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Insurance Act, 2017 (Act No. 18 of 2017)

Chapter 9 : Resolution

Part 2 : Curatorship

54. Appointment of curator

 

(1) Despite any other law—
(a) the court may, on application by the Prudential Authority; or
(b) the Prudential Authority may by agreement with an insurer or controlling company and without the intervention of the court, appoint a curator in terms of section 5 of the Financial Institutions (Protection of Funds) Act in respect of any insurer or controlling company.

 

(2) In addition to any powers or functions that may be afforded by a court to a curator on appointment under subsection (1), but subject to section 5 of the Financial Institutions (Protection of Funds) Act, a curator on appointment—
(a) is vested with the power to take and implement any decision in respect of the insurer or the controlling company that would have required an ordinary resolution or a special resolution of shareholders or members of the insurer or controlling company in terms of the provisions of the—
(iii) Memorandum of Incorporation or the equivalent constitution, deed or founding instrument of an insurer that is not a company; or
(iv) rules of any securities exchange registered under the Financial Markets Act, 2012 (Act No. 19 of 2012), on which any securities of the insurer or controlling company are listed;
(b) is vested with all executive powers which would ordinarily be vested in, and exercised by, the key persons (other than an auditor or the head of a control function) of the insurer or controlling company, whether by law or in terms of its Memorandum of Incorporation or the equivalent constitution, deed or founding instrument of an insurer that is not a company, and the present key persons shall be divested of all such powers in relation to the business;
(c) must take immediate control of, manage and investigate the business and operations of and concerning the insurer or controlling company, together with all assets, interests and liabilities relating to such business, subject to the control of the Prudential Authority in accordance with the provisions of section 5(6) of the Financial Institutions (Protection of Funds) Act, and with all such rights and obligations as may be pertaining thereto;
(d) must at all times give consideration to the best interests of the policyholders of the insurer or, in the case of a controlling company, the best interests of policyholders of the insurers that are part of the insurance group;
(e) must exercise the powers vested in the curator with a view to conserving the business and, with the prior approval of the Prudential Authority, may—
(i) alienate or dispose of any of the property or transfer any of the liabilities or insurance business of the insurer or controlling company;
(ii) cancel any guarantee issued by the insurer, other than a guarantee that constitutes an insurance obligation under a life insurance policy, or controlling company prior to the latter being placed under curatorship, excluding such guarantee which the insurer or controlling company is required to make good within a period of 30 days as from the date of the appointment of the curator; and
(iii) raise funding on behalf of the insurer or controlling company, despite any contractual obligations of the insurer or controlling company, to provide security over the assets of the insurer or controlling company in respect of such funding;
(f) in the case of an insurer, must continue to conduct the insurance business for which the insurer is licensed, but may not enter into new insurance policies without the approval of the Prudential Authority;
(g) must take custody of the cash, cash investments, shares, other securities or investments held or administered by the insurer or controlling company, and of other property (movable or immovable) or effects belonging to or held by or on instructions of the insurer or controlling company or any entity directly or indirectly controlled by, affiliated to or associated with the insurer or controlling company;
(h) must notify the Prudential Authority should the curator deem it necessary or expedient that application be made to the court—
(i) for the extension of the curator’s powers to any other company (including any holding company or subsidiary) or other related or inter-related person or person associated with the insurer or controlling company;
(ii) for the winding-up of the insurer or controlling company; or
(iii) for any relief as envisaged in the Financial Sector Regulation Act against the insurer or controlling company or any of its key persons;
(i) may, in the curator’s discretion and depending on available resources, make full or part payments to policyholders in identified circumstances, after the prior approval of the Prudential Authority has been obtained;
(j) may conduct any investigation with a view to locating the assets belonging to, administered or controlled by the insurer or controlling company, including such assets held by way of securities, in cash or liquid form;
(k) may incur such reasonable expenses and costs as may be necessary or expedient for the curatorship and control of the insurer or controlling company and operations of the insurer or controlling company, and to pay same from the assets held, administered or under the control of the insurer or controlling company;
(l) may engage, after consultation with the Prudential Authority, such assistance of a legal, accounting, administrative or other professional or technical nature as the curator may reasonably deem necessary for the performance of the curator’s duties, and the curator may defray reasonable charges and expenses thus incurred from the assets held or under control of the insurer or controlling company;
(m) may institute or prosecute any legal proceedings on behalf of the insurer or the controlling company, and defend any litigation against the insurer or controlling company;
(n) may invest such funds as are not required for the immediate purposes of the business, with a bank registered under the Banks Act, 1990 (Act No. 94 of 1990), or other liquid instrument approved by the Prudential Authority;
(o) may take control of and operate or freeze existing banking accounts of the insurer or the controlling company and of its subsidiaries or related persons, and of any director of the insurer or controlling company, insofar as any money belonging to the insurer or controlling company has been deposited into such latter banking account;
(p) may open and operate any new banking accounts for the purposes of the curatorship; and
(q) may claim all costs, charges and other expenditure reasonably incurred by the curator in the execution of duties in terms of this section, including the curator’s own remuneration, as administration costs, in the event of the winding-up of the insurer or controlling company ensuing.

 

(3) A curator, when acting in accordance with subsection (2), must consider the expected effect on the creditors of the insurer or controlling company and whether—
(a) creditors are treated in an equitable manner; and
(b) when acting under subsection (2)(e)(i), a reasonable probability exists that a creditor will not incur greater losses, as at the date of the proposed disposal, transfer or disposal and transfer, than would have been incurred if the insurer or controlling company had been wound-up on the date of the proposed disposal, transfer or disposal and transfer.

 

(4) A claim for damages in respect of any loss sustained by or damage caused to any person as a result of the cancellation of a guarantee referred to in subsection (2)(e)(ii), other than a guarantee that constitutes an insurance obligation under a life insurance policy, or provision of security, may be instituted against the insurer or controlling company after the expiration of a period of six months from the date of the cancellation.

 

(5) An insurer or a controlling company may not begin or enter business rescue or be wound-up while under curatorship within the meaning of the Financial Institutions (Protection of Funds) Act, unless the curator applies for the business rescue or winding-up.