Monkton
Insurance Services Limited
Captive insurance companies licensed in Barbados are regulated in accordance with the Exempt Insurance Act, 1983-9 (1995 Amendment). The following is a compilation of the Exempt Insurance Act, 1983-9 and all subsequent amending legislation and represents a current statement as at December 31, 1997 of the Exempt Insurance Act of Barbados as amended. While every effort has been made to ensure the accuracy of the compilation, no responsibility can be undertaken for any errors which may have inadvertently occurred. Persons seeking advice on the Act itself are recommended to consult their professional advisors.
EXEMPT INSURANCE ACT, CHAPTER 308A OF THE LAWS OF BARBADOS
Part I - Preliminary
Part II - Licensing of Exempt Insurance Companies
Part III - Financial Obligation
Part IV - Winding up of Licensee
Part V - Management Companies and Ancillary Personnel
Part VA - Holding Companies and Related Matters
Part VI - Special tax and other exemptions
Part VII - Miscellaneous
I assent
D.H.L. WARD
Governor-General
11th March, 1983.
An Act to enable companies to carry on exempt insurance business from within Barbados.
4th
October, 1983 Commencement
1st May, 1986 Amendment
1st July, 1988 Amendment
29th
December, 1995 Amendment
Enacted by the Parliament of Barbados as follows:
Part I - Preliminary
Short title - 1. This Act may be cited as the Exempt Insurance Act, 1983.
Interpretation - 2. (1) In this Act,
"actuary" means
(a) a person who is qualified as an actuary and is
a member in good standing of an association of actuaries or other similar body approved
by the Minister; or
(b) a person who is for the time being authorised by the Minister
under section 35C to be appointed as an actuary;
"auditor" means a member of the Institute of Chartered Accountants of Barbados who holds a practising certificate from that Institute, or a person who for the time being is authorised by the Minister under section 35C to be appointed as an auditor for the purposes of this Act;
"Caribbean Community" means the Caribbean Community as defined by the treaty establishing the Caribbean Community signed at Trinidad and Tobago on 4th July, 1973;
"financial year" means the period not exceeding 53 weeks at the end of which the balance of the licensee's accounts is struck or, if no balance is struck, or if a period in excess of 53 weeks is employed, then a calendar year;
"general insurance business" includes insurance business of all or any
of the following classes:
(a) property insurance,
(b) accident and sickness
insurance,
(c) employers' liability insurance,
(d) motor vehicles insurance,
(e)
marine, aviation and transit insurance,
(f) general liability,
(g) product
liability,
(h) professional liability,
(i) financial insurance,
(j) workmen's
compensation insurance,
(k) public liability insurance;
"holding company" has the meaning ascribed to it by section 28A;
"insurance business" means the business of effecting and carrying out
contracts
(i) protecting persons against loss or liability to loss in respect
of risks to which such persons may be exposed, or
(ii) to pay a sum of money or
other thing of value upon the happening of an insurable event,
and reinsurance;
"long term insurance business" means insurance business of all or any
of the following classes:
(a) ordinary life insurance,
(b) industrial life
insurance,
(c) bond investment,
(d) any insurance business that is incidental
to any classes of business specified in paragraphs (a) to (c);
"management services" includes the provision of accounting, administrative, brokerage and underwriting services, and the processing of claims for exempt insurance business;
"premium income" means the net premium after deducting any premiums paid by the licensee for reinsurance;
"resident representative" means the licensee's management company or such individual as the Supervisor approves for the purpose of managing the business of the licensee;
"Supervisor" means the Supervisor of Insurance.
(2) For the purposes of this Act, the following are resident of Barbados;
(a)
an individual ordinarily resident in Barbados
(b) any incorporated or other body,
incorporated, formed or organised in Barbados
(i) the majority of the shares or other ownership of which is beneficially held by persons resident in Barbados; or
(ii) the shares or other ownership of which is beneficially held by persons resident outside Barbados, and such incorporated or other body is a licensee, the business of which is managed and controlled in Barbados;
(c) a company providing management services in accordance with section 27 from within Barbados and the business of the company is managed and controlled in Barbados.
(3) Where an individual referred to in section 2(2)(a) is ordinarily resident in Barbados only by reason of a working relationship with a company licensed or registered under the Act, the individual may, notwithstanding any enactment, hold shares in that company.
(4) For the purposes of subsections (2)(b)(ii) and (2)(c)
(a) a company providing
management services shall be deemed to be managed and controlled in Barbados if its
holds its annual general meetings and the majority of its other meetings of directors
and shareholders in Barbados; and
(b) every licensee shall be deemed to be managed
and controlled in Barbados.
Exempt insurance business - 3. Exempt insurance business is the business of insuring risks located outside Barbados in respect of which premiums originate outside Barbados.
Licensing requirements - 4. (1) No person may engage in exempt insurance business from within Barbados, without a licence issued under the Act.
(2) No Licence may be issued under this Act to a person other than a body corporate that satisfies the following requirements:
(a) it is incorporated under the Companies Act as a company limited by shares or as a mutual insurance company;
(b) its objects and activities are the transaction of exempt insurance business;
(c) subject to subsections (3) and (4), at least one of its directors is a resident citizen of Barbados;
(d) its beneficial shareholders are not persons resident within the Caribbean Community; and
(e) its articles of incorporation are acceptable to the Minister;
(f) its paid up capital or, in the case of a mutual insurance company approved by the Minister, its contributed reserves, accord with the requirements of Section 17.
(g) its articles of incorporation provide that upon the liquidation of the body corporate monies payable to shareholders are payable to or for the benefit of persons resident outside the Caribbean Community.
(3) Where a company has appointed a citizen of Barbados who is a resident of Barbados to its Board of Directors in accordance with this section, that director shall not subscribe for nor acquire any shares of the company, either by way of qualification or otherwise.
(4) The citizen of Barbados to whom this section refers must before the registration of the articles of the company, file with the Registrar of Companies a consent signed by him to act as director.
Part II - Licensing of Exempt Insurance Companies
Participation - 4A. A Licensee, notwithstanding that it is a resident, may participate in the ownership of another licensee.
Application requirements - 5. (1) Notwithstanding the Companies Act, no company may be incorporated under the Act for the purpose of engaging in exempt insurance business from within Barbados unless its incorporation has been consented to by the Minister.
(2) Notwithstanding anything in the articles of incorporation, no company incorporated under the Companies Act before the commencement of this Act has capacity to engage in exempt insurance business from within Barbados unless its articles of incorporation are, or are amended to be satisfactory to the Minister.
Contents of application -6. (1) A company wishing to obtain a licence under this Act may apply to the Minister giving particulars of the type of exempt business it proposes to do from within Barbados and providing such other information as may be prescribed.
(2) An application for a licence must be accompanied by a certified copy of the articles of incorporation of the applicant company, and the prescribed application fee.
(3) An application for a licence and all documents submitted pursuant to this Act in support of the application must be signed by at least 2 directors of the applicant company.
Examinations of applicants - 7. On receipt of an application for a licence under this Act, the Minister may cause such investigation to be made of the applicant company, its financial circumstances and any associates of the applicant as the Minister considers necessary in the public interest.
Issue or refusal of licence - 8. (1) When the Minister is satisfied that it is proper to do so, he may issue or refuse a licence under this Act.
(2) On refusal of a licence, the applicant is entitled to repayment of the application fee.
Conditions of licence - 9. (1) In issuing a licence under this Act, the Minister may specify the class or classes of insurance business in which the licensee may engage.
(2) Notwithstanding section 8 of the Aliens Act the Minister may attach such conditions to the issue of a licence relating to the real property investments and holdings of a licensee as the Minister thinks fit.
(3) It is a condition of a licence under this Act that the licensee will not, without the prior approval in writing of the Minister,
(a) enter into a merger or consolidation
(b) transfer, other than in the ordinary course of its business including a transfer by way of reinsurance, the whole or any part of its assets or liabilities;
(c) charge the whole or any part of its assets;
(d) change its name from that set out in the licence;
(e) engage in a class of insurance business other than that specified in its licence;
(f) alter its articles of incorporation.
(4) It shall not be a condition of a licence issued under this Act that the licensee commences business within a specific period of time; and a licensee shall not be struck off the register of companies or incur any penalty or sanction for not commencing business within a specified period of time, notwithstanding any other enactment to the contrary.
(5) Subsection (3)(b) does not apply where the licensee has filed documents specifying procedures which in the opinion of the Minister are satisfactory for effecting the full discharge of any liabilities that may arise under the laws of Barbados in relation to the licensee.
(6) Subsection (3)(c) does not apply where the charge is by way of letters of credit issued to secure the insurance or reinsurance obligations of the licensee.
(7) Where a transfer under this section is effected pursuant to subsection (5), the licensee shall as soon as possible thereafter notify the Supervisor.
Misleading name -10. No licensee may be granted a licence under a name that in the opinion of the Minister may mislead or confuse persons for whom the proposed licensee intends to provide its services.
Validity of licence - 11. A licence issued under this Act remains valid until revoked or suspended under this Act, subject to the payment of an annual prescribed fee, or any tax payable under Section 29(2), as the case may be.
Revocation or suspension of licence - 12. (1) The Minister may revoke a licence if the licensee
(a) fails to comply with a condition of its licence;
(b) is in breach of any duty or obligation imposed upon it by this Act or commits an offence under this Act; or
(c) ceases to carry on business under its licence.
(2) The Minister may by notice in writing addressed to the licensee direct the licensee to remedy any breach of this Act within the time specified in the notice.
(3) Where the licensee fails to comply with the minister's directions, the minister may suspend the licence for a period not exceeding 90 days, and his decision thereon is final.
(4) When the Minister intends to revoke or suspend a licence under this section, it is his duty to give the licensee notice of his intention to do so and reasonable opportunity to show cause why the licence should not be revoked or suspended, as the case may be.
(5) It is the duty of the Minister to give the licensee notice of the suspension or revocation of the licence.
Appeal on revocation - 13. (1) A person who is aggrieved by the revocation of a licence by the Minister may within 30 days of the giving of the notice of revocation under Section 12 appeal against that revocation to a judge in chambers, whose decision thereon is final.
(2) The Minister may pending the determination of an appeal under subsection (1), suspend the operation of the revocation of the licence in relation to the existing business of the licensee.
(3) Where the Minister revokes a licence and there is no appeal or where there is an appeal that is disallowed, the notice of revocation must be published in the Official Gazette and in a daily newspaper published and circulated in Barbados.
Service of documents - 14. (1) Before engaging in exempt insurance business from within Barbados, a licensee shall deposit with the Supervisor a certificate setting out the address in Barbados of the licensee's registered office and the name and address of a person resident in Barbados acceptable to the Supervisor as a person on whom documents relating to the licensee are to be served.
(2) Notwithstanding any other enactment, any notice, instrument or other document or legal process to be delivered to or served on a licensee may be delivered or served by leaving it at the registered office of the licensee.
(3) If the registered office cannot reasonably be found or is not open to business during normal working hours, the notice, instrument, document or legal process may be delivered or served by leaving it at the office of the Supervisor who must publish that fact in the Official Gazette.
Records of licensee - 15. When a licensee begins engaging in exempt insurance business it shall maintain in Barbados, in addition to its registered office and the person referred to in Section 14(1), such registers of policies, claims registers, books and business records as the Supervisor requires.
Delegation of functions - 16. The Minister may by instrument in writing delegate to the Supervisor any of the functions conferred on him by this Act.
Part III - Financial Obligations
Capital requirements - 17. (1) A licence may be issued to a company under this Act when that company has a minimum paid up capital of $250,000 or in the case of an approved mutual insurance company, minimum contributed reserves of $250,000.
(2) Notwithstanding subsection (1), a licence may be issued to a company that satisfies the requirements of Section 4, when that company has paid up capital or contributed reserves of such amount that is less than the minimum specified in subsection (1) as the Minister approves, and the company certifies to the satisfaction of the Minister that it does not propose to begin engaging in exempt insurance business immediately after the issue of the licence.
(3) When a company that has been licensed under subsection (2) proposes to begin, and in any case not later than 7 days after the beginning, to engage in exempt insurance business, it shall so notify the Supervisor, and shall certify to his satisfaction that it has minimum paid up capital or contributed reserves in compliance with the requirements of subsection (1).
(4) Notwithstanding section 30 of the Companies Act, paid up capital or contributed reserves may be in the form of valid and irrevocable letters of credit drawn on or confirmed by a bank licensed under the Banking Act, or the Offshore Banking Act, and representing a stated capital account or not less than $250,000 or such other amount as the Minister approves.
Financial Statements - 18 (1) Not later than
six months after the close of the financial year of a licensee or such longer period
as the Supervisor or the Commissioner of Inland Revenue, as the case requires, allows,
the licensee shall submit
(a) to the Supervisor, one copy of its audited financial
statements in a form that complies with generally accepted accounting principles
together with such other related information as may be prescribed; and
(b) to
the Commissioner of Inland Revenue, a copy of the statements referred to in paragraph
(a)
(1a) The statements referred to in paragraph (b) of subsection (1) shall be in satisfaction of the licensee's obligation to file a tax return under section 52 of the Income Tax Act in respect of its income from exempt insurance business.
(1b) A licensee who pays the amount of tax determined under Section 29(2) within 28 days after the close of the financial year of the licensee or such longer period as the Commissioner of Inland Revenue allows, shall be deemed to have satisfied its obligations with respect to the payment of income tax in respect of income derived by the licensee from its exempt insurance business.
(1c) Notwithstanding subsections (2) and (3), a licensee shall comply with a demand made by the Commissioner of Inland Revenue in accordance with the Income Tax Act requiring the licensee to provide such information in the from of a return of income or a return of information or otherwise as would enable the Commissioner to fulfil his obligations under any agreement made between Barbados and another country or territory respecting the avoidance of double taxation, the prevention of fiscal evasion or any other related matter.
(1d) A licensee that fails to comply with a demand referred to in subsection (4) is guilty of an offence and is liable on summary conviction to a fine of $50,000.
(2) The financial statements and any other related information submitted to the Supervisor under subsection (1) shall be accompanied by the auditors' report in the prescribed form.
(3) A licensee engaged in long term insurance business shall, in addition, submit to the Supervisor a certificate of an actuary approved by the Supervisor, stating that the licensee's reserves are adequate to meet its liabilities.
(4) A licensee shall submit to the Supervisor, together with the documents required by this section, the certificate of an auditor stating whether in his opinion, the licensee has complied with the solvency criteria prescribed by Section 24 at the balance sheet date and with such other requirements as may be prescribed.
(5) A licensee whose outstanding claims including those claims that are incurred but that are not reported to the licensee, exceed 200% of its capital and surplus accounts shall submit to the Supervisor an annual review of those claims given by an actuary approved by the Supervisor.
(6) This section does not apply to a licensee described in Section 17(2) while it is not engaged in exempt insurance business.
Part IV - Winding up of Licensees
Definition - 19. In the Part, "licensee" includes a former licensee whose licence to engage in exempt insurance business has been revoked by the Minister.
Petition for compulsory winding up - 20. (1) A judge may order the compulsory winding up of a licensee in accordance with the Companies Act but subject to this Part
(a) on petition of the Supervisor;
(b) in the case of a licensee engaged in
long term insurance business, on the petition of the policy holders with an aggregate
sum insured of $500,000;
(c) in the case of a licensee engaged in general insurance
business, on the petition of the policy holders whose volume of annual premium is
$100,000;
(d) in the case of a licensee engaged in both long term and general
insurance business, on the petition of the policy holders who qualify under either
paragraph (b) or (c) above.
(2) No petition for the compulsory winding up of a licensee may be presented without leave of the High Court, which must be satisfied that a prima facie case has been established
(a) on the petition of the Supervisor, of the licensee being unable to pay its
debts; and
(b) on the petition of a policy holder, of the licensee failing to
pay a substantial claim that is uncontested or awarded by a court.
(3) The Supervisor shall be a party to any winding up proceedings under this Part and shall be given such information as he may require concerning the affairs of the licensee.
Petition by Supervisor - 21. If the Supervisor is of the opinion that it is necessary or proper to do so he may with the leave of the High Court present a petition
(a) for the winding up by the Court of a licensee on the grounds that the licensee
is unable to pay its debts;
(b) for an order that the licensee or any part of
the insurance business of the licensee be placed under judicial management in accordance
with sections 44 to 48 of the Insurance Act, on the ground that it is in the public
interest to do so,
and the Court may order accordingly.
Petition by licensee - 22. (1) On giving the Supervisor one month's notice in writing, or such shorter period of notice as the Supervisor may agree to, of its intention to do so, a licensee may petition the Court without leave for an order to be voluntarily wound up.
(2) Both the licensee and the Supervisor are entitled to be heard on any petition to the Court under this section.
Stay of legal process - 23. Where a petition is presented under this Part for an order in respect of a licensee, all actions and the execution of all writs, summonses and other process against the licensee are, by virtue of this section, stayed and may not be proceeded with without leave of the Court.
Margin of solvency - 24. (1) Unless the Supervisor otherwise determines, a licensee carrying on general insurance business is unable to pay its debts if:
(a) at any time in its first financial year, the value of its assets does not
exceed the amount of its liabilities by $250,000;
(b) at any time after the expiration
of its first financial year, the value of its assets does not exceed its liabilities
(i)by $250,000, where the premium income of the licensee in the preceding financial year did not exceed $1,500,000;
(ii) by 1/5th of the premium income for the preceding financial year, where the premium income exceeded $1,500,000 but did not exceed $10,000,000;
(iii) by the aggregate of $2,000,000 and 1/10th of the amount by which the premium income in the preceding financial year exceeded $10,000,000, where the premium income in the preceding financial year exceeded $10,000,000.
(2) A licensee carrying on long term insurance business is unable to pay its debts if the value of its assets does not exceed its liabilities.
(3) In computing a licensee's liabilities for the purpose of this section, all contingent and prospective liabilities, other than liabilities in respect of share capital or contributed reserves are to be taken in to account.
(4) For the purpose of this section,
(a) 'assets' include
(i) cash,
(ii) bonds, debentures, fixed deposits, and equities listed on a recognised stock exchange,
(iii) mortgage loans on real estate,
(iv) net investment income due and accrued,
(v) premiums receivable,
(vi) reinsurance balances receivable,
(vii) funds held by ceding reinsurers,
(viii) accounts receivable (except from a person with whom the exempt insurer is associated, unless approved by the Supervisor),
(ix) irrevocable letters of credit drawn or confirmed by a bank licensed under the Financial Institutions Regulatory Act or the Offshore Banking Act; and
(b) liabilities are comprised of loss reserves and other outstanding liabilities, but do not include capital and surplus.
Resident representative - 24A. (1) A licensee shall appoint a resident representative for the purposes of this Act.
(2) Within 30 days from the date of an appointment under subsection (1), a licensee shall submit in writing to the Supervisor particulars respecting the name, address and terms of appointment of its resident representative.
(3) Where any change occurs in relation to the appointment of a resident representative that materially affects the particulars submitted to the Supervisor under subsection (2), the licensee shall within 30 days of the change give notice to the Supervisor of the particulars of the change.
(4) (a) No licensee may terminate the appointment of its resident representative; and
(b) No resident representative may cease to act as such, unless the licensee or the resident representative gives 30 days written notice to the Supervisor of the intention to do so.
(5) A licensee or a resident representative that fails to comply with the provisions of this section is guilty of an offence and certificate on summary conviction to a fine of $50,000.
Resident representative to report certain events - 24B. (1) It is the duty of the resident representative within 14 days of
(a) becoming aware that there is a likelihood of the licensee for which such representative
acts being unable to pay its debts; or
(b) becoming aware or having reason
to believe that an event to which this section applies has occurred,
to report
in writing to the Supervisor all the particulars that are available to him on the
matter, and to send a copy of that report to the auditor.
(2) In relation to a resident representative, this section applies to the following events:
(a) failure by the licensee
(i) to comply with the solvency criteria prescribed by Section 24,
(ii) to comply with any other requirements of this Act;
(b) the licensee's ceasing to carry on business under its licence.
(3) A resident representative that fails to discharge the duty imposed by subsection (1) is guilty of an offence and liable on summary conviction to a fine of $50,000.
Notice to resident representative
- 24C. The resident representative
(a) shall be notified of all meetings of
shareholders and directors: and
(b) may inspect corporate records of the licensee.
Evidence - 25. In any proceedings upon a petition presented for the winding up of a licensee, evidence that the licensee was insolvent at any time before the proceedings is evidence that the licensee continues to be unable to pay its debts, unless the contrary is proved.
Part V - Management Companies and Ancillary Personnel
Management Services - 26. Notwithstanding any other enactment, no person other than a management company may offer or provide management services to a licensee engaged in exempt insurance business from within Barbados.
Management Companies - 27. A management company is a body corporate, that satisfies the following requirements:
(a) its main object and activity are the provision of management services to licensees under this Act, other than banking business as defined by section 2 of the Banking Act or offshore banking business as defined by section 4 of the Offshore Banking Act, 1979;
(b) it is registered with the Supervisor in compliance with Section 28.
Registration of management companies - 28. (1) A company that is desirous of registering as a management company under this Act may apply to the Supervisor to be registered setting out the management services that it proposes to offer to a licensee under this Act, and providing a copy of its articles of incorporation and such other information as may be prescribed.
(2) An application under subsection (1) must be accompanied by the prescribed application fee.
(3) In considering an application under this section, the Supervisor shall take into account
(a) the ability of the company to provide the proposed management services
(b) the net value of the assets of the company; and
(c) the character and reputation of the company.
(4) When the Supervisor is satisfied that a company is registrable under this section, he shall, upon payment of the prescribed fee, but subject to subsection (5), issue to the company a certificate of registration containing the name and business address of the company and the date of its registration as a management company.
(5) Where in considering the registration of a company, the Supervisor is of the opinion that there are circumstances requiring that the company's registration should be subject to conditions, he may attach any of those conditions to the registration as are specified in the certificate as the circumstances require
(6) Subject to the payment of the annual prescribed fee, a certificate of registration remains valid until revoked or suspended by the Supervisor.
(7) The Supervisor may suspend or revoke the registration of a management company in such circumstances as are prescribed by paragraphs (a), (b) and (c) of Section 12 (1); and Sections 12 and 13 apply with such adaptations as are necessary to the certificate of registration as they apply to a licence under this Act.
Part VA - Holding Companies and related matters
Definition of holding company - 28A. For the purposes of this Act, a holding company is a body corporate that satisfies the following requirements:
(a) it is incorporated under the Companies Act and its sole object is to own shares
in a company whose objects and activities are the transaction of exempt insurance
business from within Barbados;
(b) at least one of its directors is a resident
citizen of Barbados;
(c) its beneficial shareholders are not persons resident
within the Caribbean Community; and
(d) it is registered with the Supervisor in
compliance with Section 28C.
Resident citizen not required to hold shares - 28B. (1) A resident citizen who is appointed a director in compliance with this section shall not subscribe for nor acquire any shares of the company, either by way of qualification or otherwise.
(2) A resident citizen who has consented to his appointment as a director of a holding company must, before the registration of the articles of incorporation of the company, file with the Registrar of Companies a consent signed by him to act as a director.
Registration of holding companies - 28C. (1) A company that is desirous of registering as a holding company under this Act may apply to the Minister for approval to be so registered.
(2) An application under this section must be accompanied by a certified copy of the articles of incorporation of the company under the Companies Act and the prescribed fee.
(3) In considering the application, the Minister shall,
(a) ensure that the sole object of the holding company is to own shares in a company whose objects and activities are the transaction of exempt insurance business from within Barbados;
(b) take into account the character and reputation of the company.
(4) Where the Minister is satisfied that a company is registrable under this section, he shall, subject to subsections (5) and (6), approve the registration of the company.
(5) On receipt of the Minister's approval under subsection (4), the Supervisor shall, upon payment of the prescribed fee, issue to the company a certificate of registration containing the name and business address of the company and the date of its registration as a holding company.
(6) Notwithstanding anything contained in this section, where the Supervisor is of the opinion that there are circumstances requiring the company's registration to be subject to conditions, he may, in addition to requiring the company to submit one copy of its financial statements in a form that complies with generally accepted accounting principles, and such other information as may be prescribed, specify such other conditions in the certificate of registration as the circumstances require.
(7) Subject to the payment of an annual registration fee, the certificate of registration remains valid until revoked or suspended by the Minister.
(8) The Minister may suspend or revoke a certificate of registration where a holding company
(a) fails to comply with a condition specified in that certificate; or
(b) is in breach of any duty or obligation imposed upon it by or under the Act;
and Sections 12 and 13 apply, with such adaptations as are necessary, to the certificate of registration as they apply to a licence under this Act.
Part VI - Special Tax and other Exemptions
Exemption from tax - 29 (1) Subject to subsection (2) and except as provided by this Part, no income tax, capital gains tax or other direct tax or impost shall be levied in Barbados.
(a) on the profits or gains of
(i) a licensee derived from exempt insurance business,
(ii) a holding company derived from its sole object as described in Section 28A(a),
(iii) a management company derived from its main object and activity as described in Section 27;
(b) on the transfer of all or any of the assets and securities of a licensee, holding company or of a management company to any person; except that in the case of a transfer to a person who is not a licensee, holding company or management company, the prior written approval of the Minister must be obtained.
(2) Notwithstanding the Income Tax Act, the profits and gains of a licensee derived from the exempt insurance business conducted in Barbados are subject to income tax
(a) for the first 15 financial years of the licensee, including the year in which
its licence was issued, at a rate of zero per cent; and
(b) thereafter,
(i) at the rate of two per cent on the first $250,000 of taxable income, and
(ii) at the rate of zero per cent in respect of all other taxable income in excess of $250,000.
(3) For the purposes of this section the annual fee referred to in Section 11 shall not be payable by a licensee to whom paragraph (b) of subsection (2) applies.
(4) A licensee shall not be granted any credit in respect of tax paid to a country other than Barbados.
Exemption from withholding tax - 30. (1) Notwithstanding the Income Tax Act, but subject to subsection (2), no licensee, holding company or management company need withhold any portion of any dividend, interest or other return payable to any person in respect of his holding any shares or securities of the licensee, holding company or management company.
(2) All dividends, interest or other returns attributable to the shares or securities of a management company that are payable to or for the benefit of a resident of Barbados shall be reported by the licensee to the Commissioner of Inland Revenue in such manner as may be prescribed.
Exchange Control exemption - 31. (1) The provisions of the Exchange Control Act do not apply to a licensee or holding company.
(2) A person who proposes to incorporate a company for the purpose of
(a) engaging in exempt insurance business from within Barbados; or
(b) owning shares in a company that is being incorporated for the purpose referred to in paragraph (a).
is not subject to any requirement to obtain permission under the Exchange Control Act in order to subscribe to membership in or shares of the proposed company.
(3) In relation to the services which it provides to licensees under the Act, a management company shall be deemed to be non-resident for the purposes of the Exchange Control Act and no residents of Barbados, other than licensees and management companies, shall subscribe to the capital of a management company or make loans to a management company except with the permission of the Exchange Control Authority.
(4) Where the Minister has consented to the incorporation of a company for the purpose of engaging in exempt insurance business or of owning shares in such a company under this Act, that company is not subject to any requirement to obtain permission under the Exchange Control Act for the purpose of issuing shares to persons resident outside Barbados.
Guarantees - 32. (1) A licensee and a holding company are entitled upon application to the Minister to be given assurances or guarantees in the prescribed form that the benefits and exemptions contained in this Act will apply to the licensee or holding company for a period of 30 years.
(2) An assurance or guarantee given pursuant to subsection (1) is subject to negative resolution.
Fixed deposits - 33. A licensee or management company may place fixed term deposits and hold current accounts with a person licensed under the Offshore Banking Act, 1979.
Salary concessions - 34. (1) Where the Minister is satisfied that a licensee or management company requires the services of specially qualified persons in order to carry on its business effectively from within Barbados and that
(a) it is unable to acquire those services in Barbados; and
(b) it is unable
to retain or hire those services from outside Barbados without special tax benefits
being made available,
the Minister may grant a tax concession in respect of the income tax payable for those specially qualified persons.
(2) The tax concession referred to in subsection (1) is one that allows a prescribed percentage of an employee's or contractor's salary or fees
(a) to be exempt from income tax in Barbados;
(b) to be paid in a foreign currency
in a trust account without being liable to income tax in Barbados as to the amount
paid on any earnings;
(c) to be paid in a foreign currency in a country specified
by the employee or contractor;
(d) to be paid in some other prescribed manner
in another currency or otherwise without being liable to income tax in Barbados.
notwithstanding any provision of the Income Tax Act or the Exchange Control Act.
Confidentiality - 35. (1) Except for the performance of his functions under this Act or the Income Tax Act or when lawfully required to do so by order of a court of competent jurisdiction, no person shall disclose any information relating to any application of a prospective licensee or to the affairs of a licensee other than such information as forms part of the public record in the possession of the Registrar of Companies.
(2) Notwithstanding subsection (1), the Supervisor may disclose details concerning the affairs of a licensee to another regulatory authority where
(a) the other regulatory authority permits reciprocal disclosure,
(b) the disclosure
is in the interest of prudential regulation of the exempt insurance industry,
(c)
the disclosure pertains to those actions of a licensee in violation of any enactment
or with respect to the failure of the licensee to comply with generally accepted
principles relating to the exempt insurance industry,
(d) the licensee is given
prior notification of the intention to disclose the requested information, or
(e)
any information disclosed is restricted to the information requested by the other
regulatory authority.
Part VII - Miscellaneous
Application of Income Tax Act - 35A. Except as otherwise provided in this Act, the Income Tax Act applies mutatis mutandis to a licensee, holding company or management company.
Exempt Insurance Advisory Committee - 35B. (1) There is hereby established for the purposes of this Act, a committee to be known as the Exempt Insurance Advisory Committee.
(2) It is the function of the Committee to advise the MInister on such matters relating to exempt insurance business, and to the functions of the Minister under the Act or the regulations as are referred by the Minister to the Committee.
(3) The Committee shall consist of such persons of recognised standing, knowledge and experience in business, professional and academic matters as the Minister may appoint by instrument in writing in accordance with the prescribed terms, conditions and other associated matters.
Power to authorise the appointment of actuaries and auditors - 35C. The Minister after consultation
(a) with the Supervisor and the Institute of Chartered Accountants of Barbados,
in the case of an auditor: or
(b) with the Supervisor, in the case of an actuary,
may by instrument authorise a person to be appointed as an actuary or auditor for the purposes of this Act, if in the opinion of the Minister that person is suitably qualified for such an appointment by reason of his knowledge and experience.
Regulations - 36. The Minister may make regulations giving effect to the purposes of this Act and in particular with respect to
(a) the operation and conduct of management companies;
(b) regulating the conduct
and activities of insurance brokers and agents who provide services for licensees;
(c)
prescribing anything that is required by this Act to be prescribed.
Offences - 37. A person who
(a) does exempt insurance business from within Barbados during any period in which
he does not hold a licence under this Act;
(b) offers or provides the services
of a management company to a licensee or in relation to the transaction of exempt
insurance business from within Barbados during any period when that person is not
a management company within the meaning of this Act.
is guilty of an offence and liable on summary conviction to a fine of $50,000.
Offences - 38. A director, officer, employee or agent of a licensee or management company, who, with intent to deceive
(a) makes any false or misleading statement or entry in a book, account, record,
report or statement or fails to make any entry that should be made therein; or
(b)
obstructs the carrying out by an auditor of his function described this Act,
is guilty of an offence and liable on summary conviction to a fine of $5,000 or imprisonment for 2 years or both.
Offences - 39. (1) Any person who contravenes Section 14(1) is guilty of an offence and liable on summary conviction to a fine of $5,000 and to a fine of $250 for every day or part thereof during which the offence continues.
(2) A person who contravenes Section 35 is guilty of an offence and liable on summary conviction to a fine of $2,000 or imprisonment for 12 months.
Non-application of specified enactments - 40. (1) The Insurance Act, 1970 except as specified in Part IV and the Stamp Duty Act do not apply to a licensee.
(2) The Rate of Interest Act does not apply to a licensee in respect of exempt insurance business, nor to a management company in respect of the provisions of management services to a licensee.
(3) Sections 152, 175(4) and 371 of the Companies Act do not apply to a licensee.
Commencement - 41. This Act comes into operation on a date to be fixed by proclamation.
Transitory Provisions
(1) Where a management company is registered with the Supervisor before the date of the coming into operation of this Act as a company that wholly owns the shares of a licensee, the management company may apply not later than 3 months from that date to the Minister for the grant of the benefits and exemptions contained in the principal Act.
(2) Where a management company makes application under this section, the Minister may exercise the power conferred on him by Section 28C in respect of the management company as if that company were a holding company for the purposes of that section.
(3) A management company is entitled to the benefits and exemptions contained in the principal Act only if it so applies within the time limited by subsection (1).
(4) The provisions of Section 24A relating to the time prescribed for the submission of particulars respecting the appointment of a resident representative or a change occurring in relation to any such appointment shall be construed as requiring a licensee engaged in exempt insurance business prior to the date of coming into operation of this Act to submit those particulars to the Supervisor not later than 30 days from that date.
(5) A licensee that fails to comply with the requirements of subsection (4) is guilty of an offence and liable on summary conviction to a fine of $50,000.
The Minister in exercise of the powers conferred on him by Section 36 of the Exempt Insurance Act, 1983, makes the following regulations:
1. These regulations may be cited as the Exempt Insurance (Tax Concession) Regulations, 1986.
2. The tax concession provided for under Section 34 of the Act in respect of income tax payable by specially qualified persons shall be 35% of an employee's or contractor's salary or fees.
3. The tax concession may be paid in a foreign currency in a country specified by the employee or contractor.
Made by the Minister this 28th day of September, 1986.
E.W. BARROW
Minister
responsible for Finance