declared since that party was previously informed under this sub–paragraph; and
(b) the total value of the benefits (including bonuses) which have accrued under the contract.
(5) In this paragraph “bonus” does not include a bonus the amount of which is specified in the contract.

Information before contract of general insurance
3 (1) This paragraph applies to a contract entered into by a friendly society to which section 37(3) above applies if–
(a) the effecting of the contract constitutes–
(i) the carrying on in the United Kingdom of general business which is not reinsurance business; or
(ii) the provision there of general insurance; and
(b) the risk which is covered by the contract is situated in the United Kingdom.
(2) Before entering into a contract to which this paragraph applies, the society shall, if the other party to the contract is an individual, inform that party in writing–
(a) of any arrangements which exist for handling complaints concerning the contract including, where appropriate, the name and address of any body which deals with complaints from any party to the contract;
(b) that the existence of a complaints body does not affect any right of action which any party to the contract may have against the society; and,
(c) as to whether the parties to the contract are entitled to choose the law applicable to the contract and–
(i) if so, of the law which the society proposes to choose; and
(ii) if not, of the law which will be so applicable.
(3) If the information required by sub–paragraph (2) above is furnished otherwise than in writing before the time when the contract is entered into, there is a sufficient compliance with that sub–paragraph if it is also furnished in writing as soon as practicable after that time.
4 (1) This paragraph applies to a contract entered into by a friendly society to which section 37(3) above applies if the effecting of the contract constitutes the provision in the United Kingdom of general insurance.
(2) Before entering into a contract to which this paragraph applies, the society shall inform the other party to the contract in writing of the member State in which is situated the establishment which will cover the risks; and any document issued to that party by the society shall also contain that information.
(3) If the information required by sub–paragraph (2) above is furnished otherwise than in writing before the time when the contract is entered into, there is a sufficient compliance with that sub–paragraph if it is also furnished in writing as soon as practicable after that time.
(4) Any relevant document issued by the society in relation to a contract to which this paragraph applies shall state the address of the establishment through which the risk is to be covered.
(5) In this paragraph “relevant document”, in relation to a contract to which this section applies, means any proposal, policy, rules or other document which, or statements contained in which, will or may bind the other party to the contract.

Supplemental
5 A friendly society which fails to comply with any provision of this Schedule shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

SCHEDULE 4 CONFIRMATION BY COMMISSION OF TRANSFERS OF ENGAGEMENTS
Regulation 25

Application for confirmation
1 (1) After sub–paragraph (1) of paragraph 6 of Schedule 15 to the 1992 Act (application for confirmation) insert–

“1A Where an application for confirmation of a transfer is made by a friendly society to which section 37(2) or (3) above applies and either–
(a) as regards any policy included in the proposed transfer, a member State other than the United Kingdom is the State in which the risk or commitment is situated; or
(b) as regards any EFTA policy included in the proposed transfer, an EEA State other than the United Kingdom is the State in which the risk or commitment is situated,
the society shall also; if the Commission so directs publish the notice in two national newspapers in that State.”

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(2) In sub–paragraph (3) of that paragraph, for paragraph (b) substitute–

“(b) stating–
(i) the addresses of the offices of the society, and
(ii) where the society is directed in accordance with sub–paragraph (1A) above to publish a notice of the application in two national newspapers in a State other than the United Kingdom, the address of such place in that State as the Commission directs,
at which copies of the report shall be available for inspection for a period of not less than 21 days beginning with the date of the first publication of the notice; and”

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Confirmation: general
2 In paragraph 13 of that Schedule (confirmation: general), after sub–paragraph (2) insert—

“3 This paragraph and paragraph 14 below do not apply to any transfer of engagements to which paragraph 15 or 15A below applies.”

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Confirmation: general business
3 For paragraph 15 of that Schedule (confirmation: general business) substitute—

“15 1 This paragraph applies to any transfer of engagements (other than contracts of reinsurance) where–
(a) the effecting of the engagements constituted the carrying on of general business;
(b) the transferor is a friendly society to which section 37(3) above applies; and
(c) the transferee is–
(i) a friendly society to which section 37(2) or (3) above applies;
(ii) a UK company;
(iii) an EC company;
(iv) a non–EC company whose head office is in an EFTA State;
(v) a Swiss general insurance company; or
(vi) an insurance company whose margin of solvency is required to be supervised in accordance with Article 25 or 26 of the first general insurance Directive.
2 The Commission shall not confirm the transfer unless–
(a) it is satisfied that the transferee is, or will be immediately after the approval–
(i) authorised under section 32 above to carry on, or
(ii) authorised under section 3 or 4 of the Insurance Companies Act 1982 to carry on, or
1982 c. 50.
(iii) authorised in accordance with Article 6 of the first general insurance Directive to carry on in an EEA State other than the United Kingdom,
general business of the class or classes to be transferred;
(b) it is also satisfied that every policy included in the transfer evidences a contract which was entered into before the date of the application;
(c) the relevant authority certifies that the transferee possesses the necessary margin of solvency after taking the proposed transfer into account; and
(d) where the establishment from which the policies are to be transferred is situated in a member State other than the United Kingdom, the Commission is satisfied–
(i) that the supervisory authority in that member State has been consulted about the proposed transfer; and
(ii) either that the authority has responded or that the period of three months beginning with the consultation has elapsed.
3 Where, as regards any policy (other than an EFTA policy) which is included in the proposed transfer, the risk is situated in a member State other than the United Kingdom, the Commission shall not confirm the transfer unless it is satisfied–
(a) that the supervisory authority in that member State has been notified of the proposed transfer;
(b) either that the authority has consented to the transfer or that the authority has not refused its consent to the transfer within the period of three months beginning with the notification.
4 Where the establishment of the transferee to which the policies are to be transferred is situated in the United Kingdom and, as regards any EFTA policy included in the proposed transfer, an EEA State other than the United Kingdom is the State in which the risk is situated, the Commission shall not confirm the transfer unless it is satisfied that–
(a) the transferee either fulfils the conditions in Articles 13 to 16 of the second general insurance Directive in that EEA State; and
(b) the supervisory authority in that EEA State agrees to the transfer.
5 Where the establishment of the transferee to which the policies are to be transferred is situated in an EEA State other than the United Kingdom and, as regards any EFTA policy included in the proposed transfer, an EEA State other than the United Kingdom is the State in which the risk is situated, the Commission shall not confirm the transfer unless–
(a) where the EEA State in which the establishment is situated is also the State in which the risk is situated, it is satisfied that the supervisory authority in that EEA State agrees to the transfer;
(b) where the United Kingdom is the State in which the risk is situated, it is satisfied that the transferee is not precluded by Schedule 2F to the Insurance Companies Act 1982 from covering the risk; and
(c) where an EEA State other than the United Kingdom or the EEA State in which the establishment is situated is the State in which the risk is situated, it is satisfied that–
(i) the transferee either fulfils the conditions in Articles 13 to 16 of the second general insurance Directive in the EEA State in which the risk is situated;
(ii) the law of that State provides for the possibility of such a transfer; and
(iii) the supervisory authority in that State agrees to the transfer.
6 In this paragraph “the relevant authority” means–
(a) if the transferee is a friendly society to which section 37(2) or (3) above applies, the Commission;
(b) if the transferee is a United Kingdom company, the Secretary of State;
(c) if the transferee is an EC company, the supervisory authority in its home State;
(d) if the transferee is a non–EC company whose head office is in an EFTA State, the supervisory authority in that EFTA State;
(e) if the transferee is a Swiss general insurance company, the supervisory authority in Switzerland;
(f) if the transferee is an insurance company whose margin of solvency is required to be supervised in accordance with Article 25 or 26 of the first general insurance Directive, the Secretary of State or other supervisory authority responsible for the supervision.”

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Confirmation: long term business
4 For paragraph 15A of that Schedule (confirmation: long term business) substitute–

“15A 1 This paragraph applies to any transfer of engagements (other than contracts of reinsurance) where–
(a) the effecting of the engagements constituted the carrying on of long term business;
(b) the transferor is a friendly society to which section 37(3) above applies; and
(c) the transferee is–
(i) a friendly society to which section 37(2) or (3) above applies;
(ii) a UK company;
(iii) an EC company;
(iv) a non–EC company whose head office is an EFTA State; or
(v) an insurance company whose margin of solvency is required to be supervised in accordance with Article 29 or 30 of the first life Directive.
2 The Commission shall not confirm the transfer unless–
(a) it is satisfied that the transferee is, or will be immediately after the making of the confirmation–
(i) authorised under section 32 above to carry on, or
(ii) authorised under section 3 or 4 of the Insurance Companies Act 1982 to carry on, or
(iii) authorised in accordance with Article 6 of the first life Directive to carry on in an EEA State other than the United Kingdom,
long term business of the class or classes to be transferred;
(b) the relevant authority certifies that the transferee possesses the necessary margin of solvency after taking the proposed transfer into account; and
(c) where the establishment from which the policies are to be transferred is situated in a member State other than the United Kingdom, the Commission is satisfied–
(i) that the supervisory authority in that member State has been consulted about the proposed scheme; and
(ii) either that the authority has responded or that the period of three months beginning with the consultation has elapsed.
3 Where, as regards any policy (other than an EFTA policy) which is included in the proposed transfer, a member State other than the United Kingdom, is the State in which the commitment is situated, the Commission shall not confirm the transfer unless it is satisfied–
(a) that the supervisory authority in that member State has been notified of the proposed scheme; and
(b) either that the authority has consented to the scheme or that the authority has not refused its consent to the scheme within the period of three months beginning with the notification.
4 Where the establishment of the transferee to which the policies are to be transferred is situated in the United Kingdom and, as regards any EFTA policy included in the proposed transfer, an EEA State other than the United Kingdom is the State in which the commitment is situated, the Commission shall not confirm the transfer unless it is satisfied that–
(a) the transferee either fulfils the conditions in Articles 11, 12, 14 and 16 of the second life Directive in that EEA State; and
(b) the supervisory authority in that EEA State agrees to the transfer.
5 Where the establishment of the transferee to which the policies are to be transferred is situated in an EEA State other than the United Kingdom and, as regards any ETFA policy included in the proposed transfer, an EEA State is the State in which the commitment is situated, the Commission shall not confirm the transfer unless–
(a) where the EEA State in which the establishment is situated is also the State in which the commitment is situated, it is satisfied that the supervisory authority in that EEA State agrees to the transfer;
(b) where the United Kingdom is the State in which the commitment is situated, it is satisfied that the transferee is not precluded by Schedule 2F to the Insurance Companies Act 1982 from covering the commitment; and
(c) where an EEA State other than the United Kingdom or the EEA State in which the establishment is situated is the State in which the risk is situated, it is satisfied that–
(i) the transferee fulfils the conditions in Articles 11, 12, 14 and 16 of the second life Directive in the EEA State which is the State in which the commitment is situated;
(ii) the law of that State provides for the possibility of such a transfer; and
(iii) the supervisory authority in that State agrees to the transfer.
6 In this paragraph “the relevant authority” means–
(a) if the transferee is a friendly society to which section 37(2) or (3) above applies, the Commission;
(b) if the transferee is a UK company, the Secretary of State;
(c) if the transferee is an EC company, the supervisory authority in its home State;
(d) if the transferee is a non–EC company whose head office is in an EFTA State, the supervisory authority in that EFTA State;
(e) if the transferee is an insurance company whose margin of solvency is required to be supervised in accordance with Article 29 or 30 of the first life Directive, the Secretary of State or other supervisory authority responsible for the supervision.”

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Rights of policy holders
5 After paragraph 16 of that Schedule insert—

“Rights of policy holders
16A 1 This paragraph applies where the Commission confirms a transfer in accordance with paragraph 15 above and either–
(a) as regards any policy included in the transfer, a member State other than the United Kingdom is the member State in which the risk is situated; or
(b) as regards any EFTA policy included in the transfer, and EEA State other than the United Kingdom is the EEA State in which the risk is situated.
2 The Commission shall direct that–
(a) notice of its decision, and of the execution of any instrument giving effect to the transfer, shall be published in the member State or, as the case may be, the EEA State in which the risk is situated; and
(b) the notice shall specify the period during which the policy holder may exercise any right to cancel the policy;
and the instrument shall not bind the policy holder if either such a notice is not so published or the policy holder exercises any such right during the period so specified.
3 The law of the member State or, as the case may be, the EEA State in which the risk is situated shall determine–
(a) whether the policy holder has a right to cancel the policy; and
(b) the conditions applicable to any such right.”

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6 After paragraph 16A of that Schedule insert—

“16B 1 This paragraph applies where the Commission confirms a transfer in accordance with paragraph 15A above and either–
(a) as regards any policy included in the transfer, a member State other than the United Kingdom is the State in which the commitment is situated; or
(b) as regards any EFTA policy included in the transfer, an EEA State other than the United Kingdom is the State in which the commitment is situated.
2 The Commission shall direct that–
(a) notice of the making of any order, or the execution of any instrument, giving effect to the transfer shall be published in the member State or, as the case may be, the EEA State which is the State in which the commitment is situated; and
(b) the notice shall specify the period during which the policy holder may exercise any right to cancel the policy;
and the instrument or order shall not bind the policy holder if either such a notice is not so published or the policy holder exercises any such right during the period so specified.
3 The law of the member State or, as the case may be, the EEA State which is the State in which the commitment is situated shall determine–
(a) whether the policy holder has a right to cancel the policy; and
(b) the conditions applicable to any such right.”

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Supplemental
7 For paragraph 18 of that Schedule (interpretation) substitute—

“18 1 In this Part of this Schedule expressions used which are defined in the Insurance Companies Act 1982 but are not defined for the purposes of this Part of this Schedule have the same meaning as they have for the purposes of that Act.
2 In this Part of this Schedule–
“policy” means a contract (other than a contract of reinsurance) the effecting of which by a friendly society to which section 37(2) or (3) above applies constituted the carrying on of insurance business of any class;
“policy holder” means a member whose contract with such a society is a contract the effecting of which by the society constituted the carrying on of insurance business (other than reinsurance business) of any class;
“relevant requirement”, with reference to this Act or the rules of a friendly society, means a requirement of this Part of this Act or of any rules prescribing the procedure to be followed by the society in approving or effecting an amalgamation or transfer of engagements or its conversion into a company.
3 A policy which evidences a contract of direct insurance is an “EFTA policy” for the purposes of this Part of this Schedule if–
(a) it covers a risk or commitment in an EFTA State and the transferee is a friendly society to which section 37(2) or (3) above applies, a UK or EC company or a non– EC company whose head office is in an EFTA State; or
(b) it covers a risk or commitment situated in a member State and the transferee is a non–EC company whose head office is in an EFTA State.”

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