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Insurance Activities Act1 Entry into force 01.01.2005 Amended by the following legal instruments (show) Chapter 1 GENERAL PROVISIONS Scope of application of Act This Act regulates insurance activities, insurance mediation and supervision thereof. Insurance activities and insurance mediation (1) For the purposes of this Act, insurance activities shall mean the acceptance of the risks of a policyholder or insured person by the insurance undertaking on the basis of an insurance contract with the objective to pay indemnities upon occurrence of an insured event. (2) Insurance mediation (hereinafter mediation) includes: 1) carrying out work preparatory to the conclusion of insurance and reinsurance contracts, including preparation of risk analyses; 2) concluding insurance and reinsurance contracts; 3) assisting in the administration and performance of insurance and reinsurance contracts. (3) For the purposes of this Act, the following are not considered to be mediation: 1) engaging of insurance undertakings in mediation, except for mediation of insurance contracts of other insurance undertakings; [RT I 2007, 68, 421 - entry into force 01.01.2008] 2) engaging of employees of insurance undertakings in mediation under an employment contract, except for mediation of insurance contracts of other insurance undertakings; [RT I 2007, 68, 421 - entry into force 01.01.2008] 3) the provision of insurance-related information in the context of another professional activity provided that the purpose of that activity is not to assist the client in concluding or performing an insurance or reinsurance contract, loss adjusting, and the management or expert appraisal of claims filed with an insurance undertaking on a professional basis, and the provision of such information is ordinarily not part of the professional activity. [RT I 2007, 68, 421 - entry into force 01.01.2008] (4) Insurance mediation is divided into insurance brokerage and activities of insurance agents. Insurance undertaking [RT I 2007, 68, 421 - entry into force 01.01.2008] (1) For the purposes of this Act, an insurance undertaking shall mean a company whose main permanent activity is the compensation for damage created upon and as a result of insured events, or payment of agreed sums of money. (2) Unless otherwise provided by law, an insurance undertaking shall only be founded as aktsiaselts [public limited company] or a European company. (3) The provisions of the Commercial Code apply to insurance undertakings together with specifications arising from this Act. (4) An insurance undertaking may only engage in insurance activities, reinsurance activities and insurance mediation, and conduct other transactions and acts directly arising from the aforementioned activities, if these are directly ancillary or supplementary to its principal activity. [RT I 2007, 68, 421 - entry into force 01.01.2008] (5) The provisions of subsection (4) of this section do not affect the validity of the transactions and acts of insurance undertakings. (6) [Repealed - RT I, 23.12.2013, 4 - entry into force 01.01.2014] (7) [Repealed - RT I 2007, 68, 421 - entry into force 01.01.2008] (8) [Repealed - RT I 2007, 68, 421 - entry into force 01.01.2008] Reinsurance activities and reinsurance undertakings (1) Reinsurance activities shall mean the acceptance of the insured risks of an insurance undertaking based on a reinsurance contract with the objective to pay the insurance undertaking indemnities in an agreed amount in connection with the insured event specified in an insurance contract entered into between the insurance undertaking and policyholder. (2) A reinsurance undertaking shall mean an insurance undertaking who may only engage in reinsurance activities and insurance mediation, and conduct other transactions and acts directly arising from the aforementioned activities, if these are directly ancillary or supplementary to its principal activity. (3) The provisions of subsection (2) of this section do not affect the validity of the transactions and acts of reinsurance undertakings. (4) Retrocession shall mean the reinsurance activities, in the case of which a retrocessionaire accepts the insured risks of a reinsurance undertaking on the basis of a reinsurance contract. (5) A retrocessionaire shall mean a reinsurance undertaking whose main permanent activity is the compensation for damage incurred by a reinsurance undertaking upon and as a result of insured events, or payment of agreed sums of money. (6) Special purpose vehicles, which are not insurance undertakings, but which are engaged in reinsurance activities by financing the insured risks accepted on the basis of a reinsurance contract through issuing debt securities or some other such financial instruments and who have no refund obligations before the performance of an obligation under the reinsurance contract, may engage in Estonia only in cross-border reinsurance activities. [RT I 2007, 68, 421 - entry into force 01.01.2008] Qualifying holding, controlled company, holding of voting rights and close links The provisions of §§ 82, 9, 10 and 721 of the Securities Market Act shall be followed in determining of qualifying holding, controlled companies, holding of voting rights and close links. [RT I 2009, 37, 250 - entry into force 10.07.2009] Parent undertaking, subsidiary, consolidation group and holding company (1) For the purposes of this Act, a parent undertaking is a person who controls at least one company or other legal person (subsidiary) pursuant to subsections 10 (1) and (2) of the Securities Market Act. For the purposes of this Act, subsidiaries of subsidiaries of parent undertakings are deemed to be subsidiaries of the same parent undertaking. (2) For the purposes of this Act, consolidation group is formed by: 1) parent undertaking together with subsidiaries; 2) parent undertaking and its subsidiaries together with undertakings related to the parent undertaking or its subsidiaries for the purposes of subsection 70 (2) of this Act; 3) companies or other legal persons under a common management pursuant to the contract entered into, the provisions of the memorandum of association or the articles of association or whose majority of the membership of the managing or supervisory bodies is formed by the same persons until the consolidated annual financial report is approved. (3) An insurance holding company shall mean a parent undertaking who is not a mixed financial holding company, but whose subsidiaries or the majority of these are insurance undertakings. (4) A mixed-activity insurance holding company is a parent undertaking who is not an insurance undertaking, insurance holding company or mixed financial holding company, and who has at least one subsidiary which is an insurance undertaking. (5) A mixed financial holding company is a parent undertaking who is not an insurance undertaking, special purpose vehicle credit institution, investment firm or management company, and who has at least one subsidiary which is an insurance undertaking, special purpose vehicle credit institution, investment firm or management company of any State which is a Contracting Party to the EEA Agreement and who, together with its subsidiaries and other undertakings, forms a financial conglomerate. Use of word “ kindlustus ” [insurance] (1) The business name of an insurance undertaking or insurance agent which is a company shall include the word “ kindlustus ” [insurance]. (2) The business names or trade marks of legal persons not specified in subsection (1) of this section shall not include the word “ kindlustus ” as a simple or compound word in Estonian or a foreign language. (3) The provisions of subsection (2) of this section do not extend to non-profit associations the members of which are only insurance undertakings or intermediaries and the objective of the activities of which is only the protection of the rights of policyholders, insured persons or beneficiaries, or to insurance brokers. (4) The provisions of subsection (1) of this section do not apply to insurance agents which are companies who engage in the mediation of insurance contracts only as an ancillary activity. Forms of insurance Insurance is divided into voluntary insurance, compulsory insurance and mandatory insurance. Voluntary insurance Voluntary insurance means insurance where there is no obligation to enter into an insurance contract arising from law. Compulsory insurance (1) Compulsory insurance means insurance where a person, pursuant to the procedure provided by law, has an obligation to enter into an insurance contract. (2) Upon the establishment of compulsory insurance, the person required to enter into an insurance contract, the insured person, the sum insured and the insured event shall be provided by law. (3) Upon the imposition of policyholder's excess in a compulsory liability insurance contract, the insurance undertaking shall pay the compensation for loss in full and the policyholder shall pay the excess to the insurance undertaking. (4) Upon the provision of compulsory insurance, the principle of equal protection of the interests of insured persons shall be guaranteed. (5) The Act which establishes compulsory insurance and other Acts, in so far as not otherwise provided by the Act specified first, apply in respect of the conditions of compulsory insurance contracts. Mandatory insurance (1) Mandatory insurance means insurance where a person has the obligation as provided by law, to pay an insurance premium or tax, and the corresponding obligation to compensate is imposed on the state or on another person. (2) This Act does not apply to mandatory insurance. Main classes, classes and subclasses of insurance (1) The main classes of insurance are: 1) non-life insurance; 2) life insurance; 3) reinsurance. (2) The main classes of insurance are divided into classes and the classes are divided into subclasses. (3) Subclasses of insurance activities are established by a regulation of the Minister of Finance. Classes of non-life insurance The classes of non-life insurance are: 1) accidents insurance; 2) sickness insurance; 3) land vehicles insurance; 4) railway rolling stock insurance; 5) aircraft insurance; 6) ships insurance; 7) goods in transit insurance; 8) fire and natural forces insurance; 9) other damage to property; 10) motor vehicle liability, including motor third party liability insurance; 11) aircraft liability insurance; 12) liability for ships; 13) general liability insurance; 14) credit insurance; 15) suretyship insurance; 16) miscellaneous financial loss insurance; 17) legal expenses insurance; 18) assistance insurance. Classes of life insurance (1) The classes of life insurance are: 1) term and whole life insurance; 2) endowment assurance; 3) birth insurance and marriage insurance; 4) annuities; 5) unit-linked life insurance; 6) tontines; 7) administration of pension schemes, except for management of pension funds provided for in § 3 of the Funded Pensions Act. (2) The insurance contract specified in clause (1) 4) of this section shall mean a life insurance contract which prescribes for the periodic payment of agreed indemnities, including insurance contracts for mandatory funded pension specified in Division 8 of Chapter 2 of the Funded Pensions Act (hereinafter in this Act pension contract). The insurance activities comprising the entry into the pension contracts shall be considered the insurance activities specified in Article 3(4) of Directive 2002/83/EC of the European Parliament and of the Council concerning life assurance (OJ L 345, 19.12.2002, p. 1–51). [RT I 2008, 48, 269 - entry into force 14.11.2008] Classes of reinsurance The classes of reinsurance are: 1) reinsurance of non-life insurance; 2) reinsurance of life insurance. Gender factor in assessment of insured risk (1) The differences between the insurance premiums and insurance indemnities of females and males shall not be caused by the use of the gender factor in the assessment of the insured risks. (2) An insurance undertaking shall be permitted in the assessment of insured risks in sickness insurance to take into account the risks, which are characteristic only of persons of one gender, and to differentiate, if necessary, to the extent of the specified risks the insurance premiums and insurance indemnities of females and males. (3) Neither pregnancy nor maternity shall affect the size of the insurance premiums and insurance indemnities. Clients and processing of their data [RT I 2007, 68, 421 - entry into force 01.01.2008] (1) The client of an insurance undertaking for the purposes of this Act shall mean a person to whom the insurance undertaking provides the service relating to the insurance activities (the policyholder, insured person, beneficiary, injured party) or a person that has approached the insurance undertaking with the aim of using a service. [RT I 2007, 68, 421 - entry into force 01.01.2008] (2) Processing of personal data in insurance activities is permitted only with the consent of the client unless otherwise provided by this Act. Pursuant to § 12 of the Personal Data Protection Act, the consent of the client necessary for the processing of personal data may also be included in the standard terms of the insurance contract. The provisions of subsection 43 (2) of the Law of Obligations Act shall apply to the standard provision whereby the insurance undertaking reserves the right to amend the aforementioned standard terms. The amendment of the standard terms shall be considered unreasonable with regard to the client primarily in case the amendment provides the insurance undertaking with the right to process personal data to the extent which the client could not reasonably expect taking into consideration the objective of the contract. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) Processing of personal data is permitted without the consent of the client is permitted in the cases provided for in the Personal Data Protection Act and for the performance of a contract entered into in favour of the client or for ensuring the performance of a contract, excluding the processing of sensitive personal data, unless otherwise provided by this Act. [RT I 2007, 68, 421 - entry into force 01.01.2008] (4) Insurance undertakings shall be entitled to process personal data, excluding sensitive personal data, without the consent of the client for the assessment of the insured risk or the performance of other acts preceding the entry into the contract and issuing of the policy if the client has submitted an application for the entry into the insurance contract and the entry into the contract presumes the performance of the aforementioned act or acts. [RT I 2007, 68, 421 - entry into force 01.01.2008] (5) Insurance undertakings, for the performance or ensuring the performance of the contract, shall be entitled to process without the consent of the client for the purpose of determining the performance obligation and the scope thereof the data specified in clause 4 (2) 3) of the Personal Data Protection Act in case the insured event is the client's death or the damage incurred due to the occurrence of the insured event consists in the damage to the client's health or the client's bodily injury. [RT I 2008, 48, 269 - entry into force 14.11.2008] (6) Insurance undertakings, for the performance or ensuring the performance of the contract, shall be entitled to process without the consent of the client for the purpose of determining the performance obligation and the scope thereof the data specified in clause 4 (2) 8) of the Personal Data Protection Act. [RT I 2007, 68, 421 - entry into force 01.01.2008] (7) The insurance undertaking shall be entitled, for ensuring the performance of the contract, to store personal data until the expiry of the limitation period for claims arising from the contract unless otherwise provided by law. [RT I 2007, 68, 421 - entry into force 01.01.2008] (8) Upon entry into a contract, the insurance undertaking is required to identify a policyholder and a representative or representatives thereof pursuant to the provisions of the Money Laundering and Terrorist Financing Act. [RT I 2007, 68, 421 - entry into force 01.01.2008] (9) Insurance undertakings, in case of an insured event, shall be entitled without the consent of the client to request from a third party the personal data or granting access to the personal data, which are necessary to the insurance undertaking for determining the performance obligation of the insurance contract or the scope of the performance thereof. The third party shall, at the request of the insurance undertaking, promptly communicate the personal data or grant access thereto. The communication of personal data to the insurance undertaking or granting access thereto for the such purpose shall not be permitted if these are sensitive personal data, excluding the case when the insurance undertaking requires sensitive personal data in the cases specified in subsections (5) and (6) of this section. [RT I 2008, 48, 269 - entry into force 14.11.2008] (10) Managers and employees of insurance undertakings, persons acting on the authorisation or orders of such persons, including persons from whom the operations related to insurance activities pursuant to this Act have been outsourced, are required to maintain, during and after their employment or operation and for an unspecified term, the confidentiality of all information which becomes known to them and which concerns the economic status, state of health, personal data and the business or other professional secrets of clients, unless otherwise prescribed by law. Assessment of suitability of unit-linked life insurance contracts (1) Insurance undertakings shall, prior to entry into unit-linked life insurance contracts, assess the suitability of the contract and its underlying assets for the policyholder. (2) A unit-linked life insurance contract shall mean a contract where the investment risk related to the underlying assets thereof is born, pursuant to the insurance contract, by the policyholder and where the preservation of the nominal value of the insurance premiums paid for the acquisition of the underlying assets is not guaranteed. (3) Insurance undertakings shall establish the following in the assessment of the suitability of unit-linked life insurance contracts and their underlying assets: 1) the policyholder's insurable interests, investment objectives and their preferences in terms of risk tolerance and desirable duration of the investment; 2) the existence of the investment knowledge and experience of the policyholder in order to find out whether the policyholder understands the investment risk which accompanies the entry into a unit-linked life insurance contract. (4) Insurance undertakings shall warn the policyholder about of the unsuitability of a unit-linked life insurance contract or its underlying assets if on the basis of the received information there is reason to believe that the unit-linked life insurance contract or its underlying assets are unsuitable for the policyholder. (5) Insurance undertakings shall not encourage failure to submit the information required for the assessment of the suitability of a unit-linked life insurance contract and its underlying assets. (6) In case of the submission of insufficient information or a failure to submit information by the policyholder, the insurance undertaking shall warn the policyholder that it is impossible to assess the suitability of a unit-linked life insurance contract or its underlying assets and therefore his or her interests could be less protected. (7) The insurance undertaking has the right to base on the information submitted by its policyholder upon the assessment of the suitability of a unit-linked life insurance contract and its underlying assets, except in case the insurance undertaking was aware or should have been aware that the respective information is outdated, inaccurate or incomplete. (8) The insurance undertaking does not need to assess the suitability of a unit-linked life insurance contract and its underlying assets for the policyholder if the policyholder himself or herself has approached the insurance undertaking with the wish to enter into such contract and the insurance undertaking has warned the policyholder that in such case the assessment of the suitability of either the unit-linked life insurance contract or its underlying assets is required and therefore the interests of the policyholder could be less protected. The insurance undertaking is required to assess the suitability of the unit-linked life insurance contract and its underlying assets for the policyholder in case the policyholder has expressed a wish therefor. (9) The insurance undertaking does not need to assess the suitability of a unit-linked life insurance contract and its underlying assets for the policyholder if this is an insurance contract for a supplementary funded pension specified in the Funded Pensions Act, which has been chosen for the policyholder and on the basis of which the insurance premiums for the policyholder are paid by his or her employer. Administrative procedure The provisions of the Administrative Procedure Act apply to administrative proceedings prescribed in this Act, taking account of the specifications provided for in this Act and the Financial Supervision Authority Act. Chapter 2 RIGHT TO OPERATE AS INSURANCE UNDERTAKING Division 1 Authorisation Authorisation (1) In order to engage in insurance activities, a company shall hold a relevant authorisation (hereinafter authorisation). (2) The Financial Supervision Authority shall grant authorisations to companies founded in Estonia. The registered office and the principal place of business of an insurance undertaking who has obtained an authorisation from the Financial Supervision Authority shall be in Estonia. (3) Authorisations shall be granted for an unspecified term. (4) Authorisations shall not be transferable, and the use thereof by other persons shall be prohibited. Scope of authorisations (1) An authorisation is granted for engaging in one or several classes of insurance or, at the request of the applicant for the authorisation, for engaging in one or several subclasses of insurance. (2) An insurance undertaking may engage in only such classes or subclasses of insurance for which an authorisation has been granted to the insurance undertaking. (3) In addition to the provisions of subsection (2) of this section, an insurance undertaking engaging in non-life insurance may operate in classes or subclasses of insurance without an additional authorisation if the risk additionally insured by the insurance undertaking is related to the object insured on the basis of the class or subclass of insurance indicated in the authorisation, and the specified risk and object or person are insured on the basis of the same insurance contract. (4) The provisions of subsection (3) of this section do not apply to credit insurance, suretyship insurance and legal expenses insurance, unless the legal expenses insurance is an additional class of assistance insurance, ships insurance or liability for ships insurance. (5) An insurance undertaking shall not be simultaneously engaged in life insurance and non-life insurance, except in the case specified in subsection (6) of this section. (6) An insurance undertaking engaged in life insurance may be simultaneously engaged in life insurance and the classes of non-life insurance specified in clauses 12 1) and 2) of this Act. [RT I 2007, 68, 421 - entry into force 01.01.2008] (7) An insurance undertaking may be simultaneously engaged either in life insurance and the reinsurance of life insurance or non-life insurance and the reinsurance of non-life insurance. (8) A reinsurance undertaking may be engaged in reinsurance of non-life insurance and reinsurance of life insurance. [RT I 2007, 68, 421 - entry into force 01.01.2008] Application for authorisation (1) In order to apply for an authorisation, a written application of the members of the management board set out in the memorandum of association of the company or, in the case of an operating company, entered in the registry card of the commercial register, and the following documents and information shall be submitted (hereinafter in this Division application): 1) a copy of the articles of association and, in the case of an operating company, also the resolution of the general meeting on amendment of the articles of association and the amended text of the articles of association; 2) upon foundation of a company, a notarised copy of the memorandum of association or foundation resolution and a notice issued by a credit institution regarding the payment of share capital; 3) in the case of an operating company, documents certifying the amount of available solvency margin together with the sworn auditor’s report; [RT I 2010, 9, 41 - entry into force 08.03.2010] 4) the opening balance of the applicant and a review of income and expenditure, and the latest balance, income statement and the three last annual reports of the applicant, if such documents exist; 5) a scheme of operations in conformity to the requirements provided for in § 20 of this Act; 6) the standard terms of insurance contracts in case the planned insurance activities envisage the entry into pension contracts or the authorisation is applied for engaging in compulsory insurance; [RT I 2008, 48, 269 - entry into force 14.11.2008] 7) information on the members of the management board and supervisory board of the applicant which includes each person's given name and surname, personal identification code or date of birth in the absence of a personal identification code, residence, educational background, a complete list of places of employment and positions and, in the case of members of the management board, a description of the area of responsibility of the specified persons, and documents in proof of their trustworthiness and conformity to the requirements of this Act which the applicant deems necessary to submit; 8) information on the applicant's auditor, responsible actuary and person carrying out internal audit, including each person's name, personal identification code or, in the absence of the identification code, the date of birth or registry code; 9) a list of the shareholders which sets out the name, the registry code or personal identification code of each shareholder, or the date of birth in the absence of a personal identification code, and information on the amount of contribution, number of shares and votes acquired or owned by each shareholder; 10) the data specified in subsection 61 (3) of this Act concerning persons have a qualifying holding in the applicant; 11) information on companies in which the share of the applicant or any member of its or supervisory board or management board exceeds 20 per cent, which also sets out the amount of share capital of the company, a list of the areas of activity and the size of the holding of the applicant and the members of its or supervisory board or management board; 12) the planned organisational structure of the applicant; 13) the internal rules of an insurance undertaking pursuant to § 477 of this Act, or a draft of such document; 14) the name and address of the person handling claims who is designated to each Contracting State of the EEA Agreement except Estonia (hereinafter Contracting State) by the applicant pursuant to subsection 43 (5) of the Motor Third Party Liability Insurance Act, if the application is submitted for motor third party liability insurance; 15) a document by which the applicant assumes the obligation to pay the single contribution to the Pension Contracts Sectoral Fund prescribed in the Guarantee Fund Act in case the planned insurance activities of the applicant envisage the entry into pension contracts. [RT I 2008, 48, 269 - entry into force 14.11.2008] (2) The accuracy of information and documents submitted with regard to natural persons specified in clauses (1) 7) and 8) of this section shall be confirmed by such persons by their signatures. (3) If during the review of an application, any changes occur in the information or documents specified in subsection (1) of this section, the applicant shall promptly resubmit the amended information or documents to the Financial Supervision Authority. Application for additional authorisation (1) In order to engage in a class or subclass of insurance for which an insurance undertaking has no authorisation, the insurance undertaking shall apply for an additional authorisation. (2) An application for an additional authorisation shall consist of a written application of the insurance undertaking and a scheme of operations which complies with the requirements provided for in § 20 of this Act, with the exception of clause 20 (1) 6) of this Act, concerning the classes and subclasses of insurance activities for which the application for the additional authorisation is submitted. (3) If an application for an additional authorisation is submitted for engaging in compulsory insurance, the standard terms of insurance contracts shall also be submitted in addition to that provided for in subsection (2) of this section. (31) If the planned insurance activities envisage the entry into pension contracts, the standard terms of pension contracts and the document specified in clause 18 (1) 15) of this Act shall be submitted in addition to the items specified in subsection (2) of this section. [RT I 2008, 48, 269 - entry into force 14.11.2008] (4) An insurance undertaking shall notify the Financial Supervision Authority promptly of any changes to the information and documents specified in subsections (2) and (3) of this section, which occur during application for an additional authorisation. (5) The provisions of §§ 21–23 of this Act apply to the processing of applications for additional authorisations. Scheme of operations (1) A scheme of operations shall set out: 1) a list of the planned classes and subclasses of insurance; 2) the planned amount of reinsurance and the principles of reinsurance for each class and subclass of insurance specified in subsection (1) of this section; 3) a list and amount of available solvency margin; 4) the principles and methods of calculation of the technical provisions provided for in § 75 of this Act and of the financial liabilities provided for in § 751 of this Act; [RT I 2007, 4, 20 - entry into force 20.01.2007] 5) a technical business plan for each class and subclass of insurance; 6) the estimated balance sheet and income statement of the first three years of activity of the insurance undertaking; 7) the estimated volume of insurance premiums, claims and operating expenses and the portion of reinsurance therein during the first three years of activity of the insurance undertaking and the amount of the technical provisions and financial liabilities by each class and subclass of insurance applied for separately. [RT I 2007, 4, 20 - entry into force 20.01.2007] (2) If an application is submitted for engaging in assistance insurance, a scheme of operations shall also contain a description of the means necessary for the provision of assistance in addition to that provided for in subsection (1) of this section. (21) If a scheme of operations meeting the requirements provided for in subsection (1) of this section is submitted by a reinsurance undertaking, it shall submit instead of the planned amount of reinsurance and the principles of reinsurance the planned amount of retrocession and the principles of retrocession for each class of reinsurance. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) The Financial Supervision Authority shall be promptly notified in writing of all amendments to the scheme of operations during application for an authorisation and during a period of three years after granting the authorisation. (4) During three years after granting the authorisation, an insurance undertaking shall submit a report on the implementation of the scheme of operations to the Financial Supervision Authority together with the annual report. [RT I 2008, 48, 269 - entry into force 14.11.2008] (5) If the planned insurance activities of an insurance undertaking envisage the entry into pension contracts after receiving an authorisation for annuity payments, the insurance undertaking shall submit to the Financial Supervision Authority a corresponding technical business plan. [RT I 2008, 48, 269 - entry into force 14.11.2008] Review of applications for authorisations (1) If an applicant has failed to submit all the information and documents specified in § 18 of this Act or if such information or documents are incomplete or have not been prepared in accordance with the requirements, the Financial Supervision Authority shall demand elimination of the deficiencies by the applicant. (2) The Financial Supervision Authority may demand the submission of additional information and documents if it is not convinced on the basis of the information and documents specified in § 18 of this Act as to whether the applicant for an authorisation has adequate facilities for engaging in insurance activities, or whether it meets the requirements for insurance undertakings prescribed by an Act or legislation issued on the basis thereof or if other circumstances relating to the applicant need to be verified. (3) In order to verify the information submitted by an applicant, the Financial Supervision Authority may make inquiries from national databases, perform on-site inspections, order an assessment or special audit, obtain oral explanations from the members of applicant's supervisory board or management board, auditors, internal auditors, representatives thereof and if necessary, from third parties concerning the content of documents and facts which are relevant in making a decision on the granting of an authorisation. (4) The information and documents specified in subsections (1)–(3) of this section shall be submitted within a reasonable term determined by the Financial Supervision Authority. (5) The Financial Supervision Authority may refuse to review an application if the applicant has failed to eliminate the deficiencies specified in subsection (1) of this section within the prescribed term, or has not submitted the documents or information requested by the Financial Supervision Authority by the due date. Upon refusal to review an application, the Financial Supervision Authority shall return the submitted documents. (6) Upon processing of an application for an authorisation, the Financial Supervision Authority shall cooperate with the financial supervision authority of the respective Contracting State if: 1) the applicant is a parent undertaking or subsidiary of an insurance undertaking, investment firm, investment fund, credit institution, management company or another subject of financial supervision founded in the Contracting State; 2) a subsidiary of the parent undertaking of the applicant is an insurance undertaking, investment firm, investment fund, credit institution, management company or another subject of financial supervision founded in the Contracting State; 3) the applicant and an insurance undertaking, credit institution, management company, investment fund, investment firm or another subject of financial supervision founded in the Contracting State are all companies being supervised by the same person. (7) In the course of the co-operation specified in subsection (6) of this section, the parties shall consult with each other, evaluating the suitability of the shareholders and the reputation and experience of the head of the other division of the consolidation group, and forwarding to each other all corresponding information relevant to the granting of an authorisation. Decision to grant authorisation and decision to refuse from granting authorisation (1) An authorisation shall be granted if the submitted information and documents comply with the requirements, and if it is possible to verify on the basis of the submitted information and documents that the applicant for the authorisation has the sufficient facilities and organisational capacity to carry on insurance activities, and that the interests of policyholders, insured persons and beneficiaries are sufficiently protected. (2) The Financial Supervision Authority shall make a decision to grant or refuse from granting an authorisation within three months after the receipt of all the necessary conforming information and documents and after the requirements are complied with, but not later than within six months after submission of the application for an authorisation. (3) Upon granting of an authorisation, the Financial Supervision Authority may establish obligatory secondary conditions based on the circumstances provided in § 23 of this Act. (4) The Financial Supervision Authority shall promptly deliver a decision to grant or refuse from granting an authorisation to an applicant. (5) The terms specified in subsection 250 (4) and 271 (2) of the Commercial Code shall be calculated as of the date of delivery of a decision to grant an authorisation to the applicant. Bases for refusal to grant authorisation (1) The Financial Supervision Authority may refuse to grant an authorisation if: 1) the applicant does not meet the requirements for insurance undertakings provided for in this Act or legislation issued on the basis thereof; 2) the applicant does not have the sufficient facilities or experience to operate as an insurance undertaking with continuity; 3) a member of the management board or supervisory board, auditor, responsible actuary or shareholder of the applicant does not meet the requirements provided for in this Act or legislation established on the basis thereof; 4) close links between the applicant and another person prevent sufficient supervision over the applicant, or the requirements arising from legislation or the implementation of legislation of the state where the persons with whom the applicant has close links is established prevent sufficient supervision over the insurance undertaking; 5) the internal rules of an insurance undertaking specified in § 477 of this Act are not sufficiently accurate or unambiguous for regulation of the activities of the insurance undertaking; 6) the applicant has been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act. (2) Among other matters, the following shall be considered upon assessment of the provisions of clause (1) 2) of this section: 1) the level of the organisational and technical administration of the activities of the applicant; 2) the education, work experience, business contacts, trustworthiness and reputation of the persons related to the management of the applicant; 3) the adequacy and sufficiency of the scheme of operations provided for in § 20 of this Act; 4) the activities, financial situation, reputation and experience of the applicant, its parent undertaking and persons belonging to the same consolidation group as the applicant. [RT I 2007, 68, 421 - entry into force 01.01.2008] Amendment of decision on granting of authorisation (1) Upon changes in the business name or address of the seat of an insurance undertaking, the Financial Supervision Authority shall make a decision on amendment of a decision on granting of an authorisation specified in subsection 22 (2) of this Act. (2) The Financial Supervision Authority shall make a decision on amendment of a decision on granting of an authorisation within one month after receipt of the changed information specified in subsection (1) of this section. (3) The Financial Supervision Authority shall promptly deliver a decision specified in subsection (1) of this section to the insurance undertaking. Termination of authorisation (1) An authorisation expires: 1) in the event of revocation of an authorisation, upon revocation of the authorisation; 2) in the event of a merger of insurance undertakings on the basis of subsection 97 (4) of this Act, the authorisations of the merging insurance undertakings expire upon entry of the new insurance undertaking in the commercial register; 3) in the event of a merger of insurance undertakings on the basis of subsection 97 (5) of this Act, the authorisation of the insurance undertaking being acquired expires upon entry of the merger in the commercial register; 4) in the event of the transfer of an insurance portfolio, the authorisation of the insurance undertaking transferring the insurance portfolio expires upon receipt of an authorisation for the transfer of the insurance portfolio from the Financial Supervision Authority; 5) in the event of the voluntary dissolution of an insurance undertaking, upon the receipt of authorisation for dissolution from the Financial Supervision Authority; 6) in the event of the bankruptcy of the insurance undertaking, by a bankruptcy ruling or a court ruling to terminate bankruptcy proceedings due to abatement. [RT I 2008, 59, 330 - entry into force 01.01.2009] (2) Upon expiry of an authorisation, the insurance undertaking shall also terminate its activities through branches located in foreign states. Revocation of authorisation (1) Revocation of an authorisation is the total or partial deprivation of a right acquired by a decision to grant an authorisation. (2) An authorisation may be revoked completely or by individual classes or subclasses of insurance, whereupon the rights of which the holder of the authorisation is deprived of upon the revocation of the authorisation are specified. (3) The Financial Supervision Authority shall revoke an authorisation on the bases provided for in § 27 of this Act. (4) A decision on revocation of an authorisation shall be promptly delivered to the insurance undertaking. Bases for revocation of authorisation The Financial Supervision Authority may revoke an authorisation completely or by individual classes or subclasses of insurance if it becomes evident that: 1) the insurance undertaking has not commenced engaging in a class or subclass of insurance activities within twelve months as of the granting of the authorisation or additional authorisation or if the activities of the insurance undertaking are suspended for more than six consecutive months; 2) the insurance undertaking has submitted misleading information or documents, or incorrect information or false documents, or such information or documents were submitted to the Financial Supervision Authority upon application for the authorisation; 3) the insurance undertaking does not meet the valid requirements for the granting of authorisations; 4) the circumstances provided for in clauses 23 (1) 3) or 4) of this Act become evident; 5) the insurance undertaking fails to meet the secondary conditions specified in subsection 22 (3) of this Act; 6) the insurance undertaking has violated, repeatedly or to a material extent, the provisions of the legislation regulating the activities thereof, or the insurance undertaking has been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act, or the activities or omissions of the insurance undertaking are in conflict with public interest; 7) the insurance undertaking has published materially incorrect or misleading information concerning its activities or the members of its governing bodies, or has published materially incorrect or misleading advertisements; 8) the insurance undertaking belongs to a consolidation group the structure of which prevents the receipt of information necessary for supervision on a consolidated basis, or if a company which belongs to the same consolidation group as the insurance undertaking operates on the basis of legislation of a foreign state, which prevents the exercise of sufficient supervision; 9) the insurance undertaking is involved in money laundering or violates the procedure for preventing money laundering and terrorist financing established by legislation; 10) the insurance undertaking has violated, pursuant to information submitted to the Financial Supervision Authority by a financial supervision authority of a Contracting State, the provisions of legislation of the Contracting State, or the conditions set by a financial supervision authority of a Contracting State specified in subsection 35 (6) of this Act; 11) the insurance undertaking is unable to adhere to the commitments it has assumed or its activities significantly damage the interests of the policyholders, insured persons or beneficiaries for any other reason; 12) the amount of available solvency margin of the insurance undertaking does not comply with the requirements of this Act; 13) the technical provisions and financial liabilities or assets covering technical provisions of the insurance undertaking do not comply with the requirements of this Act; [RT I 2007, 4, 20 - entry into force 20.01.2007] 14) the insurance undertaking providing motor third party liability insurance fails to perform the obligations of a member of the guarantee fund; 141) the insurance undertaking which enters into pension contracts failed to pay contributions to the Pension Contracts Sectoral Fund prescribed in the Guarantee Fund Act within the specified term or in full; [RT I 2008, 48, 269 - entry into force 14.11.2008] 15) the insurance undertaking has failed to implement a precept of the Financial Supervision Authority to the full extent prescribed or within the prescribed term. Publication (1) The Financial Supervision Authority shall publish a decision to grant, amend or revoke an authorisation on its website not later than on the working day following the day the decision is made. (2) In addition to the requirement specified in subsection (1) of this section, the Financial Supervision Authority shall make a decision to revoke an authorisation public in at least one national daily newspaper. Division 2 Activities of Estonian Insurance Undertakings in Foreign States Bases of activities of insurance undertaking in foreign state (1) Estonian insurance undertakings may engage in insurance activities in a foreign state for which the Financial Supervision Authority has granted an authorisation thereto, by founding a branch or engaging in cross-border insurance activities. (2) If a person permanently authorised to represent an Estonian insurance undertaking is permanently engaged in activities of insurance agent or insurance activities in a foreign state, the activities of the authorised person shall be deemed to be the activities of a foreign branch of the Estonian insurance undertaking and for the continuation of such activities the insurance undertaking shall found a branch pursuant to §§ 31–37 of this Act. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) Upon engaging in insurance activities in a foreign state, an insurance undertaking shall comply with the requirements provided for in this Act, legislation issued on the basis thereof and legislation of the foreign state. (4) The §§ 30, 35–37 and 38–40 of this Act apply to the provision of services in a Contracting State. [RT I 2010, 7, 30 - entry into force 26.02.2010] (5) The provisions of §§ 31–34 and 371 of this Act apply to the provision of services in a foreign state not specified in subsection (4) of this section (hereinafter third country). [RT I 2010, 7, 30 - entry into force 26.02.2010] (6) An Estonian reinsurance undertaking may engage in reinsurance activities in third countries, and the provisions of subsection 30 (4) and §§ 38–40 of this Act apply thereto. [RT I 2007, 68, 421 - entry into force 01.01.2008] Cross-border insurance activities and reinsurance activities by Estonian insurance undertakings [RT I 2007, 68, 421 - entry into force 01.01.2008] (1) For the purposes of this Division, cross-border insurance activities are the insurance activities of an Estonian insurance undertaking which relate to insured risks situated in a foreign state. [RT I 2010, 7, 30 - entry into force 26.02.2010] (2) For the purposes of this Act, a foreign state where the insured risk is situated means foreign states: [RT I 2010, 7, 30 - entry into force 26.02.2010] 1) in which the object of insurance is situated, where the insurance relates to immovables, including construction works or construction works and their contents, in so far as the contents are covered by the same insurance policy; 2) in which the object of insurance is entered in the register and a corresponding licence plate is attached to the object, where the insurance relates to vehicles of any type, or 3) in which an insurance contract covering risks related to travel services for a duration of four months or less has been entered into. (21) In addition to the provisions of clause (2) 2) of this section, in case of motor third party liability insurance a foreign state where the insured risk is situated for the purposes of this Act shall also include foreign states where a land vehicle is to be conveyed or was conveyed from Estonia, provided that not more than 30 days have passed as of the beginning of the conveyance of the vehicle from Estonia to another foreign state. The above term commences as of the issue of a transit registration plates to the vehicle. If no transit registration plates are issued to the vehicle, the thirty-day term shall commence as of the moment when the seller has performed the obligation to transfer the vehicle to the buyer or representative thereof. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) In the cases not provided in subsection (2) of this section, a foreign state where the insured risk is situated means foreign states: [RT I 2010, 7, 30 - entry into force 26.02.2010] 1) in which the policyholder who is a natural person has his or her habitual residence, or 2) which are, in case of policyholders who are legal persons, the place of business related to the insurance contracts thereof. [RT I 2010, 7, 30 - entry into force 26.02.2010] (4) For the purposes of this Division, cross-border reinsurance activities are the reinsurance activities of an Estonian reinsurance undertaking, in the framework of which the Estonian reinsurance undertaking provides reinsurance to an insurance undertaking founded in a foreign state. [RT I 2007, 68, 421 - entry into force 01.01.2008] Branch of insurance undertaking in third country (1) An insurance undertaking who wishes to found a branch in a third country shall apply for a corresponding authorisation from the Financial Supervision Authority (hereinafter in this Division authorisation for foundation of a branch). (2) In order to apply for an authorisation for the foundation of a branch, an insurance undertaking shall submit a written application and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority: 1) the name of the third country where the insurance undertaking wishes to found a branch together with a reference to the legislation of the corresponding state, according to which foundation of the branch of the insurance undertaking is permitted in the third country; 2) the address of the seat of the branch in the third country; 3) scheme of operations of the branch concerning insurance activities in the third country, which complies with the requirements provided for in § 20 of this Act, with the exception of clause 20 (1) 6) of this Act, together with a detailed description of the planned insurance activities and the structure of the organisation; 4) information provided in clause 18 (1) 7) of this Act concerning the director of the branch who must have sufficient right of representation for operating in the name of the insurance undertaking in relation to third parties, the correctness of which is verified by the signature of the said person. (3) An insurance undertaking is required to promptly notify the Financial Supervision Authority of any changes to the information or amendment of the documents specified in clauses (2) 2)–4) of this section. Processing of application for authorisation for foundation of branch and decision on granting of authorisation (1) The provisions of § 21 of this Act apply to the processing of applications for an authorisation for the foundation of a branch, verification of the submitted information and verification of the financial situation, organisational structure and technical systems of the applicant and existence of sufficient resources for the foundation of a branch. (2) A decision to grant or refuse to grant an authorisation for the foundation of a branch shall be made by the Financial Supervision Authority within two months after receipt of all necessary and conforming information and documents and compliance with the requirements, but not later than within three months after the receipt of the corresponding application. (3) The Financial Supervision Authority shall promptly deliver a decision to grant or refuse to grant an authorisation for the foundation of a branch to an applicant. Refusal to grant authorisation for foundation of branch The Financial Supervision Authority may refuse to grant an authorisation for the foundation of a branch if: 1) the information or documents submitted upon application for the authorisation for the foundation of a branch do not meet the requirements provided for in this Act or legislation established on the basis thereof, or are inaccurate, misleading or incomplete; 2) the director of the branch does not meet the requirements provided for in § 52 of the this Act; 3) the financial position, organisational structure and other resources of the insurance undertaking are insufficient for engaging in insurance activities described in the scheme of operations in a third country; 4) the foundation of the branch in a third country or implementation of the scheme of operations submitted by the insurance undertaking may damage the interests of the policyholders, insured persons or beneficiaries, the financial position of the insurance undertaking or the reliability of its activities in Estonia, a Contracting State or a third country; 5) the financial supervision authority of a third country has no legal basis or possibilities for cooperation with the Financial Supervision Authority and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the branch; 6) the insurance undertaking has been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act. Revocation of authorisation for foundation of branch (1) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch if: 1) the insurance undertaking has submitted to the Financial Supervision Authority misleading information or documents, or incorrect information or false documents concerning the branch upon application for the authorisation for the foundation of a branch or on any other occasion; 2) the insurance undertaking has repeatedly or materially violated the requirements provided for in the legislation of the corresponding third country, which may damage the interests of policyholders, insured persons or beneficiaries; 3) the insurance undertaking or its branch does not meet the valid requirements for the granting of authorisations for the foundation of a branch; 4) the insurance undertaking fails to submit reports on its branch as required; 5) the insurance undertaking has failed to implement a precept of the Financial Supervision Authority concerning the operation of the branch by the prescribed due date or to the extent prescribed; 6) the risks arising from the activities of the branch are significantly greater than risks arising from the activities of the insurance undertaking; 7) the circumstances provided for in § 33 of this Act become evident. (2) The Financial Supervision Authority shall promptly deliver a decision to revoke an authorisation for the foundation of a branch to the insurance undertaking and the financial supervision authority of a third country. Branch of insurance undertaking in Contracting State (1) An insurance undertaking who wishes to found its branch in a Contracting State shall notify the Financial Supervision Authority of its intention and submit the following information and documents to the Financial Supervision Authority: 1) the name of the Contracting State where the insurance undertaking wishes to found the branch; 2) a scheme of operations of the branch concerning insurance activities, which complies with the requirements provided for in § 20 of this Act, with the exception of clause 20 (1) 6) of this Act, together with a detailed description the structure of the organisation; 3) the address of the seat of the branch in the Contracting State; 4) information provided for in clause 18 (1) 7) of this Act concerning the director of the branch who must have sufficient right of representation for operating in the name of the insurance undertaking in relation to third parties, the correctness of which is verified by the signature of the said person; 5) confirmation that the branch founded in a Contracting State, if the planned insurance activities prescribe entry into motor third party liability insurance contracts, has become a member of the national bureau of motor third party liability insurance and the guarantee fund of the Contracting State of the location of the branch. (2) The documents specified in clauses (1) 3)-5) of this Act, the detailed description of the structure of the branch and a list of planned insurance activities by class and subclass shall be submitted together with a translation made by a sworn translator or certified by a notary into a language suitable for communication between the Financial Supervision Authority and the financial supervision authority of the Contracting State of the location of the branch. (3) The Financial Supervision Authority shall make a decision to forward or refuse to forward the information and documents specified in subsection (2) of this section to the financial supervision authority of the Contracting State of the location of the branch within two months after receipt of all the required documents and information and compliance with requirements, but not later than after three months of the submission of the information and documents. The Financial Supervision Authority shall promptly notify the insurance undertaking of the decision. (4) The Financial Supervision Authority may refuse to review the information and documents specified in subsection (1) of this section if: 1) the information or documents submitted for forwarding do not comply with the requirements provided for in this Act or legislation established on the basis thereof; 2) the information or documents submitted for forwarding are incomplete; 3) the information or documents required by the Financial Supervision Authority for forwarding have not been submitted within the prescribed term. (5) Upon forwarding the information and documents specified in subsection (2) of this section, the Financial Supervision Authority shall also provide the financial supervision authority of the Contracting State of the location of the branch certification that the available solvency margin of the insurance undertaking conform to the requirements of this Act. (6) An insurance undertaking may found a branch in a Contracting State after receiving, through the Financial Supervision Authority, the conditions set by the financial supervision authority of the Contracting State of the location of the branch for engaging in insurance activities in that state. If the financial supervision authority of the Contracting State of the location of the branch has not provided its conditions within two months after the receipt of the information and documents specified in subsection (1) of this section from the Financial Supervision Authority, the insurance undertaking may found a branch in the Contracting State. (7) An insurance undertaking shall notify the Financial Supervision Authority and the financial supervision authority of the Contracting State of the location of the branch of changes in information or amendment of the documents specified in subsection (2) of this section at least one month before entry into force of the changes or amendments. (8) Subsection (6) of this section does not apply to reinsurance undertakings, who may found a branch in a Contracting State after the receipt from the Financial Supervision Authority of a decision to forward the information and documents specified in subsection (3). [RT I 2007, 68, 421 - entry into force 01.01.2008] Process for refusal to forward information and documents The Financial Supervision Authority may make a decision to refuse to forward the information and documents specified in subsection 35 (2) of this Act if: 1) the information or documents submitted do not meet the requirements provided for in this Act or are inaccurate, misleading or incomplete; 2) the financial position, organisational structure or other resources of the insurance undertaking are insufficient for engaging in insurance activities described in the scheme of operations in the Contracting State of the location of the branch; 3) the director of the branch does not meet the requirements provided for in § 52 of the this Act; 4) the foundation of the branch or implementation of the scheme of operations submitted by the insurance undertaking may damage the interests of the policyholders, insured persons or beneficiaries, the financial position of the insurance undertaking or the reliability of its activities in Estonia or the Contracting State of the location of the branch. Precept for termination of insurance activities through branch (1) The Financial Supervision Authority may prohibit, by way of precept, an insurance undertaking to engage in insurance activities through a branch founded in a Contracting State, if: 1) a basis provided for in § 36 of this Act for refusal to forward the information and documents exists; 2) the financial supervision authority of the Contracting State of the location of the branch has informed the Financial Supervision Authority of a violation by the insurance undertaking of legislation of the Contracting State or the conditions specified in subsection 35 (6) of this Act; (2) The Financial Supervision Authority shall promptly deliver a precept specified in subsection (1) of this section to the insurance undertaking. Cross-border insurance activities in third countries (1) An Estonian insurance undertaking, who wishes to engage in cross-border insurance activities in third countries, is required to apply for a corresponding authorisation (hereinafter in this Division authorisation for cross-border insurance activities) from the Financial Supervision Authority. Upon application for authorisation for cross-border insurance activities, the insurance undertaking shall submit a written application and the following information and documents to the Financial Supervision Authority: 1) name of the third country where the insurance undertaking wishes to engage in cross-border insurance activities together with reference to the provisions of the legislation of the corresponding country, pursuant to which the cross-border insurance activities of the insurance undertaking are permitted in this state; 2) a description of the planned cross-border activities. (2) An insurance undertaking is required to promptly notify the Financial Supervision Authority of any changes to the circumstances specified in clause (1) 2) of this section. (3) The provisions of subsections 21 (1)–(5), subsections 22 (1) and (4) and § 28 of this Act apply to the processing of applications for authorisation for cross-border insurance activities. (4) A decision to grant or refuse to grant an authorisation for cross-border insurance activities shall be made by the Financial Supervision Authority within two months after receipt of all necessary and conforming information and documents and compliance with requirements, but not later than within three months after the submission of an application for authorisation for cross-border insurance activities. (5) The Financial Supervision Authority may refuse to grant authorisation for cross-border insurance activities if: 1) the insurance undertaking has submitted misleading information or documents, false information or falsified documents to the Financial Supervision Authority; 2) the financial situation, organisational structure and other resources of the insurance undertaking are insufficient for engaging in cross-border activities described upon application for the authorisation for cross-border insurance activities; 3) the activities of the insurance undertaking in a third country may damage the interests of the policyholders, insured persons or beneficiaries, the financial position of the insurance undertaking or the reliability of its activities; 4) the financial supervision authority of a third country has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority, and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the activities of the insurance undertaking; 5) the insurance undertaking has been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act; 6) the insurance undertaking is involved in money laundering or violates the procedure for preventing money laundering and terrorist financing established by legislation. (6) The Financial Supervision Authority may revoke an authorisation for cross-border insurance activities if: 1) the insurance undertaking has submitted misleading information or documents, false information or falsified documents to the Financial Supervision Authority; 2) the insurance undertaking has failed to notify the Financial Supervision Authority of the change to the circumstances related to cross-border activities; 3) the insurance undertaking has repeatedly or significantly violated the provisions of legislation regulating its activities; 4) the insurance undertaking does not meet the valid requirements for the granting of authorisations for cross-border insurance activities; 5) the insurance undertaking has failed to implement a precept of the Financial Supervision Authority concerning the cross-border insurance activities by the prescribed due date or to the extent prescribed; 6) the risks arising from the cross-border insurance activities the insurance undertaking are significantly greater than risks arising from other activities of the insurance undertaking. (7) The Financial Supervision Authority shall promptly deliver a decision to revoke an authorisation for cross-border insurance activities to the insurance undertaking and the financial supervision authority of a third country. [RT I 2010, 7, 30 - entry into force 26.02.2010] Cross-border insurance activities in Contracting States (1) An insurance undertaking who wishes to engage in cross-border insurance activities in a Contracting State shall notify the Financial Supervision Authority of its intention and submit the following information and documents to the Financial Supervision Authority: 1) the name of the Contracting State where the insurance undertaking wishes to engage in cross-border insurance activities; 2) a description of the planned cross-border insurance activities; 3) in the case provided in subsection (6) of this section, the information provided by clauses 1) and 2) of the same subsection. (2) The documents specified in subsection (1) of this section shall be submitted together with a translation made by a sworn translator or certified by a notary into a language suitable for communication between the Financial Supervision Authority and the financial supervision authority of the Contracting State where the insurance undertaking intends to engage in cross-border insurance activities. (3) The Financial Supervision Authority shall make a decision to forward or to refuse to forward the information and documents specified in subsection (1) of this section to the financial supervision authority of the Contracting State within one month after receipt of all requisite information and documents. The Financial Supervision Authority shall promptly notify the insurance undertaking of the decision. (4) The Financial Supervision Authority may refuse to review the information and documents specified in subsection (1) of this section if the information and documents: 1) the information or documents are incomplete or do not comply with the requirements provided for in this Act; 2) have the deficiencies specified in clause 1) of this subsection and the information or documents additionally required by the Financial Supervision Authority have not been submitted within the prescribed term. (5) The Financial Supervision Authority shall forward the following information and documents to the financial supervision authority of the relevant Contracting State: 1) a list of the classes of insurance in which the insurance undertaking has the right to engage; 2) information concerning the available solvency margin of the insurance undertaking and confirmation that the available solvency margin complies with the requirements provided for in this Act; 3) a description of the planned cross-border insurance activities. (6) If the cross-border insurance activities planned by an insurance undertaking in a Contracting State foresee entry into motor third party liability insurance contracts, the Financial Supervision Authority shall, in addition to that provided for in subsection (5) of this section, forward the following to the financial supervision authority of the Contracting State: 1) confirmation that the insurance undertaking has become member of the national bureau of motor third party liability insurance and the guarantee fund of the Contracting State; 2) the name and address of the representative who is designated to a Contracting State by the insurance undertaking and has a permanent residence or place of business in the State and who, arising from motor third party liability insurance contracts, must have sufficient right of representation for operating in the name of the insurance undertaking for adjustment of losses and compensation of traffic damage caused to victims. (7) The person handling the claims specified in subsection 43 (5) of the Motor Third Party Liability Insurance Act may act as the representative specified in clause (6) 2) of this section with the approval of the Financial Supervision Authority. (71) Differently from the provisions of subsection 29 (2) of this Act, the activities of a claims adjuster specified in clause (6) 2) and subsection (7) of this section shall not be considered the foundation of a branch of an Estonian insurance undertaking in a Contracting State, and such activities shall also not be considered the foundation of an insurance undertaking in a Contracting State. [RT I 2007, 55, 368 - entry into force 02.11.2007] (8) An insurance undertaking may commence cross-border insurance activities in a Contracting State after being communicated the decision to forward the information and documents specified in subsections (5) and (6) of this section. (9) If information specified in clauses (1) 2) or 3) of this section changes, an insurance undertaking shall notify the Financial Supervision Authority of the changes at least one month before entry into force thereof and the Financial Supervision Authority shall forward such information to the financial supervision authority of the corresponding Contracting State. Process for refusal to forward information and documents The Financial Supervision Authority may decide to refuse to forward the information or documents specified in subsection 38 (5) and (6) of this Act if: 1) the information or documents submitted do not meet the requirements provided for in this Act or are inaccurate, misleading or incomplete; 2) the financial position, organisational structure and other resources of the insurance undertaking are insufficient for engaging in insurance activities described in the scheme of operations in the Contracting State; 3) the cross-border insurance activities may damage the interests of the policyholders, insured persons or beneficiaries, the financial position of the insurance undertaking or the reliability of its activities in Estonia or the Contracting State of the location of the branch. Precept for termination of cross-border insurance activities (1) The Financial Supervision Authority may prohibit, by way of precept, an insurance undertaking to engage in cross-border insurance activities, if: 1) a basis provided for in § 39 of this Act for refusal to forward the information and documents exists; 2) the financial supervision authority of the Contracting State has informed the Financial Supervision Authority of a violation by the insurance undertaking of legislation of the Contracting State. (2) The Financial Supervision Authority shall promptly deliver a precept specified in subsection (1) of this section to the insurance undertaking. Division 3 Activities of Foreign Insurance Undertakings in Estonia Activities of foreign insurance undertakings in Estonia (1) A person who has the right to engage in insurance activities according to the legislation of the state where it is founded and where an authorisation to engage in insurance activities was granted thereto (hereinafter home country), may also engage in insurance activities in Estonia on the basis of the authorisation granted in the home country by establishing a branch or engaging in cross-border insurance activities. (2) If a person permanently authorised to represent a foreign insurance undertaking is permanently engaged in activities of insurance agent or insurance activities in Estonia, the activities of the authorised person shall be deemed to be the activities of an Estonian branch of the foreign insurance undertaking and for the continuation of such activities the insurance undertaking shall found a branch pursuant to §§ 43-46 of this Act. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) Upon engaging in insurance activities in Estonia, a foreign insurance undertaking shall comply with the requirements provided for insurance activities in this Act, legislation issued on the basis thereof and other requirements for provision of services arising from Estonian law. (4) The provisions of §§ 42, 46 and 47 of this Act apply to persons specified in subsection (1) of this section whose home country is a Contracting State (hereinafter Contracting State insurance undertaking). (5) The provisions of §§ 42-45 and 461 of this Act apply to persons specified in subsection (1) of this section whose home country is a third country (hereinafter third country insurance undertaking). Third country insurance undertakings are not permitted to enter into pension contracts. [RT I 2010, 7, 30 - entry into force 26.02.2010] (6) Third country reinsurance undertakings are entitled to engage in cross-border reinsurance activities in Estonia, and the provisions of subsection 42 (4) and § 47 of this Act apply thereto. [RT I 2007, 68, 421 - entry into force 01.01.2008] (7) It is prohibited to enter into pension contracts in the framework of cross-border insurance activities. [RT I 2008, 48, 269 - entry into force 14.11.2008] Cross-border insurance activities and reinsurance activities by foreign insurance undertakings [RT I 2007, 68, 421 - entry into force 01.01.2008] (1) For the purposes of this Division, cross-border insurance activities are the insurance activities of a foreign insurance undertaking which relate to insured risks situated in Estonia. [RT I 2010, 7, 30 - entry into force 26.02.2010] (2) The insured risk is situated in Estonia if: 1) the object of insurance is an immovable situated in Estonia, including construction works or construction works and their contents, in so far as the contents are covered by the same insurance policy; 2) the object of insurance is entered in an Estonian register and a corresponding licence plate is attached to the object, where the insurance relates to vehicles of any type, or 3) an insurance contract covering risks related to travel services for a duration of four months or less has been entered into in Estonia. (21) In addition to the provisions of clause (2) 2) of this section, in case of motor third party liability insurance the insured risk shall be situated in Estonia also in case a land vehicle is to be conveyed or was conveyed from another Contracting State to Estonia, provided that not more than 30 days have passed as of the beginning of the conveyance of the vehicle from another Contracting State to Estonia. The commencement of such thirty-day term shall be calculated pursuant to the procedure provided for in subsection 30 (21) of this Act. [RT I 2007, 55, 368 - entry into force 02.11.2007] (3) In all cases not provided for in subsection (2) of this section, the insured risk is situated in Estonia if: 1) the policyholder who is a natural person has his or her habitual residence in Estonia or 2) Estonia is the place of business related to the insurance contracts of policyholders who are legal persons. [RT I 2010, 7, 30 - entry into force 26.02.2010] (4) For the purposes of this Division, cross-border reinsurance activities are the reinsurance activities of a foreign reinsurance undertaking, in the framework of which the foreign reinsurance undertaking provides reinsurance to an Estonian insurance undertaking. [RT I 2007, 68, 421 - entry into force 01.01.2008] Branch of insurance undertaking of third country in Estonia (1) In order to found a branch in Estonia, a third country insurance undertaking is required to apply for a corresponding authorisation (hereinafter in this Division authorisation for foundation of a branch) from the Financial Supervision Authority. (2) Upon application for an authorisation for the foundation of a branch, a written application and the following information and documents (hereinafter in this Division application) shall be submitted to the Financial Supervision Authority: 1) the business name and address of the insurance undertaking; 2) the scope of the authorisation granted to the insurance undertaking and information concerning the agency which granted the authorisation; 3) the business name and address of the branch in Estonia; 4) information provided for in clause 18 (1) 7) of this Act concerning the director of the branch who must have sufficient right of representation for operating in the name of the insurance undertaking in relation to third parties, the correctness of which is verified by the signature of the said person; 5) the information and documents provided for in clauses 386 (2) 1) and 3)–5) of the Commercial Code; 6) the audited annual reports of the insurance undertaking for the past three financial years; 7) a scheme of operations of the branch concerning insurance activities in Estonia, which complies with the requirements provided for in § 20 of this Act, together with a detailed description of the planned insurance activities and the structure of the organisation; 8) the confirmation by the guarantee fund provided in the Motor Third Party Liability Insurance Act that the branch founded in Estonia, if the planned insurance activities prescribe entry into motor third party liability insurance contracts, will become, after obtaining the authorisation of the Financial Supervision Authority, a member of the guarantee fund, and the name and address of the person handling claims who is designated to each Contracting State by the applicant pursuant to subsection 43 (5) of the Motor Third Party Liability Insurance Act; 9) a certificate from an Estonian credit institution certifying the fact that the person who applies for authorisation for founding a branch has deposited at least 25 per cent of the minimum solvency margin provided for in subsection 71 (3) or (31) of this Act with the Estonian credit institution, and that according to the deposit agreement the deposited amount may be paid or transferred only with the written permission of the Financial Supervision Authority. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) The requirement provided for in clause (2) 9) of this section does not apply to: 1) Estonian branches of insurance undertakings of the Swiss Confederation who have the right to engage in non-life insurance; 2) Estonian branches of third country insurance undertakings who use the benefits specified in subsection 82 (2) of this Act and in the case of which supervision over the required solvency margin is not exercised by the Financial Supervision Authority. (4) In addition to the information and documents specified in subsection (2) of this section, third country insurance undertakings shall provide the Financial Supervision Authority with the following from the financial supervision authority of the home country: 1) the permission of the financial supervision authority of the home state to found a branch in Estonia; 2) confirmation of the financial supervision authority of the home country to the effect that the insurance undertaking holds a valid authorisation in its home country and that it pursues its activities in a correct manner and in accordance with public interest; 3) information concerning the amount of available solvency margin and the solvency of the insurance undertaking and the principles and methods of calculation of the technical provisions and financial liabilities and the requirements towards the assets covering technical provisions, which are applicable in the home state. [RT I 2007, 4, 20 - entry into force 20.01.2007] (5) Third country insurance undertakings shall submit the information and documents specified in this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. Processing of application for authorisation for foundation of branch and revocation of authorisation (1) Sections 21–23 and 26 and 27 of this Act apply to the processing of applications for an authorisation for the foundation of a branch, verification of information and to the grant and revocation of authorisations, unless otherwise provided for in this section. (2) In addition to the bases provided for in § 23 of this Act, the Financial Supervision Authority may refuse to grant an authorisation for the foundation of a branch if the financial supervision authority of the third country cannot ensure exercise of sufficient supervision over the applicant, or the financial supervision authority of the third country has no legal basis or possibility for cooperation with the Financial Supervision Authority, and also if the branch of a third country does not conform to the requirements provided in § 82 of this Act. (3) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch if circumstances provided for in § 27 of this Act, subsection (2) of this section, or subsection 82 (10) of this Act become evident. (4) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch of an insurance undertaking of the Swiss Confederation engaging in non-life insurance on the bases provided for in subsection (3) of this section and before doing so, seek the opinion of the financial supervision authority of the Swiss Confederation. (5) Until an opinion concerning revocation of an authorisation for the foundation of a branch is obtained from the financial supervision authority of the Swiss Confederation, the Financial Supervision Authority may prohibit the branch of the insurance undertaking of the Swiss Confederation specified in subsection (4) of this section from concluding new contracts. The Financial Supervision Authority shall notify the financial supervision authority of the Swiss Confederation of such prohibition. (6) The Financial Supervision Authority may refuse to revoke an authorisation for the foundation of a branch if the policyholders, insured persons or beneficiaries of the branch have claims against the branch or the third country insurance undertaking who founded the branch, or if revocation of the authorisation damages the interests of the policyholders, insured persons or beneficiaries. Amendment of authorisation for foundation of branch (1) A third country insurance undertaking who wishes to engage in Estonia in a class or subclass of insurance activities which is not specified in the scheme of operations submitted upon application for authorisation for foundation of the branch, shall apply for amendment of the authorisation from the Financial Supervision Authority. (2) Third country insurance undertakings applying for amendment of an authorisation for foundation of a branch shall submit the information and documents specified in clauses 43 (2) 1)-4) and 7) of this Act to the Financial Supervision Authority and add the information and documents specified in clause 43 (2) 8) of this Act if the amendment of authorisation is applied for in order to engage in motor third party liability insurance. (3) The provisions of §§ 21-23 of this Act apply to the processing of applications for the amendment of authorisations for the foundation of a branch, verification of information and deciding on amendment of the authorisations. Branch of Contracting State insurance undertaking in Estonia (1) A Contracting State insurance undertaking who wishes to found a branch in Estonia shall so notify the Financial Supervision Authority through the financial supervision authority of the Contracting State. The following information and documents shall be submitted to the Financial Supervision Authority: 1) the business name and address of the seat of the branch in Estonia; 2) a detailed description of the structure of the branch and a list the classes and subclasses of planned insurance activities; 3) the name of the director of the branch who must have sufficient right of representation for operating in the name of the insurance undertaking in relation to third parties; 4) confirmation that the branch founded in Estonia the planned insurance activities of which foresee entry into motor third party liability insurance contracts, has become member of the guarantee fund prescribed in the Motor Third Party Liability Insurance Act; 5) confirmation provided by the financial supervision authority of the Contracting State that the available solvency margin of the Contracting State insurance undertaking complies with the requirements for calculation of the required solvency margin established by the Contracting State; 6) a document by which the branch assumes the obligation to pay the single contribution to the Pension Contracts Sectoral Fund prescribed in the Guarantee Fund Act in case the planned insurance activities of the branch envisage the entry into pension contracts. [RT I 2008, 48, 269 - entry into force 14.11.2008] (2) The Financial Supervision Authority shall promptly notify the financial supervision authority of the Contracting State of receipt of the information and documents specified in subsection (1) of this section. Within two months after the financial supervision authority of a Contracting State has forwarded the information specified in subsection (1) of this Act to the Financial Supervision Authority, the Financial Supervision Authority shall make a decision which determines the requirements which the insurance undertaking must comply with upon engaging in insurance activities in Estonia. The Financial Supervision Authority shall notify the financial supervision authority of the Contracting State of its decision. (3) A Contracting State insurance undertaking may found a branch and commence insurance activities after receipt of a decision specified in subsection (2) of this section from the financial supervision authority of its home country or two months after the date on which the documents and information specified in subsection (1) of this section were received by the Financial Supervision Authority. (4) The Financial Supervision Authority shall be given at least one month's advance notice of any changes to the information or amendment of the documents specified in subsection (1) of this section. Within one month after becoming aware of such changes or amendments, the Financial Supervision Authority may amend the decision specified in subsection (2) of this section, or make the decision if the decision had not been previously made. (5) Confirmation from the Financial Supervision Authority concerning receipt of the information and documents specified in subsection (1) of this section shall be submitted upon entry of a branch in the commercial register. (6) The financial supervision authority of a Contracting State shall submit the information and documents specified in this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. (7) The provisions of the second and third sentence of subsection (2) of this section, the provisions of subsection (3) and the second sentence of subsection (4) of this section shall not apply to reinsurance undertakings of a Contracting State who may found a branch in Estonia if they have received from the financial supervision authority of the Contracting State of their location a decision to forward to the Financial Supervision Authority the information and documents specified in subsection (1). [RT I 2007, 68, 421 - entry into force 01.01.2008] Cross-border insurance activities of third country insurance undertaking in Estonia (1) A third country insurance undertaking, who wishes to engage in cross-border insurance activities in Estonia, is required to apply for a corresponding authorisation (hereinafter in this Division authorisation for cross-border insurance activities) from the Financial Supervision Authority. Upon application for authorisation for cross-border insurance activities, the insurance undertaking shall submit a written application and the following information and documents to the Financial Supervision Authority: 1) the business name and address of the insurance undertaking; 2) confirmation provided by the authority exercising financial supervision over the insurance undertaking that the insurance undertaking is entitled to engage in insurance activities in the country of location and cross-border together with the list of the classes of insurance activities in which the insurance undertaking has the right to engage; 3) a description of the planned cross-border insurance activities; 4) information concerning the amount of available solvency margin of the insurance undertaking and the principles of calculation thereof and a confirmation by a third country financial supervision authority that the available solvency margin of the insurance undertaking meet the requirements applicable in the third country together with the description of the aforementioned requirements; 5) the audited annual reports of the insurance undertaking for the past three financial years. (2) If the cross-border insurance activities planned by a third country insurance undertaking in Estonia envisage the entry into motor third party liability insurance contracts, the information and documents specified in subsection 47 (2) of this Act shall be submitted to the Financial Supervision Authority in addition to the items provided in subsection (1) of this section and the provisions of subsection 47 (21) shall apply. (3) An insurance undertaking is required to promptly notify the Financial Supervision Authority of any changes to the circumstances specified in clauses (1) 1)–4) and subsection (2) of this section. (4) The provisions of subsections 21 (1)–(5), subsections 22 (1), (3) and (4), subsections 26 (1), (2) and (4) and § 28 of this Act apply to the processing of applications for authorisation for cross-border insurance activities, verification of information and revocation of authorisation for cross-border insurance activities. (5) A decision to grant or refuse to grant an authorisation for cross-border insurance activities shall be made by the Financial Supervision Authority within two months after receipt of all conforming information and documents and compliance with requirements, but not later than within three months after the submission of an application for authorisation for cross-border insurance activities. (6) The Financial Supervision Authority has the right to refuse to grant an authorisation for cross-border insurance activities if: 1) the insurance undertaking has submitted misleading information or documents, false information or falsified documents to the Financial Supervision Authority; 2) the insurance undertaking is unable to adhere to the commitments it has assumed or its activities significantly damage the interests of the policyholders, insured persons or beneficiaries in any other way; 3) the requirements applicable with regard to available solvency margin of the insurance undertaking, the amount of available solvency margin or the principles of calculation thereof are insufficient taking into consideration the volume of the cross-border activities planned by the insurance undertaking in Estonia and the risks related thereto; 4) the financial supervision authority of a third country has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority, and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the activities of the insurance undertaking. (7) The Financial Supervision Authority has the right to revoke an authorisation for cross-border insurance activities if: 1) the insurance undertaking has submitted misleading information or documents, false information or falsified documents to the Financial Supervision Authority; 2) the insurance undertaking has failed to notify the Financial Supervision Authority of the change to the circumstances related to cross-border insurance activities; 3) the insurance undertaking has failed to implement a precept of the Financial Supervision Authority concerning the cross-border insurance activities by the prescribed due date or to the extent prescribed; 4) the insurance undertaking does not meet the valid requirements for the granting of authorisations for cross-border insurance activities; 5) the insurance undertaking fails to meet the secondary conditions established on the basis of subsection 22 (3) of this Act; 6) the insurance undertaking has repeatedly or significantly violated the provisions of legislation regulating its activities; 7) the insurance undertaking, which is engaged in motor third party liability insurance, fails to perform the obligations of a member of the Estonian Traffic Insurance Foundation. (8) The Financial Supervision Authority has the right to revoke an authorisation for cross-border insurance activities in full or in part also in case it is requested by the insurance undertaking. The Financial Supervision Authority shall not revoke the authorisation for cross-border insurance activities if the policyholders, insured persons or beneficiaries have claims against the insurance undertaking or if the revocation of the authorisation for cross-border insurance activities would damage the interests of the policyholders, insured persons or beneficiaries. (9) Third country insurance undertakings shall submit all the information and documents specified in this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. Cross-border insurance activities of Contracting State insurance undertaking in Estonia [RT I 2010, 7, 30 - entry into force 26.02.2010] (1) A Contracting State insurance undertaking who wishes to engage in cross-border insurance activities in Estonia shall so notify the Financial Supervision Authority through the financial supervision authority of the Contracting State. The following information and documents shall be submitted to the Financial Supervision Authority: 1) a list of the classes of insurance in which the insurance undertaking has the right to engage; 2) information on the available solvency margin of the insurance undertaking, and a confirmation provided by the financial supervision authority of the Contracting State that the available solvency margin of the insurance undertaking complies with the requirements in force in the Contracting State; 3) a description of the planned cross-border insurance activities. (2) If the cross-border insurance activities planned by an insurance undertaking in Estonia foresee entry into motor third party liability insurance contracts, then in addition to that provided for in subsection (1) of this section, the following shall be submitted to the Financial Supervision Authority: 1) confirmation that the insurance undertaking has become a member of the guarantee fund prescribed in the Motor Third Party Liability Insurance Act; 2) the name and address of the representative who is designated to Estonia by the insurance undertaking and has a permanent residence or place of business in the Estonia and who, arising from motor third party liability insurance contracts, must have sufficient right of representation for operating in the name of the insurance undertaking for adjustment of losses and compensation of traffic damage caused to victims. (21) Differently from the provisions of subsection 41 (2) of this Act, the activities of a representative specified in clause (2) 2) of this section shall not be considered the foundation of a branch of a Contracting State insurance undertaking in Estonia, and such activities shall also not be considered the foundation of an insurance undertaking in Estonia. [RT I 2007, 55, 368 - entry into force 02.11.2007] (3) After the information and documents specified in subsections (1) and (2) of this section are forwarded to the Financial Supervision Authority, the Contracting State insurance undertaking may commence cross-border insurance activities in Estonia. (4) The financial supervision authority of a Contracting State shall notify the Financial Supervision Authority of any changes to the information or amendment of the documents specified in subsections (1) and (2) of this section. (5) The financial supervision authority of a Contracting State shall submit the information and documents specified in this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. Chapter 3 CORPORATE GOVERNANCE SYSTEM AND SHARES OF INSURANCE UNDERTAKING, AND OUTSOURCING OF OPERATIONS RELATED TO INSURANCE ACTIVITIES Division 1 Corporate Governance System of Insurance Undertaking General principles (1) To ensure the relevant and reliable management of an insurance undertaking, the insurance undertaking shall have an efficient management system. The management system shall be in compliance with the nature, extent and complexity of the activities of an insurance undertaking. (2) The management system of an insurance undertaking shall be designed in such way as to ensure the transparency of the organisational structure, the relevant segregation of duties and clear division of areas of responsibility. The management system of an insurance undertaking shall support the forwarding and exchange of information related to the activities of an insurance undertaking. (3) The management system shall ensure the ability of an insurance undertaking to perform the functions of risk management, actuary, conformity inspection and internal audit (hereinafter key functions) and other important duties. (4) The Financial Supervision Authority shall issue advisory guidelines to determine the management system of an insurance undertaking and guide an insurance undertaking. (5) Parent insurance undertakings, insurance holding companies and mixed financial holding companies shall ensure compliance with the management system requirements at consolidation group level. Risk management system (1) The risk management system is part of the management system and it comprises the strategies, processes and internal reporting of an insurance undertaking, which are necessary to identify, measure, constantly monitor and manage all major risks and organise the reporting. (2) To ensure the functioning of the risk management system, an insurance undertaking shall implement the risk management function. (3) The risk management function supports the management board of an insurance undertaking and other functions to identify all material risks from the point of view of an insurance undertaking and provide an opportunity for the monitoring and measurement of these risks. Methods and procedures which are necessary to achieve the aforementioned objectives, including the documentation of activities related to risk management, shall be applied when performing the risk management function. Actuarial function (1) The actuarial function comprises: 1) coordination of assessment of technical provisions and financial liabilities; 2) ensuring relevance of assumptions and methods used upon calculation of technical provisions and financial liabilities and models constituting the basis for the calculation; 3) assessment of sufficiency and quality of data used upon calculation of technical provisions and financial liabilities; 4) notification of members of the management board and supervisory board of an insurance undertaking (hereinafter managers of insurance undertaking) of the reliability and conformity to the requirements of the calculation of technical provisions and financial liabilities; 5) giving an opinion regarding the general organisation of assessment of insured risks; 6) giving an opinion regarding the relevance of the reinsurance programs; 7) participation in the implementation of the risk management system specified in § 472 of this Act. (2) A responsible actuary who shall have a higher education, knowledge and qualification in the sphere of insurance and financial mathematics conforming to international requirements and at least three years' work experience in a position of actuary with an Estonian insurance undertaking or a Contracting State insurance undertaking shall ensure the continuation of the actuarial function and be responsible for the performance thereof. (3) An insurance undertaking shall notify the Financial Supervision Authority of the person of a responsible actuary at least ten days prior before the responsible actuary commences operation at the insurance undertaking and submit a written confirmation concerning his or her conformity to the requirements provided for in subsection (2) of this section. The insurance undertaking shall promptly notify the Financial Supervisory Authority of the termination of the activities of the responsible actuary. (4) A insurance undertaking shall submit, together with an annual report, a report of the responsible actuary covering the following technical circumstances to the Financial Supervision Authority: 1) sufficiency of technical provisions and financial liabilities and the principles and methods of calculation thereof; 2) assets covering technical provisions and compliance thereof with technical provisions and financial liabilities; 3) sufficiency of the insurance premiums applied by the insurance undertaking; 4) conformity of available solvency margin to the requirements of this Act; 5) reinsurance program of the insurance undertaking. (5) The responsible actuary has the right to obtain information necessary for the performance of his or her duties from the managers and employees of the insurance undertaking. (6) The responsible actuary is required to forward promptly any information which becomes known to them and which indicates an offence or that the interests of policyholders, insured persons and beneficiaries are not protected to the supervisory board and management board of the insurance undertaking in writing. (7) The principles of remuneration of the responsible actuary shall comply with the principles provided for in section 481 of this Act and these shall not affect the objectivity of the responsible actuary. Internal control system (1) The supervisory board of an insurance undertaking shall ensure, and the management board of an insurance undertaking shall organise the efficiency of internal control system within the undertaking. The internal control system is part of the management system and it comprises at least management and accounting procedures, internal control principles, organisation of public, supervisory and internal reporting of an insurance undertaking, and the implementation of the internal audit function and conformity inspection function. (2) The supervisory board of a parent insurance undertaking shall ensure, and the management board of each undertaking belonging to the consolidation group shall organise the efficiency of internal control system within such undertaking. Conformity inspection function (1) The objective of conformity inspection is to ensure conformity of an insurance undertaking and its activities to the requirements. (2) The conformity inspection function comprises the assessment of conformity of the management system to the legislation and assessment of potential effects of changes in the legal environment, as well as counselling the management board in order to ensure that an insurance undertaking, its managers and employees would act in compliance with the legislation and the rules approved by the governing bodies of an insurance undertaking and good business practices. Internal audit function (1) The internal audit function comprises the assessment of the relevance and efficiency of the management system. (2) The supervisory board of an insurance undertaking shall appoint an independent person in charge of performance of the internal audit function (hereinafter internal auditor). An internal auditor shall be governed by the requirements and the legal bases for the activities established for a certified internal auditor internal in the Auditors Activities Act. An internal auditor shall have no other duties which cause or are likely to result in a conflict of interest. (3) An internal auditor shall report to the supervisory board of the insurance undertaking. (4) An internal auditor has the duty to: 1) establish and assess risks which are liable to affect the operation of the insurance undertaking or the efficiency of the internal control system; 2) assess the internal control measures applied by the insurance undertaking in order to achieve its goals and the efficiency thereof, and to provide an opinion on the adequacy of such measures; 3) verify and assess, at least once a year, the compliance of the principles of remuneration of the members of the management board, responsible actuary and other employees of an insurance undertaking with the requirements provided for in this Act; 4) notify the governing bodies of the insurance undertaking of his or her observations and conclusions, and where necessary, to make proposals for elimination of deficiencies or application of additional measures. (5) An insurance undertaking shall guarantee that the internal auditor has all the rights and necessary conditions to perform his or her duties, including the right to obtain explanations and information from the managers and employees of the insurance undertaking and to monitor adherence to the proposals made. Internal rules of insurance undertaking (1) An insurance undertaking shall establish internal rules to regulate the activities of the insurance undertaking which shall ensure compliance of the activities of the insurance undertaking and the managers and employees of the insurance undertaking with the legislation, articles of association and resolutions of governing bodies of the insurance undertaking. (2) Among other matters, the internal rules shall set out the following: 1) the management system rules of an insurance undertaking, including implementation procedure of the key functions; 2) the procedure for outsourcing of operations related to insurance activities; 3) the requirements for information technology systems, ensuring information security and business continuity; 4) the procedure for avoiding conflicts between the interests of the insurance undertaking and the personal economic interests of the managers and employees of the insurance undertaking, including the procedure for avoiding a conflict of interests within a consolidation group if the insurance undertaking belongs to such group; 5) the procedure for entry into insurance contracts, loss adjustment and compensation for damage, the procedure for the assessment of the suitability of a unit-linked life insurance contract and its underlying assets, the principles of assignment and division of supplementary profit to policyholders and beneficiaries, and the procedure for division of pension insurance contract expenses; 6) the procedure for the submission of the precontractual information submitted to clients with regard to insurance contracts and the information submitted during the term of the contract; 7) the internal rules of procedure for implementation of international sanctions established on the basis of the International Sanctions Act, including a scheme of operation in a situation where circumstances with the characteristics described in the International Sanctions Act or legislation established on the basis thereof are discovered; 8) the principles of remuneration of the members of the management board and other employees of an insurance undertaking and the measures for management and prevention of conflicts of interests related to remuneration and the procedure for verification of compliance with these principles. (3) The internal rules of a life insurance undertaking shall determine, in addition to the provisions of subsection (2) of this section, the rules of procedure provided for in the Money Laundering and Terrorist Financing Prevention Act and the code of conduct for verification of compliance therewith. (4) An insurance undertaking shall assess the relevance of the internal rules at least once a year and change these, if necessary. Requirements for managers of insurance undertaking and key function holders (1) The managers and key function holders of an insurance undertaking shall have the education, expertise and experience necessary for the management of an insurance undertaking or performance of the key function, and also an impeccable business reputation. (2) The following shall not be managers and key function holders of an insurance undertaking: 1) persons whose activities or omissions have led to the bankruptcy or revocation of the authorisation, on the initiative of a state agency or a supervisory agency, of an insurance undertaking, credit institution, e-money institution, management company, fund or professional securities market participant; 2) persons who have been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act; 3) persons who are subjected to a prohibition on business; 4) persons whose earlier activities as managers of a company during the previous five years have shown that they are not capable of organising the management of a company such that the interests of the policyholders, insured persons and beneficiaries are sufficiently protected. (3) A certificate of the punishment register or an equivalent document of a competent court or administrative authority of the country of origin of a person which has been issued less than three months earlier is accepted as the document specified in clause 18 (1) 7) of this Act certifying the compliance of a citizen of a foreign state with the requirements provided in clauses (2) 1)-3) of this section. (4) If such documents are not issued by the country of origin specified in subsection (3) of this section, a document issued, less than three months ago, by a competent notary, court or administrative authority of the corresponding foreign state certifying the truthfulness of an oath taken by the person in front of the notary, court or administrative authority, or another competent body shall also be accepted as the document specified in clause 18 (1) 7) of this Act. (5) The management board of an insurance undertaking shall have at least two members. (6) The manager and employees of an insurance undertaking are required to act with the prudence and competence expected of them and in accordance with the requirements for their position and in the interests of the insurance undertaking, policyholders, insured persons and beneficiaries. Remuneration of members of management boards and employees of insurance undertakings (1) The bases and principles of determining the remuneration and other office related benefits of members of the management board and employees of an insurance undertaking, including severance payments, pension benefits and other benefits (hereinafter principles of remuneration) shall: 1) be clear, transparent and in compliance with prudent and efficient risk management principles; 2) be based on the business strategy and values of the insurance undertaking, taking into consideration the economic performance of the insurance undertaking and the legitimate interests of the policyholders, insured persons and beneficiaries; 3) take into consideration the long-term objectives of the insurance undertaking in view of its ability to cope with the changes in the external environment. (2) The principles for determining the fees payable to members of the management board of the insurance undertaking based on the economic performance and transactions (hereinafter performance pay) shall be objective and reasoned and predetermine the period of time for which the performance pay is paid. (3) The following shall be taken into account upon determination and payment of the performance pay to members of the management board of the insurance undertaking: 1) the proportion of the basic pay and performance pay shall be in reasonable compliance with the duties of the member of the management board; 2) the basic pay shall make up a sufficiently big part of the pay which makes it possible not to determine or pay the performance pay, if necessary. (4) The contract of a member of the management board of an insurance undertaking shall prescribe the right of the insurance undertaking to reduce the payable performance pay, suspend the payment of the performance pay or demand return of the paid performance pay in part or in full. An insurance undertaking may apply the aforementioned right if: 1) the general economic performance of the insurance undertaking has deteriorated to a significant extent as compared to the previous period; 2) a member of the management board of the insurance undertaking no longer meets the performance criteria or 3) determination of the performance pay was based on information which was inaccurate or incorrect to a material extent. (5) The limitation period for a claim arising from performance pay is three years as of the date when the payment of the performance pay to a member of the management board of the insurance undertaking was decided. (6) An insurance undertaking shall disclose in its annual report for the past financial year the principles of remuneration of the members of the management board and the information characterising their implementation in the following format: 1) relevant characteristics of the principles of remuneration, including information concerning the criteria used to measure work results and compliance with them; 2) reasons for payment of performance pay and severance pay and enabling of other performance based financial or significant non-financial benefits. (7) For the purposes of this Act, pay shall also mean the remuneration payable to members of the management board of an insurance undertaking. Election or appointment of manager of insurance undertaking (1) Upon the election or appointment of a manager of an insurance undertaking, the person to be elected or appointed shall present the following to the insurance undertaking: 1) his or her written consent; 2) description of his or her educational background, a complete list of places of employment and positions held during the last five years and, in the case of a member of a management board, a description of his or her fields of responsibility; 3) confirmation that no circumstances exist which, according to this Act, would preclude his or her right to be a manager of the insurance undertaking. (2) An insurance undertaking is required to notify the Financial Supervision Authority of the intention to elect, appoint or extend the term of office of a manager of the insurance undertaking, and to submit the information and documents specified in subsection (1) of this section to the Financial Supervision Authority at least ten days before making the specified decision. This term shall not be applied if the prior submission of documents is not possible for good reason. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) The insurance undertaking shall notify the Financial Supervision Authority of the resignation or the initiation of the removal of a manager of the insurance undertaking before the expiry of their term of office at least ten days before making a decision on the specified issue. This term shall not be applied if the prior notification is not possible for good reason. [RT I 2010, 7, 30 - entry into force 26.02.2010] (4) The provisions of this section do not apply during the time of application for an authorisation. Removal of manager of insurance undertaking (1) The Financial Supervision Authority has the right to issue a precept to demand the removal of a manager of an insurance undertaking if: 1) the person does not meet the requirements of this Act; 2) the manager has violated the requirements of this Act or other legislation relating to the professional activities thereof; 3) misleading, incomplete or inaccurate information or documents were submitted in connection with the election or appointment of the person; 4) the activities of the person in managing the insurance undertaking have shown that he or she is not capable of organising the management of the insurance undertaking such that the interests of policyholders, insured persons and beneficiaries are sufficiently protected. (2) If an insurance undertaking fails to comply with the precept specified in subsection (1) of this section, the Financial Supervision Authority has the right to demand the removal of a manager through a court or to revoke the authorisation of the insurance undertaking. Restrictions on activities of managers of insurance undertakings (1) The employees of the internal audit unit of an insurance undertaking, auditors and members of the management board or supervisory board of a bankrupt shall not be managers of an insurance undertaking. (2) Members of management board of an insurance undertaking shall not be members of the management board or employees of another insurance undertaking, credit institution, payment institution, e-money institution, management company or investment firm, except for members of the management board of an undertaking belonging to the same consolidation group as the given insurance undertaking. (21) [Repealed – RT I, 24.03.2011, 1 - entry into force 03.04.2011] (3) [Repealed - RT I, 24.03.2011, 1 - entry into force 03.04.2011] Director of branch Sections 48–51 of this Act also apply to the directors of foreign branches of Estonian insurance undertakings and directors of Estonian branches of third country insurance undertakings. Responsible actuary [Repealed - RT I, 23.12.2013, 4 - entry into force 01.01.2014] [Repealed - RT I 2007, 68, 421 - entry into force 01.01.2008] Division 2 Shares and Shareholders of Insurance Undertakings Shares of insurance undertakings (1) Insurance undertakings may issue only registered shares. (2) Insurance undertakings shall not issue preferred shares. Requirements for share capital of insurance undertakings (1) The minimum share capital of an insurance undertaking shall be at least three million euros if the insurance undertaking has the right to engage in: 1) reinsurance activities; 2) life insurance; 3) the classes of non-life insurance provided for in clauses 12 10)–15) of this Act. (2) If an insurance undertaking has the right to engage only in classes of non-life insurance which are not specified in clause (1) 3) of this section, the minimum share capital of the insurance undertaking shall be two million euros. (21) The share capital of a reinsurance undertaking, which does not belong to the same consolidation group as an insurance undertaking and which owner is not an insurance undertaking and which accepts from the insurance undertaking on the basis of a reinsurance contract only the risks of an undertaking or undertakings who own such reinsurance undertaking, or the risks of the consolidation group of this undertaking or undertakings, where the reinsurance undertaking belongs, shall amount at least to one million euros. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) Upon the foundation of an insurance undertaking, the share capital of the insurance undertaking shall be paid in the form of a monetary contribution. Increase of share capital (1) Upon a resolution of the general meeting, the share capital of an insurance undertaking may be increased by supplementary monetary contributions or without supplementary contributions (bonus issue). (2) [Repealed - RT I 2007, 4, 20 - entry into force 20.01.2007] (3) A bonus issue may be conducted using the issue premium of the insurance undertaking, other reserves formed of net profit, retained profits from previous years or net profit. (4) With a resolution of the general meeting, the share capital of an insurance undertaking may be increased by a non-monetary contribution if the share capital is increased in the course of a merger of insurance undertakings. (5) An insurance undertaking is required to notify the Financial Supervision Authority in writing of any intended increase in share capital and the details of the new issue at least seven days prior to the adoption of the corresponding resolutions. (6) The provisions of § 346 of the Commercial Code do not apply to insurance undertakings. Reduction of share capital (1) The share capital of an insurance undertaking may only be reduced in order to cover a loss (simplified reduction of share capital). (2) An insurance undertaking is required to notify the Financial Supervision Authority in writing of any planned reduction of share capital at least one month prior to the adoption of the corresponding resolution. An insurance undertaking may adopt a resolution on the reduction of share capital when the Financial Supervision Authority has granted corresponding consent. The Financial Supervision Authority shall make a decision on the grant of or refusal to grant consent not later than within twenty days as of the receipt of the corresponding notice. (3) The Financial Supervision Authority may refuse to grant the consent specified in subsection (2) of this section if the reduction of share capital would damage the solvency of the insurance undertaking or the interests of policyholders, insured persons, beneficiaries or other creditors of the insurance undertaking. (4) As a result of reduction of share capital, the share capital of an insurance undertaking shall not be less than provided for in § 56 of this Act. (5) Section 358, the term provided for in the first sentence of subsection 359 (1), and subsection 359 (2) of the Commercial Code do not apply to insurance undertakings. The management board of an insurance undertaking shall publish a notice concerning the new size of share capital in a national daily newspaper within fifteen days as of adoption of the resolution on the reduction of the share capital. Payment of dividends to shareholders (1) Dividends may be paid to shareholders after the general meeting has approved the annual report. The amount of dividends to be paid to shareholders shall be calculated on the basis of figures from the financial year provided in the annual report. (2) Upon calculating the share of profit to be paid to shareholders, the profit for the accounting year, the reduction in the reserves formed of profit prescribed by the articles of association shall be added to the retained profit or loss of the previous periods, and the loss for the accounting year, the increase in the reserve capital, the balance of treasury shares in the acquisition cost, the increase in reserves formed of profit prescribed by the articles of association and the book value of the intangible assets shall be deducted therefrom. Requirements for persons acquiring or having qualifying holding Qualifying holdings in an insurance undertaking may be acquired, held and increased and control over an insurance undertaking may be gained, held and increased by every person (hereinafter in this Division person): 1) who has impeccable business reputation and whose activities in connection with the acquisition comply with the principles of sound and prudent management of the insurance undertaking; 2) who after the acquisition or increase of the holding shall elect, appoint or designate only such persons as managers of the insurance undertaking which comply with the requirements provided for in § 48 of this Act; 3) whose financial situation is sufficiently secure to ensure regular and reliable operation of the insurance undertaking, and in the case of a legal person if such financial statements exist, they allow for a correct assessment to be made of its financial situation; 4) who is able to ensure that the insurance undertaking is able to meet the prudential requirements provided for in this Act, in the case of a legal person above all the requirement that the consolidation group, which part the insurance undertaking will form, has a structure which enables exercise of efficient supervision, exchange of information and co-operation between the financial supervision authorities; 5) with regard to whom there is no justified reason to believe that the acquisition, holding or increase of a holding in or control over the insurance undertaking is related to money laundering or terrorist financing or an attempt thereof or increases such risks. [RT I 2009, 37, 250 - entry into force 10.07.2009] Notification of acquisition of holding and information to be submitted (1) A person who intends to acquire a qualifying holding in an insurance undertaking or to increase such holding so that the proportion of the share capital of the insurance undertaking or votes represented by shares exceeds 20, 30 or 50 per cent, or to conclude a transaction as a result of which the insurance undertaking will become a company controlled thereby (hereinafter acquirer) shall notify the Financial Supervision Authority of its intention beforehand and shall submit the information and documents provided for in subsection (3) of this section. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) The provisions of this Division also apply in the case where a person acquires a qualifying holding or increases a qualifying holding so that the proportion of the share capital or votes in an insurance undertaking held by the person exceeds 20, 30 or 50 per cent, or the insurance undertaking becomes a controlled company of the person as a result of any other type of event or transaction. In such case the person is required, promptly after gaining control over the insurance undertaking or becoming aware of acquisition of a qualifying holding or increase of a qualifying holding in the insurance undertaking, to promptly notify the Financial Supervision Authority of such fact. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) The Financial Supervision Authority shall notify the acquirer in writing within two working days after receipt of the notice specified in subsection (1) or (2) of this section or the additional information and documents specified in subsection (4) of this section and the possible termination date of terms in proceedings provided for in § 611 of this Act. [RT I 2009, 37, 250 - entry into force 10.07.2009] (3) The Financial Supervision Authority shall be notified of the name of the company in which a qualifying holding is acquired or increased or which becomes controllable by the acquirer and the size of the holding acquired in this company, and the following information and documents shall be submitted: 1) description of the company acquired which contains an extract of the share register, information on the type of shares and number of votes acquired or owned by the acquirer and other information if necessary; 2) a curriculum vitae of the acquirer who is a natural person which contains, inter alia, the name, residence, education, work and service experience and personal identification code of the acquirer or date of birth in the absence of a personal identification code; 3) the name, registered office, registry code, authenticated copy of a registration certificate and a copy of the articles of association, if they exist, of the acquirer if the acquirer is a legal person or of the legal person administering the pool of assets; 4) a list of the owners or members of the acquirer if the acquirer is a legal person and information on the number of shares held by or the size of the holding and number of votes of each owner or member; 5) the information on the members of the management board and supervisory board of the acquirer if the acquirer is a legal person, including, for each person, the name and surname, personal identification code or date of birth in the absence of a personal identification code, education, work and service experience, and documents which prove the trustworthiness, experience, competence and impeccable reputation of such persons; 6) the confirmation that the persons becoming managers of an insurance undertaking as a result of acquiring a holding have not been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has been expunged from the punishment register pursuant to the Punishment Register Act. In the case of a citizen of a foreign state, a certificate of the punishment register or an equivalent document of a competent court or administrative authority of the country of origin of the person which has been issued less than three months earlier is accepted; 7) a description of the business activities of the acquirer and a description of the economic and non-economic interests of persons connected with the acquirer; 8) a confirmation that in the case of a person specified in clause 6 of this subsection no such circumstances have existed or exist which in accordance with law preclude his or her right to be a manager of an insurance undertaking; 9) the last three annual reports of the acquirer, if they exist. If more than nine months have passed since the end of the previous financial year, an audited interim report for the first six months of the financial year shall be submitted. The sworn auditor's report shall be added to the reports if preparation of the report is prescribed by legislation; [RT I 2010, 9, 41 - entry into force 08.03.2010] 10) if the acquirer is a natural person, ratings required for assessing the financial situation of the acquirer and companies connected with the acquirer and reports intended for the public, if possible; and if the acquirer is a legal person, credit ratings issued to the acquirer and the consolidation group; 11) if the acquirer is a company belonging to a consolidation group, a description of the structure of the group, data relating to the sizes of the holdings of the companies belonging to the group, and the last three annual reports of the consolidation group together with sworn auditor's reports; [RT I 2010, 9, 41 - entry into force 08.03.2010] 12) if the acquirer is a natural person, documents certifying the financial status of the person during the last three years; 13) information and documents concerning the sources of monetary or non-monetary resources for which it is intended to acquire a qualifying holding or increase it or gain control; 14) the circumstances relating to the acquisition of holding pursuant to §§ 9, 10 and 721 of the Securities Market Act; 15) the size of the qualifying holding owned by the person after acquisition of the holding and the circumstances relating to the holding pursuant to §§ 9, 10 and 721 of the Securities Market Act; 16) upon gaining control over an insurance undertaking, the business plan and other circumstances related to the acquisition and execution of control pursuant to §§ 9 and 10 of the Securities Market Act; 17) a review of the strategy applied in an insurance undertaking, provided the insurance undertaking does not become a controlled company as a result of the acquisition. [RT I 2009, 37, 250 - entry into force 10.07.2009] (31) The Minister of Finance may establish a regulation which specifies the information and documents to be submitted to the Financial Supervision Authority and specified in subsection (3) of this section. [RT I 2009, 37, 250 - entry into force 10.07.2009] (32) The information and documents submitted to the Financial Supervision Authority shall be in Estonian. With the consent of the Financial Supervision Authority, the aforementioned information and documents may be submitted in another language. [RT I 2009, 37, 250 - entry into force 10.07.2009] (4) The Financial Supervision Authority may request in writing additional information or documents in order to specify or verify the documents specified in subsection (3) of this section. In such case it is specified which additional information shall be submitted to the Financial Supervision Authority. [RT I 2009, 37, 250 - entry into force 10.07.2009] (5) The Financial Supervision Authority may waive the demand for the information or documents specified in subsection (3) of this section in part of in full. (6) If a person who wishes to acquire a qualifying holding is an insurance undertaking, credit institution, investment firm, management company, investment fund or another subject of financial supervision of a third country, then in addition to the documents specified in subsection (3) of this section, a document issued by the financial supervision authority of the third country which certifies that the person has a valid authorisation and conforms to established requirements shall be submitted to the Financial Supervision Authority. Legislative proceeding and term in proceeding (1) The Financial Supervision Authority shall assess the compliance of the acquirer with the requirements provided for in § 60 of this Act and shall resolve on prohibition on acquisition of holding or granting authorisation for acquisition of holding within 60 working days (hereinafter term in a proceeding) as of submission of the notice provided for in subsection 61 (21) of this Act concerning receipt by the Financial Supervision Authority of the information and documents required for the assessment. (2) The Financial Supervision Authority has the right to demand the additional information and documents specified in subsections 61 (4) of this Act, pursuant to the provisions, within 50 working days as of the beginning of the term in the proceeding. (3) The term in the proceeding shall suspend for the period between the first demand by the Financial Supervision Authority for additional information and documents specified in subsection 2 of this section and receipt from the acquirer of the demanded additional information and documents, but the suspension shall not exceed 20 working days. The term in the proceeding shall not suspend if additional information and documents are demanded. (4) If no financial supervision is exercised over the acquirer or a financial supervision authority of a third country exercises supervision over the acquirer, the Financial Supervision Authority may extend the term in the proceeding specified in subsection (3) of this section to up to thirty working days. (5) Upon assessment of acquisition and increase of the qualifying holding and gaining control over the insurance undertaking, the Financial Supervision Authority shall co-operate with the financial supervision authority of a Contracting State if the acquirer is: 1) an insurance undertaking, credit institution, management company, investment fund, investment firm or another person subject to financial supervision having obtained an authorisation in a Contracting State; 2) a parent undertaking of an insurance undertaking, credit institution, management company, investment fund, investment firm or another person subject to financial supervision having obtained an authorisation in a Contracting State, or; 3) a person controlling an insurance undertaking, credit institution, management company, investment fund, investment firm or another person subject to financial supervision having obtained an authorisation in a Contracting State. (6) The Financial Supervision Authority shall consult with other financial supervision authorities in the framework of the cooperation specified in subsection (5) of this section. The Financial Supervision Authority shall immediately forward to other financial supervision authorities all the information that is essential upon assessment of acquisition and increase of the qualifying holding and gaining control over the insurance undertaking. (7) If more than one person wishes to acquire a qualifying holding simultaneously, the Financial Supervision Authority shall treat them equally under equal circumstances. [RT I 2009, 37, 250 - entry into force 10.07.2009] Requirements for acquisition of holding, bases for prohibition on acquisition of holding and decision on acquisition [RT I 2009, 37, 250 - entry into force 10.07.2009] (1) The Financial Supervision Authority has the right to set a term to the acquirer during which the acquirer has the right to acquire or increase the qualifying holding or to gain control over the insurance undertaking. The Financial Supervision Authority may extend the term prescribed but the term shall not exceed twelve months in total. During such term, the acquirer is required to promptly notify the Financial Supervision Authority of the conduct of the transaction whereby the qualifying holding is acquired or increased or the insurance undertaking becomes a controlled company, or a decision not to conduct the transaction. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) A qualifying holding may be acquired or increased or the insurance undertaking may be turned into a controlled company if the Financial Supervision Authority does not prohibit, by a precept, acquisition or increase of a qualifying holding or turning of the insurance undertaking into a controlled company based on the provisions of § 611 of this Act and subsection (3) of this section. [RT I 2009, 37, 250 - entry into force 10.07.2009] (3) The Financial Supervision Authority may prohibit, by a precept, acquisition and increase of the qualifying holding and gaining control over the insurance undertaking if: 1) the acquirer does not comply with the requirements provided for in § 60 of this Act; 2) the acquirer has not submitted, by the prescribed due date, the information or documents required in this Act, or the information or documents required by the Financial Supervision Authority on the basis of this Act to the Financial Supervision Authority; 3) the information or documents submitted to the Financial Supervision Authority do not comply with the requirements provided by legislation or are incorrect, misleading or incomplete or based on the information and documents submitted the Financial Supervision Authority cannot exclude reasonable doubt with respect to unsuitability of the acquisition and with respect to that the acquisition does not comply with the requirements provided for in this Act; 4) the insurance undertaking would become a company controlled by a person residing or located in a third country and sufficient supervision is not exercised over the person in the country of residence or location of the person or the financial supervision authority of the third country has no legal basis or possibility to co-operate with the Financial Supervision Authority. [RT I 2009, 37, 250 - entry into force 10.07.2009] (4) The Financial Supervision Authority shall submit a decision to the acquirer concerning the authorisation to acquire the qualifying holding or a prohibiting precept within two working days after adoption of the respective decision but prior to the expiry of the term in the proceeding. If financial supervision over the acquirer is exercised by the financial supervision authority of another Contracting State, its assessment of the acquisition or increase of the qualifying holding or upon turning an insurance undertaking into a controlled company must be also indicated in the decision. [RT I 2009, 37, 250 - entry into force 10.07.2009] (5) If the circumstances specified in subsection (3) of this section become evident after acquisition or increase of qualifying holding or gaining control over the insurance undertaking, the Financial Supervision Authority may issue a precept according to which acquisition of qualified holding or gaining control over the insurance undertaking is deemed to be contrary to this Act. [RT I 2009, 37, 250 - entry into force 10.07.2009] (6) The Financial Supervision Authority has the right issue a precept to prohibit or restrict the exercise of the right to vote or any other rights entitling to control by an acquirer or person who has a qualifying holding in an insurance undertaking or who has control over an insurance undertaking every time the circumstances provided in subsections (3) or (5) of this section arise. The Financial Supervision Authority may issue a precept regardless of whether a precept provided for in subsection (3) or (5) of this section is issued. (7) The Financial Supervision Authority may publish the precept specified in subsection (6) of this section on its website, and the acquirer may also demand publication of the precept. [RT I 2009, 37, 250 - entry into force 10.07.2009] (8) If the acquirer or person who has a qualifying holding in an insurance undertaking or who has control over an insurance undertaking is an insurance undertaking, credit institution, management company, investment fund, investment firm, another subject of financial supervision or person belonging to the same consolidation group as the said person registered in another Contracting State, the Financial Supervision Authority shall notify the competent financial supervision authority of the Contracting State of the precept specified in subsection (5) or (6) of this section. (9) Compliance with the precept of the Financial Supervision Authority specified in subsection (3), (5) and (6) of this section is also mandatory for insurance undertakings, persons maintaining their share register and other persons organising the exercise of voting rights. Consequences of illegal acquisition of holding (1) A person shall not acquire the voting rights determined by the shares related to a transaction by which a qualifying holding is acquired or increased, and the shares shall not be included in the quorum of the general meeting, if: 1) the transaction is contrary to a precept issued by the Financial Supervision Authority; 2) the Financial Supervision Authority has issued a precept specified in subsection 62 (5) or (6) of this Act; 3) the Financial Supervision Authority has not been informed of the transaction in accordance with § 61 of this Act; 4) the transaction is conducted after the expiry of the term specified in subsection 62 (1) of this Act or before the acquisition of a qualifying holding is permitted pursuant to this Act. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) If any of the circumstances specified in subsection (1) of this section exist with regard to a transaction, the person who conducted the transaction shall not have any rights arising from the transaction which would entitle the person to gain control over the insurance undertaking. (3) If voting rights representing a holding acquired or increased by such a transaction, in the case of which any of the circumstances specified in subsection (1) of this section exist, are included in the quorum of the general meeting and influence the adoption of a resolution of the general meeting, the resolution of the general meeting shall be void. A court may declare the resolution of the general meeting invalid on the basis of a petition of the Financial Supervision Authority, a shareholder, member of the management board or supervisory board of the insurance undertaking if the petition is submitted within three months as of the adoption of the resolution of the general meeting. [RT I 2009, 37, 250 - entry into force 10.07.2009] (4) If rights entitling to control arising from a transaction by which the insurance undertaking should have become a company controlled by a person and with regard to which any circumstances specified in subsection (1) of this section exist are exercised, a court may declare the exercise of such rights null and void on the basis of a petition of the Financial Supervision Authority, a shareholder or a member of the management board or supervisory board of the insurance undertaking, if the petition is submitted within three months as of the time of exercise of such rights. [RT I 2009, 37, 250 - entry into force 10.07.2009] Giving notification of changes in holding (1) If a person intends to transfer shares in an amount which would result in the person losing a qualifying holding in an insurance undertaking or if the person reduces the holding thereof such that it falls below one of the limits specified in subsection 61 (1) of this Act or foregoes control over the insurance undertaking, the person is required to inform the Financial Supervision Authority of the intention immediately and indicate the number of shares which the person owns and transfers and holds after the transaction. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) The provisions of subsection (1) of this section also apply if a person loses control over an insurance undertaking, loses the qualifying holding in an insurance undertaking, or the qualifying holding thereof decreases below the rates specified in subsection 61 (1) of this section as a result of any other type of event or transaction. In such case, the person shall inform the Financial Supervision Authority promptly after becoming aware of the loss of qualifying holding or control or the reduction of holding. (3) An insurance undertaking is required to notify the Financial Supervision Authority promptly after becoming aware of the conduct of the transactions specified in subsections 61 (1) and (2) of this Act and subsections (1) and (2) of this section. (4) An insurance undertaking shall, together with its annual report, submit to the Financial Supervision Authority information concerning persons who, as at the end of the financial year, have a qualifying holding in the insurance undertaking and shall set out the size of holding owned by the person and related circumstances pursuant to §§ 9, 10 and 721 of the Securities Market Act. [RT I 2009, 37, 250 - entry into force 10.07.2009] Division 3 Outsourcing Outsourcing of operations related to insurance activities (1) To the extent provided for in this section, an insurance undertaking has the right to outsource the operations related to insurance activities. An insurance undertaking may outsource the performance of the key functions and other important duties or operations only in case: 1) this does not damage the legitimate interests of policyholders, insured persons or beneficiaries; 2) this does not interfere with the insurance undertaking's operations and performance of its duties at requisite level; 3) this does not prevent the exercise of supervision over the insurance undertaking at the level which is necessary; 4) this does not create a situation where the insurance undertaking ceases to actually engage in insurance activities; 5) the third party from whom the operations are outsourced has the necessary qualifications and the ability to perform the functions assumed thereby; 6) the insurance undertaking has the right to supervise the operations of the third person which are related to insurance activities; 7) other requirements arising from this Act are complied with. (11) The provisions of subsections 142 (2) and (5)–(10) of this Act concerning the insurance undertaking shall apply to third persons from whom the insurance undertaking has outsourced the operations related to insurance activities. (2) Pursuant to a contract entered into between an insurance undertaking and a third party for the outsourcing of operations related to insurance activities, the insurance undertaking shall have the right to: 1) obtain exhaustive information concerning the outsourced activities from the other party of the contract; 2) provide the other party to the contract with binding instructions related to the outsourced activities. (3) Outsourcing does not release the insurance undertaking from the liability arising from insurance activities and the insurance undertaking shall retain jurisdiction for the exercise of supervision over such outsourced operations. (31) When outsourcing the performance of a key function, an insurance undertaking shall appoint a person who will be responsible for the organisation of the performance of this key function and who shall comply with the requirements provided for in § 48 of this Act. (4) An insurance undertaking shall notify the Financial Supervision Authority prior to outsourcing a key function, other important duty or operation, notifying in case of outsourcing a key function of the name of the person provided for in subsection (31) of this section. (5) An insurance undertaking shall submit, at the request of the Financial Supervision Authority: 1) a copy of the contract for outsourcing of operations, which shall include, inter alia, the requirements for processing of personal data, taking into consideration the provisions of subsection (11) of this section; 2) the analysis of compliance of outsourcing with the provisions of subsection (1) of this section. Termination of outsourcing of operations related to insurance activities (1) An insurance undertaking shall have the right to terminate a contract entered into with a third party for outsourcing of operations related to insurance activities at any time giving reasonable advance notice. (2) The Financial Supervision Authority has the right to issue a precept in order to demand termination of a contract entered into with a specific person for the outsourcing of certain operations related to insurance activities, or to demand termination of all contracts entered into between the insurance undertaking and third parties for the outsourcing of operations related to insurance activities. (3) The Financial Supervision Authority may issue a precept specified in subsection (2) of this section if: 1) the third party lacks the qualifications needed for the conduct of the operations related to insurance activities; 2) the legitimate interests of policyholders, insured persons or beneficiaries are violated, or there is a danger of such violation; 3) the conditions specified in § 65 of this Act are violated; 4) the third person from whom the operations related to insurance activities are outsourced does not conform to the requirements for performance of the assumed functions. (4) If the outsourced operation is the entry into insurance contracts, the provisions of this Division do not apply to the insurance agent specified in Chapter 10 of this Act from whom an insurance undertaking has outsourced this operation. Chapter 4 PRUDENTIAL REQUIREMENTS SET FOR INSURANCE UNDERTAKINGS Available solvency margin of insurance undertakings (1) The available solvency margin of an insurance undertaking shall consist of: 1) the paid-up share capital and issue premium relating thereto; 2) the share capital and issue premium formed pursuant to subsection 57 (3) of this Act; 3) reserves formed, pursuant to legislation and the articles of association, from the retained profits from previous years or net profit; 4) retained profits from previous years; 5) profit for accounting year the amount of which has been verified by the auditor of the insurance undertaking and from which the dividends have been deducted. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) The subordinated liabilities, and the securities with no specified maturity date and other instruments provided for in § 68 of this Act up to 50 % of the lesser of the available solvency margin and the required solvency margin for the total of such securities may be included in the available solvency margin of an insurance undertaking. (3) The available solvency margin shall be reduced by the following: 1) the book value of intangible assets; 2) loss from previous years; 3) loss in the current year; 4) the acquisition cost of treasury shares repurchased; 5) all off-balance sheet liabilities; 6) the insurance undertaking's participation in an insurance undertaking, insurance holding company, credit institution or financial institution; [RT I 2007, 68, 421 - entry into force 01.01.2008] 7) claims against the persons specified in clause 6) of this subsection arising from the subordinated liabilities, securities with no specified maturity date and other instruments which meet the requirements provided in § 68 of this Act or in §§ 721, 74, 741 or 742 of the Credit Institutions Act. (4) For the purposes of this Act, participation shall mean at least 20 per cent of the share capital or of the votes represented by shares. (5) With the prior consent of the Financial Supervision Authority, the deductions specified in clauses (3) 6) and 7) of this section may be omitted, if: 1) the participation specified in clause (3) 6) of this section has been acquired, or the claim specified in clause (3) 7) of this section has arisen temporarily in connection to the re-structuring the activities or improving the financial position of the person in whom the undertaking participates or against whom there is a claim; 2) the insurance undertaking is subject to the supervision over consolidation group provided for in Division 2 of Chapter 11 of this Act or supplementary supervision over financial conglomerate provided for in Chapter 91 of the Credit Institutions Act and the persons specified in clause (3) 6) of this section belong to the same consolidation group as the insurance undertaking. (6) The Financial Supervision Authority shall make a decision to grant or to refuse to grant the consent specified in subsection (5) of this section within one month after receipt of all requisite information and documents and compliance with requirements but not later than within two months after receipt of an application to this effect. (7) The Financial Supervision Authority may demand additional deductions from the available solvency margin of an insurance undertaking to the extent by which a reinsurance undertaking has a share in the technical provisions and financial liabilities, if according to the opinion of the Financial Supervision Authority: [RT I 2007, 4, 20 - entry into force 20.01.2007] 1) the legislation or the financial supervision authority of the home country of the reinsurance undertaking does not ensure the provision of sufficient supervision, including consolidated supervision, over the reinsurance undertaking, bankruptcy or liquidation proceedings have been commenced against the reinsurance undertaking, the financial supervision authority of the home country has imposed significant sanctions on the reinsurance undertaking or the quality of reinsurance has significantly deteriorated in comparison with the previous financial year; 2) risks are not transferred on the basis of the reinsurance contract or the transferred risk is insignificant considering the volume of the reinsurance contract. Subordinated liabilities, securities with no specified maturity date and other instruments (1) A liability of an insurance undertaking is deemed to be subordinated and it may rank as a component of the available solvency margin if the claim arising from such liability meets the following conditions: 1) only fully paid-up funds received by the insurance undertaking are taken into account; 2) the insurance undertaking does not guarantee the fulfilment of the claim; 3) the due date for fulfilment of the claim is at least five years or notice of fulfilment of the claim shall be given at least five years in advance; 4) the insurance undertaking has no obligation, under any circumstances, other than the dissolution of an insurance undertaking, to fulfil the claim before the prescribed term; 5) the claim is satisfied in the event of dissolution or bankruptcy of the insurance undertaking after satisfaction of all the accepted claims of all other creditors; 6) the insurance undertaking does not own a holding in the company with respect to whom it has accepted a subordinated liability. (2) Securities with no specified maturity date and other instruments may be included in the available solvency margin of an insurance undertaking if they meet the requirements set for subordinated liabilities in clauses (1) 1) and 5) of this section and the following conditions: 1) they cannot be repaid at the initiative of the person who files the claim, or without prior permission of the Financial Supervision Authority; 2) the documents concerning the issue of securities provide an option that the amount repaid for the unpaid obligation plus interest may be used to cover the losses so that the insurance undertaking could continue its usual economic activities, or documents concerning other instruments provide for the right of the insurance undertaking to postpone the payment of interest if after the payment of interest the available solvency margin of the insurance undertaking would not comply with the required solvency margin. (3) Promptly after inclusion in the available solvency margin of a subordinated liability, securities with no specified maturity date or other instruments, the insurance undertaking is required to submit the documents which constitute the basis for the subordinated liability or a specific description of the instruments and the documents which constitute the basis therefore to the Financial Supervision Authority. To such documents, an impartial legal opinion on whether the conditions of the transaction meet the conditions set for the subordinated liabilities, securities with no specified maturity date or other instruments included in the available solvency margin and provided in this section. (4) The terms and conditions of a contract whereby an insurance undertaking assumes a subordinated liability may be amended only with the prior permission of the Financial Supervision Authority if the information and documents which constitute the basis for amendment of the subordinated liability together with an impartial legal opinion concerning the compliance of the conditions of the transaction with the requirements provided in this section have been submitted to the Financial Supervision Authority. (5) In the case of a subordinated liability the maturity of which is fixed, the insurance undertaking shall submit to the Financial Supervision Authority, twelve months before the due date for fulfilment of the claim arising from the subordinated liability, a list of assets included in the insurance undertaking's available solvency margin and the value thereof as at that time, and a forecast list and value of assets included in the available solvency margin as at the due date for fulfilment of the claim arising from the subordinated liability. (6) In the case of a subordinated liability the maturity of which is not fixed, the insurance undertaking shall submit, six months before the due date for fulfilment of the claim, the information specified in subsection (5) of this section to the Financial Supervision Authority. (7) Fulfilment, ahead of the prescribed due date, of a claim arising from a subordinated liability included in the available solvency margin of an insurance undertaking is permitted only at the initiative of the insurance undertaking with the prior permission of the Financial Supervision Authority. (8) Upon seeking the permission specified in clause (2) 1) or subsection (7) of this section, the insurance undertaking shall submit to the Financial Supervision Authority: 1) an overview of the assets covering technical provisions of the insurance undertaking; 2) an estimation of the available solvency margin and the required solvency margin as at the time before and after fulfilment of the claim arising from the subordinated liability before the due date, or before and after fulfilment of the claim arising from securities for an unspecified term or other instruments; 3) other information and documents required by the Financial Supervision Authority. (9) The Financial Supervision Authority shall make a decision to grant the permission or to refuse to grant the permission specified in clause (2) 1) or subsection (7) of this section within one month after submission of all the required documents and information but not later than within two months after receipt of an application to this effect. (10) The Financial Supervision Authority has the right to refuse to grant the permission specified in clause (2) 1) or subsection (7) of this section if, after fulfilment of the claim arising from the subordinated liability, securities with no fixed maturity date or other instruments, the available solvency margin of the insurance undertaking no longer complies with the required solvency margin. Taking of loans (1) Insurance undertakings shall not take loans except under the conditions provided for in § 68 of this Act. (2) The prohibition provided in subsection (1) of this section does not apply if an insurance undertaking takes a loan with a term of up to six months which is needed for ensuring sufficient liquidity of the insurance undertaking. (3) The loans specified in subsection (2) of this section shall be taken only with the prior written permission of the Financial Supervision Authority. In order to be granted the permission, the insurance undertaking shall submit to the Financial Supervision Authority an application to this effect together with the draft of the loan agreement, an overview of the assets covering technical provisions, a calculation of the required solvency margin, and other information and documents required by the Financial Supervision Authority. (4) The Financial Supervision Authority shall make a decision to grant the permission or to refuse to grant the permission specified in subsection (3) of this section within ten working days after the insurance undertaking submits the application to this effect and all requisite documents and information to the Financial Supervision Authority. (5) The Financial Supervision Authority has the right to refuse to grant the permission specified in subsection (3) of this section if in the opinion of the Financial Supervision Authority, the provisions of subsection (2) of this section are not the grounds for taking of the loan. Adjusted solvency margin of insurance undertaking (1) In calculation of its adjusted solvency margin, an insurance undertaking who is participating in another insurance undertaking shall adhere to the provisions of this section. [RT I 2007, 68, 421 - entry into force 01.01.2008] (2) For the purposes of this Act, participating undertaking means a parent undertaking or an undertaking participating in another undertaking. For the purposes of this Act, a related undertaking, including an insurance undertaking, is a subsidiary or an undertaking in which a participating undertaking holds participation. (3) If the insurance undertaking is an insurance holding company, mixed financial holding company or a subsidiary of a third country insurance undertaking, the insurance holding company, mixed financial holding company or a third country insurance undertaking shall calculate, pursuant to the procedure provided in this section, its adjusted solvency margin with regard to the insurance undertaking who is the participating undertaking. (4) The adjusted solvency margin of an insurance undertaking who is a participating undertaking shall be calculated on the basis of the consolidated annual accounts of the insurance undertaking. [RT I 2009, 37, 250 - entry into force 10.07.2009] (5) In the case of successive participation, the adjusted solvency margin shall be calculated as per each insurance undertaking who is a participating undertaking and who has at least one related undertaking. In the case of successive participation, a chain of participating undertakings exists. (6) If an insurance undertaking who is a participating undertaking holds a participation, through an insurance holding company or mixed financial holding company, in a related insurance undertaking, upon calculation of its adjusted solvency margin, the financial position of such insurance holding company or mixed financial holding company shall also be taken into account, whereas the insurance holding company or mixed financial holding company is deemed to be an insurance undertaking and the provisions of this Act concerning the available solvency margin and adjusted solvency margin of insurance undertakings apply thereto. (7) Upon calculation of the adjusted solvency margin of an insurance undertaking who is participating in a third country insurance undertaking, the third country insurance undertaking is deemed to be a related insurance undertaking and the provisions of this section apply thereto. [RT I 2007, 68, 421 - entry into force 01.01.2008] (8) Assets obtained through reciprocal financing shall not be included in the adjusted solvency margin of an insurance undertaking who is a participating undertaking. (9) For the purposes of this Chapter, reciprocal financing shall mean a case where: 1) an insurance undertaking or its related undertaking has a holding in an undertaking who owns, directly or indirectly, assets which are suitable for financing the available solvency margin of such insurance undertaking or related undertaking; 2) an insurance undertaking or its related undertaking grants a loan to an undertaking who owns, directly or indirectly, assets which are suitable for financing the available solvency margin of the insurance undertaking or related undertaking. (10) If the Financial Supervision Authority is not able to access information concerning a related undertaking of an insurance undertaking founded in a foreign state which is needed for calculation of the adjusted solvency margin of an insurance undertaking who is a participating undertaking, the book value of the related undertaking shall be deducted from the adjusted solvency margin of the insurance undertaking who is a participating undertaking, and any unrealised profit related to such participation shall also not be included in the adjusted solvency margin. (11) An insurance undertaking who is a participating undertaking has the right, at the request of the Financial Supervision Authority, not to calculate the adjusted solvency margin provided in this section if the insurance undertaking is: 1) a related insurance undertaking of another Estonian insurance undertaking, and it shall be included in the calculation of the adjusted solvency margin of such insurance undertaking; 2) a related insurance undertaking of an insurance holding company or mixed financial holding company located in Estonia, and it shall be included in the calculation of the adjusted solvency margin of such insurance holding company or mixed financial holding company; 3) a related insurance undertaking of a Contracting State insurance undertaking or an insurance holding company or mixed financial holding company located in a Contracting State, and the financial supervision authority of the Contracting State exercises supplementary supervision over the insurance undertaking; 4) a subsidiary of the same insurance holding company, mixed financial holding company or third country insurance undertaking as another Estonian insurance undertaking, and it shall be included in the calculation of the adjusted solvency margin of such insurance holding company, mixed financial holding company or third country insurance undertaking which shall be carried out pursuant to the requirements of this section; 5) a subsidiary of the same insurance holding company, mixed financial holding company or third country insurance undertaking as a Contracting State insurance undertaking and pursuant to subsection 186 (1) of this Act, the financial supervision authority of the Contracting State exercises supplementary supervision over such undertakings. Amount of available solvency margin of insurance undertakings (1) An insurance undertaking shall, at all times, have an available solvency margin to ensure adherence to the commitments arising from insurance contracts, which shall at least correspond to the amount and structure provided for in this Act. (2) The total amount of the available solvency margin of an insurance undertaking shall not at any time be less than the minimum solvency margin or the required solvency margin, and in the case of adjusted solvency margin, not less than the required amount of adjusted solvency margin. (3) The minimum solvency margin of an insurance undertaking shall be 3.7 million euros if the insurance undertaking has the right to engage in reinsurance, life insurance or classes of non-life insurance provided for in clauses 12 10)–15) of this Act, and 2.5 million euros if the insurance undertaking has the right to engage in classes of non-life insurance not specified in this subsection. (31) The minimum solvency margin of a reinsurance undertaking specified in subsection 56 (21) of this Act shall be 1.2 million euros. (4) The required solvency margin of a reinsurance undertaking and an insurance undertaking engaged in non-life insurance shall be calculated pursuant to § 72 of this Act, and the required solvency margin of an insurance undertaking engaged in life insurance shall be calculated pursuant to § 73 of this Act. [RT I 2007, 68, 421 - entry into force 01.01.2008] (41) The amount of the available solvency margin and the required solvency margin of the insurance undertaking shall be calculated on the basis of the data in the supervisory financial statement established by the Minister of Finance based on this Act. [RT I 2009, 37, 250 - entry into force 10.07.2009] (5) The required amount of adjusted solvency margin of the insurance undertaking shall be calculated on the basis of the data in the consolidated supervisory financial statement established by the Minister of Finance based on this Act. [RT I 2009, 37, 250 - entry into force 10.07.2009] (6) Insurance undertakings shall submit a calculation of the required solvency margin and where required, also a calculation of the required amount of adjusted solvency margin to the Financial Supervision Authority together with the annual report, and in other cases provided by law. (7) The Minister of Finance has the right to establish the specific procedure for calculation of the required solvency margin of insurance undertakings. Required solvency margin of insurance undertakings engaged in non-life insurance (1) Required solvency margin of insurance undertakings engaged in non-life insurance is the amount calculated on the basis of either subsection (3) of this section or (5) of this section, depending on which of those amounts is higher. (2) An insurance undertaking shall use the higher of gross written premiums, or gross earned premiums of a financial year, multiplied by the factor 0.18 for an amount extending up to 61.3 million euros, and by the factor 0.16 for an amount in excess of 61.3 million euros, whereas: 1) in the case of aircraft liability insurance, liability for ships and general liability insurance, the gross written premiums, or gross earned premiums of the previous financial year shall be increased by 50 per cent before calculation; 2) in the case of short-term accident insurance or sickness insurance, the gross written premiums, or gross earned premiums of the previous financial year shall be divided by three before calculation. (3) The results obtained pursuant to subsection (2) of this section shall be added together, and the sum so obtained shall be multiplied by the factor existing in respect of the sum of the previous financial year between the amount of claims remaining to be borne by the reinsurance undertaking or retrocessionaire after deduction of amounts recoverable under reinsurance and the gross amount of claims. This factor may in no case be less than 0.5. [RT I 2007, 68, 421 - entry into force 01.01.2008] (4) The gross amount of claims of an insurance undertaking of the last three financial years shall be divided by three and multiplied by the factor 0.26 for an amount extending up to 42.9 million euros, and by the factor 0.23 for an amount in excess of 42.9 million euros, whereas: 1) in the case of aircraft liability insurance, liability for ships and general liability insurance, the gross amount of claims of the last three financial years shall be increased by 50 per cent before calculation; 2) in the case of short-term accident insurance or sickness insurance, the gross amount of claims of the last three financial years shall be divided by three before calculation. (5) The results obtained pursuant to subsection (4) of this section shall be added together, and the sum so obtained shall be multiplied by the factor existing in respect of the sum of the previous financial year between the amount of claims remaining to be borne by the reinsurance undertaking or retrocessionaire after deduction of amounts recoverable under reinsurance and the gross amount of claims. This factor may in no case be less than 0.5. [RT I 2007, 68, 421 - entry into force 01.01.2008] (51) With the permission of the Financial Supervision Authority, the amount of claims remaining to be borne by the special purpose vehicles may also be taken into account as the amount of claims remaining to be borne by the reinsurance undertaking or retrocessionaire in the calculation of the factors specified in subsections (3) and (5) of this section. [RT I 2007, 68, 421 - entry into force 01.01.2008] (52) To receive the permission specified in subsection (51) of this section, the insurance undertaking shall submit to the Financial Supervision Authority a corresponding application together with the following data and documents: 1) a reinsurance contract entered into with the special purpose vehicle or a draft thereof; 2) a confirmation of the financial supervision authority of the home state of the special purpose vehicle regarding the fact that the special purpose vehicle holds valid authorisation in the home state; 3) information by the financial supervision authority of the home state of the special purpose vehicle concerning the structure and amount of the assets and liabilities of the special purpose vehicle; 4) other information and documents required by the Financial Supervision Authority. [RT I 2007, 68, 421 - entry into force 01.01.2008] (53) The Financial Supervision Authority shall make a decision to grant the permission or to refuse to grant the permission specified in subsection (51) of this section within ten working days after the insurance undertaking submits the application to this effect and all requisite documents and information to the Financial Supervision Authority. [RT I 2007, 68, 421 - entry into force 01.01.2008] (54) The Financial Supervision Authority has the right to refuse to grant the permission specified in subsection (51) of this section if it becomes evident that the special purpose vehicle has no right to operate in a Contracting State or: 1) the information or documents submitted to the Financial Supervision Authority do not meet the requirements provided for in this Act or are inaccurate, misleading or incomplete; 2) in the use of the special purpose vehicle, the quality of reinsurance is not equivalent to conventional quality of reinsurance and the interests of the policyholders, insured persons or beneficiaries are not sufficiently protected; 3) risks are not transferred or the transferred risk is insignificant considering the volume of the reinsurance contract. [RT I 2007, 68, 421 - entry into force 01.01.2008] (6) An insurance undertaking which essentially underwrites only one or more of the risks of credit, storm, hail or frost, shall use the gross amount of claims of the last seven financial years instead of the gross amount of claims of the last three financial years provided in subsection (4) of this section, which shall be divided by seven. (7) If the required solvency margin as calculated in subsection (1) of this section is lower than the required solvency margin of the year before, the required solvency margin shall be the higher of the required solvency margin as calculated in subsection (1) of this section, or the required solvency margin of the year before multiplied by the ratio of the amount of the technical provisions, net of reinsurance, for claims outstanding at the end of the last financial year and the amount of the technical provisions, net of reinsurance, for claims outstanding at the beginning of the last financial year. This ratio may in no case be higher than 1. Required solvency margin of insurance undertakings engaged in life insurance (1) The required solvency margin of a life insurance undertaking shall be determined by adding together the results obtained on the basis of subsection (2) and (4)-(6) of this section. (2) For the kinds of life insurance referred to in clauses 13 (1) 1)-4) of this Act, the required solvency margin shall be equal to the sum of the following two results: 1) a 0.04 fraction of the life insurance provisions and financial liabilities shall be multiplied by the ratio of the total life insurance provisions and financial liabilities net of reinsurance cessions to the gross total life insurance provisions and financial liabilities; that ratio may in no case be less than 0.85; [RT I 2007, 4, 20 - entry into force 20.01.2007] 2) for policies on which the capital at risk is not a negative figure, a 0.003 fraction of such capital underwritten by the insurance undertaking shall be multiplied by the ratio of the total capital at risk retained as the undertaking's liability after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0.5. (21) With the permission of the Financial Supervision Authority, the total life insurance provisions net of special purpose vehicle cessions and the total capital at risk retained as the undertaking's liability after special purpose vehicle cessions respectively may also be taken into account as the total life insurance provisions net of reinsurance cessions and the total capital at risk retained as the undertaking's liability after reinsurance cessions in the calculation of the factors specified in subsection (2) of this section. The provisions of subsections 72 (52)–(54) of this Act shall respectively apply to applications for such permission and the procedure of granting the permission or refusal to grant such permission. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) For types of life insurance specified in clause 13 (1) 1) of this Act, differently than provided for in clause (2) 2) of this section, the following calculation shall be made: 1) for policies of a term of up to three years on which the capital at risk is not a negative figure, a 0.001 fraction of such capital shall be multiplied by the ratio of the total capital at risk retained as the undertaking's liability after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0.5; 2) for policies of a term of three to five years on which the capital at risk is not a negative figure, a 0.0015 fraction of such capital shall be multiplied by the ratio of the total capital at risk retained as the undertaking's liability after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0.5. (4) The amount of the assets of the type of life insurance policies specified in clause 13 (1) 6) of this Act shall be multiplied by the factor 0.01. (5) For the kind of life insurance referred to in clauses 13 (1) 5) of this Act, the required solvency margin shall be equal to the sum of the following: 1) in so far as the insurance undertaking bears an investment risk, a 0.04 fraction of the technical provisions and financial liabilities of the insurance undertaking; [RT I 2007, 4, 20 - entry into force 20.01.2007] 2) in so far as the insurance undertaking bears no investment risk but the allocation to cover management expenses is fixed for a period exceeding five years, a 0.01 fraction of the technical provisions and financial liabilities of the insurance undertaking; [RT I 2007, 4, 20 - entry into force 20.01.2007] 3) in so far as the insurance undertaking bears no investment risk and the allocation to cover management expenses is not fixed for a period exceeding five years, a 0.25 fraction of the administrative expenses net of commissions paid by the reinsurance undertaking to the insurance undertaking; 4) in so far as the insurance undertaking covers a death risk, a 0,003 fraction of the capital at risk shall be multiplied by the ratio of the total capital at risk after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0,5. (6) In the case provided in subsection 17 (6) of this Act, the required solvency margin of the types of non-life insurance specified in clauses 12 1) and 2) of this Act shall be calculated pursuant to § 72 of this Act. (7) For the purposes of this section, capital at risk shall mean the sum insured to be paid in the case of an insured event from which the sum of the life insurance provisions and financial liabilities of that policy has been deducted. [RT I 2007, 4, 20 - entry into force 20.01.2007] Decline of available solvency margin of insurance undertakings (1) If the available solvency margin declines below the required solvency margin, the insurance undertaking is required to promptly submit a financial recovery plan (hereinafter recovery plan) to the Financial Supervision Authority. (2) A recovery plan shall contain at least the following information concerning the following three years: 1) a plan setting out detailed estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions of the insurance undertaking; 2) a forecast balance sheet of the insurance undertaking; 3) estimates of the financial resources intended to cover required solvency margin and assets covering technical provisions of the insurance undertaking; 4) reinsurance program of the insurance undertaking. (21) If a recovery plan is submitted by a reinsurance undertaking, it shall include the retrocession program of the reinsurance undertaking instead of the reinsurance program. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) If the available solvency margin declines to below one-third of the required solvency margin or below the minimum solvency margin, the insurance undertaking shall promptly submit an extraordinary recovery plan to the Financial Supervision Authority which enables the available solvency margin to be restored to at least one-third of the required solvency margin, but not below the rate of the minimum solvency margin, within three months. (4) The extraordinary recovery plan shall set out the information specified in subsection (2) of this section. (5) If, in the opinion of the Financial Supervision Authority, the financial position of an insurance undertaking may further deteriorate regardless of the recovery plan or extraordinary recovery plan submitted, the Financial Supervision Authority has the right to prohibit, by a precept, the insurance undertaking from carrying out transactions or performing acts related to the funds of the undertaking or to restrict the volume thereof and to notify the financial supervision authorities of the Contracting States where the insurance undertaking has established a branch or is engaged in cross-border insurance activities. (6) If a financial supervision authority of a Contracting State informs the Financial Supervision Authority that the financial supervision authority prohibits an insurance undertaking of the Contracting State from carrying out transactions or performing acts related to the funds of the undertaking or restricts the volume thereof, then the Financial Supervision Authority is required to apply the equivalent measures with regard to such insurance undertaking or its branch situated in Estonia. (7) If the interests of policyholders, insured persons or beneficiaries are threatened due to the deterioration of the financial position of an insurance undertaking the Financial Supervision Authority may establish, based on the recovery plan or extraordinary recovery plan, a required solvency margin with respect to the insurance undertaking higher than the required solvency margin calculated on the basis of §§ 72 or 73 of this Act. Technical provisions and classes of technical provisions (1) Technical provisions for the purposes of this Act shall mean the calculated amount of commitments arising from the insured risk transferred on the basis of the insurance contracts to an insurance undertaking. (2) The classes of technical provisions are: 1) provision for unearned premiums; 2) provision for outstanding claims; 3) life insurance provision; 4) provision for bonuses; 5) other technical provisions prescribed by legislation or the articles of association of the insurance undertaking. (3) For the purposes of this Act: 1) provision for unearned premiums means a calculated amount of an insurance premium to the extent of which an insured risk has been transferred to the insurance undertaking and the insurance undertaking has not covered the costs related thereto; 2) provision for outstanding claims means an calculated value of commitments that are likely to arise from insured events and known circumstances; 3) life insurance provision means the current amount of the insured risk contained in life insurance contracts and the commitments arising from covering this risk. The calculated amount of commitments arising from occurred insured events is not contained in life insurance provisions; 4) provision for bonuses means a calculated amount of supplementary profit arising from the insurance contracts, which has not been determined or guaranteed for such contracts. [RT I 2007, 4, 20 - entry into force 20.01.2007] Financial liabilities Financial liabilities for the purposes of this Act shall mean the commitments of an insurance undertaking, which arise from bearing the financial risk contained in the insurance contracts and the performance of which will require in the future the transfer of money or other financial assets. [RT I 2007, 4, 20 - entry into force 20.01.2007] Requirements for technical provisions and financial liabilities of insurance undertakings (1) The total technical provisions and financial liabilities of an insurance undertaking shall at all times cover the amount of the commitments arising from the insurance contracts entered into by the insurance undertaking, which the insurance undertaking can reasonably foresee. [RT I 2007, 68, 421 - entry into force 01.01.2008] (2) If the technical provisions and financial liabilities of an insurance undertaking do not comply with the provisions of subsection (1) of this section, the Financial Supervision Authority may prohibit, by a precept, carrying out transactions or performing acts involving the assets of the insurance undertaking or restrict the volume of the transactions or acts related to the assets thereof. (3) If an insurance undertaking has a branch in a Contracting State or an insurance undertaking is engaged in cross-border insurance activities in a Contracting State, the Financial Supervision Authority shall promptly notify of issuing the precept specified in subsection (2) the financial supervision authority of the Contracting State where the insurance undertaking has a branch or where it is engaged in cross-border insurance activities. [RT I 2007, 4, 20 - entry into force 20.01.2007] Requirements for technical provisions and financial liabilities of life insurance undertakings (1) A life insurance undertaking shall proceed in the calculation of the amount of the technical provisions and financial liabilities from by a sufficiently prudent actuarial valuation, taking account of the commitments arising from the insurance contracts, including: [RT I 2007, 68, 421 - entry into force 01.01.2008] 1) all guaranteed insurance indemnities, including guaranteed surrender values, taking into consideration that the technical provisions and financial liabilities under an insurance contract shall not be less than the guaranteed surrender value of this contract; [RT I 2010, 7, 30 - entry into force 26.02.2010] 2) bonuses to which unit-holders are already entitled during the past periods; 3) all liabilities of the life insurance undertaking related to the options available to the policyholder under the terms of the contract; 4) expenses arising from contracts. (2) The maximum interest rate used in the calculation of the technical provisions and financial liabilities under the insurance contracts, except for pension contracts, and the interest rate used in the calculation of the technical provisions and financial liabilities under the pension contracts shall be established by a regulation of the Minister of Finance. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) A life insurance undertaking shall publish the principles and methods of calculation of the technical provisions and financial liabilities, including the provision for bonuses, on its website. [RT I 2010, 2, 3 - entry into force 22.01.2010] Principles for investment of assets of insurance undertakings (1) In investments, an insurance undertaking shall be guided by the principle of reasonableness, investing only in such assets and instruments where it identify, assess, monitor, manage and submit in reports the risks arising therefrom. (2) The security of investments portfolio, the required quality, profitability and liquidity shall be ensured in the investments of assets. The location of the assets shall be such that ensures the availability of the assets. (3) In the event of conflict of interest, an insurance undertaking guarantees that the investment is made in the interests of the policyholders, insured persons and beneficiaries. (4) Investments in securities that are not traded on regulated securities markets shall be kept at a reasonable level. (5) Investments shall be diversified in such way, which provides the opportunity to avoid excessive exposure to one specific asset or type of assets, issuer, group of undertakings or geographic region, and the excessive accumulation of risks in the investment portfolio as a whole. (6) Investments in the assets issued by the same issuer or issuers belonging to the same consolidation group shall not bring about an excessive risk exposure for an insurance undertaking. Assets covering technical provisions of insurance undertaking (1) The assets covering technical provisions of an insurance undertaking are assets the value of which corresponds to the amount of technical provisions and financial liabilities of the insurance undertaking net of reinsurance. The amount of assets covering technical provisions of an insurance undertaking shall, at all times, be at least equal to the amount of technical provisions and financial liabilities of the insurance undertaking. [RT I 2007, 4, 20 - entry into force 20.01.2007] (11) With the permission of the Financial Supervision Authority, the share of the special purpose vehicles may also be considered as the share of the reinsurance undertaking specified in subsection (1) of this section. The provisions of subsections 72 (52)–(54) of this Act shall respectively apply to applications for such permission and the procedure of granting the permission or refusal to grant such permission. [RT I 2007, 68, 421 - entry into force 01.01.2008] (2) Upon investment of an insurance undertaking's assets covering technical provisions, the nature of commitments arising from insurance contracts shall be taken into account, including the currency in which the commitments are assumed. Upon investment of an insurance undertaking's assets covering technical provisions, optimum safety and proceeds shall be secured and, at the same time the diversification and adequate spread of the investments of the insurance undertaking shall be maintained. (3) If an insurance contract provides for the currency in which the insurance undertaking is required to pay the indemnity then such currency is deemed to be the currency in which the insurance undertaking has assumed the commitment. (4) If an insurance contract related to the classes of insurance activities specified in §§ 12 and 13 of this Act does not provide for the currency in which the commitment was assumed then the currency of the state where the insured risk is situated is deemed to be the currency in which the insurance undertaking has assumed such commitment. An insurance undertaking has the right to select a currency in which the insurance payments are to be made in cases where such selection is justified. Such selection is justified, above all, in cases where after conclusion of the contract, it will be likely that the commitment must be paid in the same currency as the insurance payments were made and which is not the currency of the state where the insured risk is situated. [RT I 2007, 4, 20 - entry into force 20.01.2007] (5) An insurance undertaking is required to invest assets covering technical provisions corresponding to the commitments arising from insurance contracts in the same currency that the commitment was assumed, unless: 1) the assets covering technical provisions corresponding to the commitments assumed in such currency is equal to up to 7 per cent of the assets covering technical provisions expressed in other currencies; 2) the assets covering technical provisions corresponding to the commitments assumed in such currency is equal to up to 20 per cent of all the commitments of the insurance undertaking expressed in the same currency; 3) the commitment was assumed in the currency of a Contracting State and the assets corresponding thereto are invested in euros; [RT I 2010, 22, 108 - entry into force 01.01.2011] 4) the commitment arises from a unit-linked life insurance contract. (6) Insurance undertakings’ assets covering technical provisions may be only the following: 1) the securities specified in clause 2 (1) 2) or 5) of the Securities Market Act which are issued or fully guaranteed by Contracting States, full members of the Organisation for Economic Co-operation and Development (OECD), states which have entered into special loan agreements with the International Monetary Fund (IMF) on the basis of the General Agreements to Borrow (GAB) of the IMF (hereinafter Zone A states), or central banks of Zone A states; 2) the securities specified in subsection 2 (1) of the Securities Market Act which are traded on a regulated securities market; 21) securities not specified in clause 2) of this subsection which can be sold within a short period of time; [RT I 2007, 68, 421 - entry into force 01.01.2008] 3) loans secured by mortgages entered in the land register in the first ranking or by guarantees of credit institutions registered in a Zone A state; 4) debenture loans granted to credit institutions or other insurance undertakings on the presumption that the credit institution or insurance undertaking is registered in a Zone A state; 5) share in investment fund which is located in a zone A state; 6) immovables or construction works except for those parts of immovables or construction works used by the insurance undertaking; 7) deposits with ceding undertakings and claims against ceding undertakings; 8) claims against policyholders and insurance intermediaries which are not older than ninety days and which arise from insurance or reinsurance activities; 9) demand deposits and fixed-term deposits in a Zone A state. (7) A state specified in clause (1) 6) of this section which has restructured its foreign debt is not deemed to be a Zone A state within the period of five years after the date on which the state declared its wish to enter into an agreement for restructuring its foreign debt. (8) In order to cover the technical provisions and financial liabilities, assets covering technical provisions shall be valued in the fair value thereof as follows: [RT I 2007, 4, 20 - entry into force 20.01.2007] 1) assets covering technical provisions shall be valued net of any arrears and commitments related to the assets, including off-balance sheet liabilities; 2) assets covering technical provisions specified in clauses (6) 4), 5) and 9) of this section and the claims against policyholders which arise from reinsurance activities specified in clause 8) of this section shall be valued taking account of their collectibility; 3) claims against persons may be accepted as cover for technical provisions after deduction of claims of such persons against the insurance undertaking. (9) The provisions of subsections (3)–(8) of this section do not apply to assets covering technical provisions of a reinsurance undertaking. [RT I 2007, 68, 421 - entry into force 01.01.2008] (10) A life insurance undertaking, including a Contracting State insurance undertaking, who enters into or whose branch in Estonia enters into pension contracts, is required to keep the assets covering technical provisions related to pension contracts separately and to invest these separately from the assets covering technical provisions corresponding to other insurance contracts and other assets. The amount of assets covering technical provisions corresponding to pension contracts shall, at all times, be at least equal to the amount of technical provisions and financial liabilities of the insurance undertaking related to pension contracts. Restrictions on investments of assets covering technical provisions of insurance undertakings (1) Assets covering technical provisions may be invested in one immovable or construction works or several construction works which can be considered to be one construction works due to their immediate vicinity in an amount of up to 10 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share but not more than 15 per cent in immovables and construction works in total. [RT I 2007, 4, 20 - entry into force 20.01.2007] (2) Assets covering technical provisions may be invested in securities of one issuer or in loans secured by one borrower in an amount of up to 5 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share. [RT I 2007, 4, 20 - entry into force 20.01.2007] (21) The restriction specified in subsection (2) of this section may be exceeded provided that the amount of investments exceeding the restriction in total does not exceed 40 per cent and no investment exceeds 10 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share. [RT I 2009, 37, 250 - entry into force 10.07.2009] (3) Assets covering technical provisions may be invested in one debenture loan in an amount of up to 1 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share and in an amount of up to 5 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share in debenture loans in total. [RT I 2007, 4, 20 - entry into force 20.01.2007] (4) Assets covering technical provisions may be invested in demand deposits in an amount of up to 3 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share. [RT I 2007, 4, 20 - entry into force 20.01.2007] (5) Assets covering technical provisions may be invested in securities specified in clause 77 (6) 21) of this Act and in shares of investment funds not specified in § 4 of the Investment Funds Act in an amount of up to 10 per cent of the total amount of technical provisions and financial liabilities together with the reinsurance undertaking’s share. [RT I 2007, 68, 421 - entry into force 01.01.2008] (6) The Financial Supervision Authority has the right to prohibit, by a precept, an insurance undertaking from concluding a transaction which may result in the assets covering technical provisions of the insurance undertaking not complying with the requirements of this Act. (7) The restrictions specified in subsection 77 (6) of this Act and subsections (1)-(5) of this section do not apply to the part of underlying assets connected to unit-linked life insurance contracts, where the insurance undertaking has no commitment arising from the insurance contract to bear the investment risk. (8) The provisions of this section do not apply to investment of assets covering technical provisions of a reinsurance undertaking. [RT I 2007, 68, 421 - entry into force 01.01.2008] (9) A life insurance undertaking, who enters into pension contracts, shall implement the requirements provided for in subsection 77 (2) of this Act and the restrictions established in subsections (1)–(5) of this section separately when investing the assets covering technical provisions corresponding to pension contracts and the assets covering technical provisions corresponding to other insurance contracts. Restrictions on investments of assets covering technical provisions of reinsurance undertakings (1) A reinsurance undertaking is required to invest assets covering technical provisions corresponding to the commitments arising from reinsurance contracts in the same currency that the commitment was assumed. If commitment was assumed in the currency of a Contracting State, the assets covering technical provisions corresponding to the commitment may also be invested in euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] (2) A reinsurance undertaking may use in the investment of assets covering technical provisions other currency than the currency of assumed commitment provided that the investments made in other currency do not exceed 30 per cent of the assets covering technical provisions of the reinsurance undertaking in the currency corresponding to the commitments arising from the reinsurance contracts. (3) A reinsurance undertaking may invest assets covering technical provisions in securities not specified in clause 77 (6) 2) of this Act and in shares of investment funds not specified in § 4 of the Investment Funds Act in an amount of up to 30 per cent of the total amount of technical provisions and financial liabilities together with the retrocessionaire’s share. (4) A reinsurance undertaking may invest assets covering technical provisions in securities of one issuer or in loans secured by one borrower in an amount of up to 5 per cent of the total amount of technical provisions and financial liabilities of the reinsurance undertaking together with the retrocessionaire's share, and assets covering technical provisions may be invested in securities of issuers belonging to the same consolidation group or in loans secured by borrowers belonging to the same consolidation group in an amount of up to 10 per cent of the total amount of technical provisions and financial liabilities together with the retrocessionaire's share. [RT I 2007, 68, 421 - entry into force 01.01.2008] Requirements for transactions involving derivative instruments (1) Insurance undertakings may conclude transactions involving derivative instruments only for the purposes of managing risks arising from fluctuation of the value of the assets of the insurance undertaking and if the following conditions are met: 1) the counterparty to the transaction is a credit institution, management company, investment fund, insurance undertaking or investment company; 2) the value of a derivative instrument acquired as a result of a transaction conducted outside the regulated market can be objectively valuated on a daily basis and the derivative instrument can be transferred at any time for a fair price, the insurance undertaking's position in the derivative security can be disposed of at any time or can be closed as a result of cancellation. (2) An insurance undertaking shall not acquire or issue derivative instruments, the execution of which brings or may bring about violation of the requirements for assets covering technical provisions and available solvency margin provided for in this Act. Requirements for reinsurance (1) The amount of all possible commitments of an insurance undertaking arising from one insurance contract or with regard to objects of insurance which can be considered to be one insurance object due to their interconnected nature or immediate vicinity shall not exceed 10 per cent of the available solvency margin of the insurance undertaking. (2) The restriction specified in subsection (1) of this section may be disregarded only if fulfilment of the commitment of the insurance undertaking with regard to the part exceeding such restriction is ensured by a reinsurance contract. (3) Insurance undertakings shall not enter into the following reinsurance contracts in non-life insurance: 1) which period of insurance providing the basis for the calculation of the reinsurance premium is longer than one year or 2) on the basis of which instalments of reinsurance premiums which are paid to the reinsurance undertaking and intended for the fulfilment of commitments arising from the probability of the insured event occurring are not based on generally recognised actuarial principles of calculation or the principles of calculation of which differ significantly in different years. [RT I 2007, 68, 421 - entry into force 01.01.2008] 4) Insurance undertakings shall not enter into reinsurance contracts in life insurance on the basis of which commitments arising from the probability of the insured event occurring or from insured sums and surrender values are divided between the parties in a manner not based on generally recognised actuarial principles of calculation or the principles of calculation of which differ significantly in different years. [RT I 2007, 68, 421 - entry into force 01.01.2008] Requirements for financial soundness of insurance undertakings engaged in European Economic Area co-insurance (1) The provisions of this section apply to Estonian insurance undertakings who engage in European Economic Area co-insurance in conformity to the requirements provided in subsection (2) of this section (hereinafter in this section co-insurance). (2) Co-insurance operations shall conform to the provisions of §§ 484 and 485 of the Law of Obligations Act with the following specifications: 1) co-insurance undertakings conclude an insurance contract specified in subsections 427 (2) or (3) of the Law of Obligations Act; 2) the home country of at least one of the co-insurance undertakings or, if the insurance contract is concluded by a branch, the country of location of the branch of at least one of the co-insurance undertakings shall be other than that of the leading insurance undertaking; 3) the leading insurance undertaking in particular has the right to determine the terms and conditions of insurance and rate of insurance premium; 4) the risk is situated within Estonia or a Contracting State pursuant to the insurance contract entered into between the co-insurance undertakings. (3) An Estonian co-insurance undertaking shall establish the technical provisions and financial liabilities for co-insurance practice based on the provisions of this Act and legislation established on the basis thereof. [RT I 2007, 4, 20 - entry into force 20.01.2007] (4) The provision for outstanding claims shall be calculated pursuant to the procedure for establishment of the provision for outstanding claims in force on the home country of the leading insurance undertaking. (5) At the discretion of an Estonian co-insurance undertaking, the assets covering technical provisions corresponding to the technical provisions and financial liabilities specified in subsections (3) and (4) of this section may be localised either in Estonia or the home country of the leading co-insurance undertaking. [RT I 2007, 4, 20 - entry into force 20.01.2007] (6) An Estonian co-insurance undertaking is required to collect and store information concerning the co-insurance operations, including information concerning other co-insurance undertakings. (7) The provisions of this section do not apply to reinsurance undertakings. [RT I 2007, 68, 421 - entry into force 01.01.2008] Requirements for financial soundness and available solvency margin of Estonian branches of third country insurance undertakings (1) An Estonian branch of a third country insurance undertaking is required to: 1) possess assets in Contracting States of an amount at least equal to the required solvency margin; 2) possess assets in Estonia of an amount at least equal to one half of the minimum solvency margin under subsections 71 (3) or (31) of this Act, including the deposit provided in clause 43 (2) 9) of this Act; [RT I 2007, 68, 421 - entry into force 01.01.2008] 3) calculate the required solvency margin pursuant to §§ 72 or 73 of this Act on the basis of insurance contracts entered into in Estonia and to comply with the requirements provided for the available solvency margin in this Act; 4) keep in Estonia the assets covering technical provisions corresponding to the technical provisions and financial liabilities arising from the insurance contracts entered into in Estonia observing the provisions of §§ 77 and 78 of this Act or the provisions of §§ 77 and 781 of this Act in case of reinsurance undertakings; [RT I 2007, 68, 421 - entry into force 01.01.2008] 5) organise accounting concerning operations in Estonia, and to store in Estonia all documents related to operations in Estonia. (2) A third country insurance undertaking who, in addition to Estonia, has a branch in any other Contracting State is entitled to operate under the following preferential conditions which however must be requested beforehand by the undertaking and approved by the financial supervision authorities of the relevant Contracting States: 1) the required solvency margin is calculated pursuant to §§ 72 or 73 of this Act based on the insurance contracts concluded in Estonia and all Contracting States; 2) possession of the deposit specified in subsection 43 (2) 9) of this Act in Estonia is required only in the case where pursuant to subsection (4) of this section, the Financial Supervision Authority exercises supervision over the required solvency margin of the Estonian and Contracting State branches of the third country insurance undertaking; 3) assets corresponding to the minimum solvency margin may be localised in Estonia or the state where the third country insurance undertaking has established a branch. (3) A third country insurance undertaking who wishes to operate under the preferential conditions specified in subsection (2) of this section shall submit a request to this effect to the Financial Supervision Authority together with documents certifying that a similar request has been submitted to the financial supervision authorities of all the Contracting States in which the third country insurance undertaking has established a branch. (4) In the request specified in subsection (3) of this section, a third country insurance undertaking shall indicate the financial supervision authorities selected thereby to exercise supervision over the required solvency margin of the Estonian and Contracting State branches of the undertaking, and shall provide the reasoning underlying such choice. Such financial supervision authority shall only be the Financial Supervision Authority or the financial supervision authority of the Contracting State in which the third country insurance undertaking has established a branch. (5) If a third country insurance undertaking has selected a financial supervision authority as the body which is to engage in the supervision specified in subsection (4) of this section, the Financial Supervision Authority shall forward information to the financial supervision authority concerning the Estonian branch of the third country insurance undertaking needed to exercise supervision over the required solvency margin of the undertaking. (6) The preferential conditions specified in subsection (2) of this section shall enter into force at the time the selected financial supervision authority informs the other financial supervision authorities that the financial supervision authority has assumed the duty to exercise supervision over the required solvency margin of the Estonian and Contracting State branches of a third country insurance undertaking. (7) If the Financial Supervision Authority or a financial supervision authority of a Contracting State in which the third country insurance undertaking has a branch decides to cease the application of the preferential conditions specified in subsection (2) of this section with respect to the undertaking, application of the preferential conditions with respect to all Estonian and Contracting State branches of the third country insurance undertaking shall cease simultaneously. (8) The provisions of § 752 of this Act shall apply to the technical provisions and financial liabilities of Estonian branches of third country insurance undertakings. If the available solvency margin of an Estonian branch of a third country insurance undertaking is reduced below the required solvency margin, an amount equal to one third of the required solvency margin or below the minimum solvency margin, the Financial Supervision Authority has the right to demand that such branch submit the recovery plan or extraordinary recovery plan specified in § 74 of this Act, or to apply the provisions of subsections 74 (5) and (7) thereto. [RT I 2007, 4, 20 - entry into force 20.01.2007] (9) In cases where pursuant to subsection (4) of this section, the Financial Supervision Authority exercises supervision over the required solvency margin of Estonian and Contracting State branches of a third country insurance undertaking, the Financial Supervision Authority is required to notify the other relevant Contracting State financial supervision authorities if the authorisation granted to the third country insurance undertaking for establishment of a branch in Estonia is revoked. (10) If a financial supervision authority of a Contracting State informs the Financial Supervision Authority that it has revoked an authorisation granted to a third country insurance undertaking for establishment of a branch on the grounds that the available solvency margin of the third country insurance undertaking does not conform to the required solvency margin which has been calculated on the basis of insurance contracts concluded in Estonia and Contracting States, the Financial Supervision Authority is required to also revoke the authorisation granted to the third country insurance undertaking for establishment of its Estonian branch. Internal control system [Repealed - RT I, 23.12.2013, 4 - entry into force 01.01.2014] Internal rules of insurance undertaking [Repealed - RT I, 23.12.2013, 4 - entry into force 01.01.2014] Chapter 5 REPORTING AND AUDIT Reporting (1) The financial year of an insurance undertaking shall be the calendar year. The financial year of an insurance undertaking being founded or dissolved, or in other cases prescribed by law, may be shorter or longer than a calendar year but shall not exceed eighteen months. (2) The Minister of Finance shall establish, for insurance undertakings and branches of foreign insurance undertaking: 1) the content, format and bases for preparation of reports; 2) the procedure and due dates for submission and publication of reports. (3) An insurance undertaking shall submit to the Financial Supervision Authority the annual report, the sworn auditor's report, an extract from the proposal for and the resolution on the distribution of profits or the covering of losses for the financial year and the minutes of the general meeting concerning the approval of or refusal to approve the annual report within two weeks after the general meeting of shareholders but not later than by 1 May of the year following the financial year. (4) An insurance undertaking is required to publish its annual report on its website and to make it accessible to the public at the seat of the undertaking no later than by 1 May of the year the report is prepared. (5) The Financial Supervision Authority shall have the right to request additional reports and information necessary for the exercise of supervision to the extent provided by this Act, as well as the information and reports concerning the services provided by an insurance undertaking, which are necessary for the performance of the duties of the Financial Supervision Authority on the basis of Regulation (EU) No 1094/2010 of the European Parliament and of the Council establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48–83). Audit (1) Annual reports of insurance undertakings shall be audited by an auditor, in accordance with international auditing standards. (2) An independent auditor with adequate expertise and experience who meets the requirements set for auditors by the Authorised Public Accountants Act may be appointed auditor of an insurance undertaking. Upon appointment of an auditor, an insurance undertaking shall be guided by the principle of rotation of auditors. (3) An auditor of an insurance undertaking shall be appointed at least eight months before the end of the financial year. (4) An insurance undertaking shall promptly notify the Financial Supervision Authority in writing of appointment of an auditor, and submit the information provided in clause 18 (1) 8) of this Act. The insurance undertaking is required to appoint another auditor if in the opinion of the Financial Supervision Authority, the auditor does not meet the requirements provided in subsection (2) of this section. (5) An auditor of an insurance undertaking conducting an audit shall involve an actuary with a knowledge and qualification in actuary science conforming to international requirements, and at least three years' work experience in a position of actuary in Estonian or a Contracting State. (6) An auditor is required to prepare a report concerning his or her observations made in the process of auditing and submit such report to the insurance undertaking. (7) In the process of auditing an insurance undertaking, an auditor shall submit a report to the insurance undertaking which sets out the auditor's opinion concerning the following areas: 1) conformity of available solvency margin and adjusted solvency margin with the requirements established in legislation; 2) conformity of the assets covering technical provisions of the insurance undertaking with the requirements established in legislation; 3) adequacy and efficiency of the internal control system; 4) sufficiency of technical provisions and financial liabilities; [RT I 2007, 4, 20 - entry into force 20.01.2007] 5) security of the information systems of the insurance undertaking. (8) An insurance undertaking shall submit the auditor's report specified in subsection (7) of this section to the Financial Supervision Authority together with the annual report. (9) An auditor is required to notify the Financial Supervision Authority promptly in writing of any circumstances revealed in the course of an audit which: 1) endanger or may endanger the solvency and financial soundness of the insurance undertaking; 2) indicate a possible or actual violation of law or violation of the conditions for granting of the authorisation; 3) are likely to lead, based on the results of the auditing of an insurance undertaking, to the issue of an adverse or qualified sworn auditor's report, or a failure to give an evaluation; [RT I 2010, 9, 41 - entry into force 08.03.2010] 4) indicate the possibility that the interests of policyholders, insured persons or beneficiaries are not sufficiently protected. (10) An auditor is required to notify the Financial Supervision Authority promptly in writing of any circumstances specified in subsection (9) of this section concerning a company closely linked to the insurance undertaking which become known to the auditor in the performance of his or her duties, and of the decisions of the company. (11) The forwarding of information to the Financial Supervision Authority is not deemed to be a violation of the obligation not to disclose information imposed on an auditor by legislation or a contract. Chapter 6 TRANSFER OF INSURANCE PORTFOLIOS Definition of insurance portfolio (1) For the purposes of this Act, insurance portfolio shall mean a set of insurance contracts together with the rights and obligations arising therefrom. (2) For the purposes of this Chapter, a set of reinsurance contracts together with the rights and obligations arising therefrom shall also be considered an insurance portfolio. (3) In case of the transfer of the insurance portfolio of a reinsurance undertaking, the provisions of the second sentence of subsection 89 (1) and subsection 89 (5), the provisions of the second sentence of subsection 92 (1) and subsections 92 (2)–(4), subsections 93 (2)–(6) and subsections 94 (4) and (6) of this Act shall not apply. [RT I 2007, 68, 421 - entry into force 01.01.2008] Conditions and parties to transfer of insurance portfolio (1) An Estonian insurance undertaking or a third country insurance undertaking (hereinafter in this Chapter transferor) has the right to respectively transfer all or part of its insurance portfolio or all or part of the insurance portfolio of its Estonian branch to an accepting insurance undertaking (hereinafter in this Chapter transferee) under the terms and conditions provided for in this Chapter. [RT I 2007, 68, 421 - entry into force 01.01.2008] (2) In the case of the transfer of only a part of an insurance portfolio, all contracts corresponding to the same class or subclass of insurance activities are transferred. The provisions concerning transfer of an entire insurance portfolio of an insurance undertaking specified in this Chapter also apply to the transfer of a part of an insurance portfolio. (3) A transferee may be an insurance undertaking established in Estonia or a Contracting State. Upon the transfer of the insurance portfolio of a reinsurance undertaking, the transferee may be an Estonian or a Contracting State reinsurance undertaking or insurance undertaking. [RT I 2007, 68, 421 - entry into force 01.01.2008] (4) In cases where the insurance portfolio of the Estonian branch of a third country insurance undertaking or part thereof is transferred, the transferee may also be a branch of a third country insurance undertaking. Upon the transfer of the insurance portfolio of a reinsurance undertaking on the terms and conditions provided for in this subsection, the transferee may be a Contracting State branch of a third country reinsurance undertaking or insurance undertaking. [RT I 2007, 68, 421 - entry into force 01.01.2008] (5) The transferor shall hold an authorisation corresponding to the contracts contained in the insurance portfolio. (6) An insurance portfolio may also be transferred during a special regime or compulsory dissolution of the transferor. (7) An insurance portfolio is transferred by a contract for transfer of the insurance portfolio. (8) In order to transfer an insurance portfolio, an authorisation by the Financial Supervision Authority (hereinafter authorisation to transfer insurance portfolio) is required. (9) If the transfer of an insurance portfolio is supported on the basis of the Guarantee Fund Act on account of the Pension Contracts Sectoral Fund of the Guarantee Fund, the provisions of the Guarantee Fund Act shall be taken into consideration in the transfer of the insurance portfolio. [RT I 2008, 48, 269 - entry into force 14.11.2008] Contract for transfer of insurance portfolio (1) In order to transfer an insurance portfolio, the transferor and transferee shall enter into a contract (hereinafter in this Chapter contract) which provides for the rights and obligations of both contracting parties. The contract shall not be entered into with a resolutive condition nor shall it damage the interests of policyholders, insured persons and beneficiaries. (2) The terms and conditions of the contract must be approved beforehand by the supervisory board of both the transferor and transferee. Where a special regime is in force with respect to the transferor, the special regime trustee shall decide on the transfer of the insurance portfolio of the insurance undertaking and the terms and conditions of the corresponding contract, and shall sign the contract; the liquidators are authorised to perform such duties if the transferor is undergoing compulsory dissolution. (3) A contract enters into force as of the date on which the Financial Supervision Authority grants the authorisation for transfer of the insurance portfolio unless a later date is specified in the contract or the authorisation for transfer of the insurance portfolio. (4) The provisions of § 179 of the Law of Obligations Act apply to a contract. (5) The second sentence of subsection (1) of this section does not apply to transfer of an insurance portfolio during the time a special regime is in force with respect to an insurance undertaking. If a policyholder does not agree to the terms and conditions of transfer of the insurance portfolio, the policyholder has the right to cancel the insurance contract pursuant to subsection 92 (3) of this Act. Application for authorisation for transfer of insurance portfolio (1) In order to apply for an authorisation for the transfer of an insurance portfolio, the transferor and transferee shall submit a joint written application and the following information and documents (hereinafter in this Chapter application) to the Financial Supervision Authority: 1) business name and address of the seat of the transferor and transferee; 2) the class or subclass of insurance activity corresponding to the part of the insurance portfolio which is to be transferred, if only a part of the portfolio is to be transferred; 3) the list and size of the technical provisions and financial liabilities corresponding to the insurance portfolio to be transferred; [RT I 2007, 4, 20 - entry into force 20.01.2007] 4) a contract which complies with the conditions provided for in § 89 of this Act; 5) a calculation of the required solvency margin of the transferee. (2) The applicants are required to promptly notify the Financial Supervision Authority of any changes to the information and documents specified in subsection (1) of this section. Processing of application for transfer of insurance portfolio and decision on granting of authorisation (1) A decision to grant or refuse to grant an authorisation for the transfer of an insurance portfolio shall be made by the Financial Supervision Authority within one month after receipt of all necessary and conforming information and documents and compliance with requirements, but not later than within three months after the submission of an application for authorisation. (2) The Financial Supervision Authority may refuse to review an application if the information or documents submitted upon application are incomplete or do not meet the requirements provided by this Act or legislation established on the basis thereof, or if the information, documents or data required by the Financial Supervision Authority are not submitted in a timely manner upon application. (3) The Financial Supervision Authority may refuse to grant authorisation for the transfer of an insurance portfolio if: 1) the information or documents submitted upon application for authorisation do not meet the requirements provided for in this Act or legislation established on the basis thereof or are inaccurate, misleading or incomplete; 2) the transfer of the insurance portfolio may damage the interests of policyholders, insured persons or beneficiaries; 3) the transfer of the insurance portfolio may damage the financial position of the transferor or transferee; 4) after transfer of the insurance portfolio, the available solvency margin or assets covering technical provisions of the transferee no longer meet the requirements provided by this Act; 5) the financial supervision authority of the Contracting State specified in §§ 93 or 94 of this Act does not give consent for grant of authorisation for the transfer of the insurance portfolio; 6) the transfer of the insurance portfolio may restrict competition in the insurance market. (4) The financial Supervision Authority shall promptly deliver a decision to grant or refuse to grant authorisation for the transfer of an insurance portfolio to the transferor and transferee. Informing of policyholders and rights thereof (1) After a transferor is granted authorisation for the transfer of its insurance portfolio, the transferor is required to promptly notify the policyholders of the transfer of the insurance portfolio to the transferee by publishing a notice to this effect in at least one national daily newspaper and on its website. The Financial Supervision Authority may request the notice to be published again if in the opinion of the Financial Supervision Authority, the place or manner of publication or the content of the notice do not ensure that policyholders and insured persons are provided with accurate and sufficient information. (2) The notice specified in subsection (1) of this section shall also be published in the Contracting States where the risks of the insurance contracts to be transferred are located. (3) A policyholder has the right to cancel the insurance contract within a period of time set forth in the notice specified in subsection (1) of this section which shall however not be shorter than one month after the publication of the notice. (4) If a policyholder fails to exercise the right of cancellation of insurance contract during the term specified in subsection (3) of this section, the policyholder is presumed to have granted consent to the transfer of the rights and obligations arising from the insurance contract to the transferee. Obligation to co-operate with financial supervision authorities of Contracting States (1) Where an insurance portfolio to be transferred includes insurance contracts concluded by a Contracting State branch of an Estonian insurance undertaking or contracts concluded in the course of cross-border insurance activities of an Estonian insurance undertaking, and the transferee is a Contracting State insurance undertaking, the Financial Supervision Authority shall grant the authorisation to transfer the insurance portfolio only after receiving confirmation of the financial supervision authority of the relevant Contracting State that after acceptance of the insurance portfolio, the amount of the assets included in the available solvency margin of the transferee still meets the required solvency margin. (2) Where an insurance portfolio to be transferred includes insurance contracts concluded by a Contracting State branch of an Estonian insurance undertaking, the Financial Supervision Authority shall grant the authorisation to transfer the insurance portfolio only after the financial supervision authority of the Contracting State of the location of the branch agrees to the transfer of the insurance portfolio. (3) The Financial Supervision Authority shall grant the authorisation to transfer an insurance portfolio only if the financial supervision authorities of the Contracting States of the location of the insured risks relating to the insurance contracts agree to the transfer of the insurance portfolio. (4) If a financial supervision authority of a Contracting State specified in this section has not informed the Financial Supervision Authority of its agreement or disagreement to the transfer within three months after receipt of a corresponding request, the financial supervision authority is deemed to agree to the transfer of the insurance portfolio. (5) Where the transferor is an Estonian branch of a Contracting State insurance undertaking or where the insured risk of the insurance contracts to be transferred is situated in Estonia, the Financial Supervision Authority shall grant its consent concerning the transfer of the insurance portfolio or refuses to grant such consent within three months after receiving a request to this effect from the financial supervision authority of the corresponding Contracting State. [RT I 2007, 68, 421 - entry into force 01.01.2008] (6) Subsections (1), (3) and (4) of this section also apply where the insurance portfolio to be transferred contains insurance contracts concluded in Estonia and the transferee is a Contracting State insurance undertaking. (7) Subsection (5) of this section applies also in case the insured risk of the insurance contracts of a Contracting State insurance undertaking to be transferred is not situated in Estonia and the transferee is an Estonian insurance undertaking. [RT I 2010, 7, 30 - entry into force 26.02.2010] Specifications for transfer of insurance portfolios of third country insurance undertakings (1) The Financial Supervision Authority gives authorisation for the transfer of an insurance portfolio of an Estonian branch of a third country insurance undertaking (hereinafter in this section insurance portfolio) to an Estonian insurance undertaking only if the Financial Supervision Authority is convinced, based on the information at its disposal and, in cases where a financial supervision authority has been selected pursuant to § 82 of this Act, also on the basis of information at the disposal of such authority, that after acceptance of the insurance portfolio the transferee will still meets the required solvency margin. (2) The Financial Supervision Authority gives permission for the transfer of an insurance portfolio to a Contracting State insurance undertaking only after the financial supervision authority of the corresponding Contracting State confirms that after acceptance of the insurance portfolio the transferee will still meets the required solvency margin. (3) The Financial Supervision Authority gives permission for the transfer of an insurance portfolio to a Contracting State branch of a third country insurance undertaking only after the financial supervision authority of such Contracting State or of a Contracting State selected pursuant to § 82 of this Act confirms that: 1) the transfer of the insurance portfolio as described in this subsection is permitted pursuant to the legislation of such Contracting State and the relevant financial supervision authority agreed to the transfer of the insurance portfolio; 2) after acceptance of the insurance portfolio the transferee will still meets the required solvency margin. (4) The Financial Supervision Authority shall grant the authorisation to transfer an insurance portfolio only if the financial supervision authorities of the Contracting States of the location of the insured risks relating to the insurance contracts agree to the transfer of the insurance portfolio. (5) If a financial supervision authority of a Contracting State specified in this section has not informed the Financial Supervision Authority of its agreement or disagreement to the transfer within three months after receipt of a corresponding request, the financial supervision authority is deemed to agree to the transfer of the insurance portfolio. (6) If pursuant to the procedure provided in § 82 of this Act, the Financial Supervision Authority has been selected as the body to exercise supervision, the Financial Supervision Authority grants its consent concerning the transfer of the insurance portfolio or refuses to grant such consent within three months after receiving a request to this effect from the financial supervision authority of the corresponding Contracting State. Chapter 7 TRANSFORMATION, DIVISION AND MERGER OF INSURANCE UNDERTAKINGS Transformation of insurance undertakings An insurance undertaking may be transformed only into a European Company. [RT I 2007, 4, 20 - entry into force 20.01.2007] Division of insurance undertakings The division of an insurance undertaking is prohibited. Merger of insurance undertakings (1) The merger of insurance undertakings shall be performed pursuant to the procedure prescribed in the Commercial Code, unless otherwise prescribed in this Chapter. (2) The provisions of § 399, the term prescribed in subsection 400 (1), and the requirements provided for in subsections 400 (2) and (3) of the Commercial Code do not apply to the merger of insurance undertakings. (3) Insurance undertakings may be merged only with insurance undertakings founded pursuant to the law of a Contracting State. A life insurance undertaking may merge only with another life insurance undertaking founded pursuant to the law of a Contracting State, and a non-life insurance undertaking may merge only with another non-life insurance undertaking founded pursuant to the law of a Contracting State. [RT I 2007, 65, 405 - entry into force 15.12.2007] (4) Insurance undertakings may merge by founding a new insurance undertaking. An insurance undertaking being founded as a result of merger shall apply for authorisation pursuant to the procedure provided for in Chapter 2 of this Act. (5) An insurance undertaking (insurance undertaking being acquired) may merge with another insurance undertaking (acquiring insurance undertaking) such that the insurance undertaking being acquired continues its activities on the basis of the authorisation of the acquiring insurance undertaking. (6) The permission for merger (hereinafter in this Chapter permission for merger) shall be granted by the Financial Supervision Authority. Merger agreement and merger report (1) A merger agreement between insurance undertakings shall not be entered into with a resolutive condition. A merger agreement enters into force upon grant of permission for merger by the Financial Supervision Authority unless a later date is provided for in the merger agreement or in the permission for merger. (2) Within three days after entry into a merger agreement, the management boards of the merging insurance undertakings shall notify the Financial Supervision Authority thereof and submit a merger plan concerning acts related to the merger. A merger plan shall include the merger schedule, the processes and activities planned in the framework of the merger and the structure of the insurance undertaking following the merger. (3) Upon the merger of insurance undertakings, a merger report shall be prepared. The merger report shall include an auditor's opinion concerning the areas specified in subsection 86 (7) of this Act. Appointment of auditor and auditor’s report (1) Upon the merger of insurance undertakings, the Financial Supervision Authority shall, on the proposal of the merging insurance undertakings, appoint at least one common auditor for all the merging insurance undertakings. The Financial Supervision Authority may not appoint a common auditor if he or she has already been appointed by a court or administrative agency of the country of location of a merging Contracting State insurance undertaking. [RT I 2009, 37, 250 - entry into force 10.07.2009] (2) The auditor specified in subsection (1) of this section shall prepare a report concerning the audit of the merger agreement and merger report in which the auditor shall, in addition to the assessment of the issues provided by § 396 of the Commercial Code, give an opinion as to whether the technical provisions and financial liabilities, and assets covering technical provisions of the acquiring insurance undertaking and the insurance undertaking being founded comply with the requirements of this Act. [RT I 2007, 4, 20 - entry into force 20.01.2007] Application for permission for merger (1) In order to obtain permission for a merger, the acquiring insurance undertaking submits or, in the case specified in subsection 97 (4) of this Act, the merging insurance undertakings submit together an application to the Financial Supervision Authority together with the following information and documents: 1) the merger agreement or a notarised transcript thereof; 2) the merger report; 3) merger resolutions if the adoption thereof is required; 4) the auditor’s report; 5) a scheme of operations conforming to the requirements provided by § 20 of this Act for the three years following merger; 6) the information and documents provided in clauses 18 (1) 7) and 11) of this Act; 7) the permission to concentrate granted by the Competition Board if required pursuant to the Competition Act. (2) The Financial Supervision Authority may demand additional documents or information in order to specify or verify the information or documents specified in subsection (1) of this section. Decision to grant or refusal to grant permission to merger (1) The Financial Supervision Authority shall give permission to merger if the interests of policyholders, insured persons and beneficiaries are protected to sufficient degree by all merging insurance undertakings and the available solvency margin and assets covering technical provisions of all merging insurance undertakings conform to the requirements. (2) The Financial Supervision Authority may refuse to grant the permission for merger if: 1) the information or documents submitted upon application for permission for merger do not meet the requirements provided for in this Act or legislation established on the basis thereof or are inaccurate, misleading or incomplete; 2) the insurance undertaking fails, within the prescribed term, to submit the data, documents or information subject to submission to the Supervision Authority upon applying for permission for merger; 3) the managers of the acquiring insurance undertaking do not comply with the requirements provided for in this Act; 4) the financial position of the acquiring insurance undertaking does not conform with the requirements provided for in this Act; 5) merger is likely to damage the legitimate interests of the merging insurance undertakings, policyholders, insured persons or beneficiaries. (3) A decision to grant or refuse to grant permission to merger shall be made by the Financial Supervision Authority within one month after receipt of all necessary and conforming information and documents and compliance with requirements, but not later than within three months after the submission of an application for permission. Notification of merger (1) Merging insurance undertakings shall give notice of obtaining permission for merger in at least one national daily newspaper and on the websites of all the merging insurance undertakings. (2) An insurance undertaking shall submit an application for entry of a merger in the commercial register promptly after publication of the merger notice specified in subsection (1) of this section. Chapter 8 SPECIAL REGIME AND CROSS-BORDER REORGANISATION MEASURES Special regime (1) A special regime is a procedure established for the representation or activities of an Estonian insurance undertaking, a Contracting State branch of an Estonian insurance undertaking, or an Estonian branch of a third country insurance undertaking (hereinafter in this Chapter insurance undertaking) which due to its financial position is experiencing, or in the opinion of the Financial Supervision Authority, is likely to experience solvency problems, which differs from the usual procedure and the objective of which is to ascertain the reason and nature of the solvency problems, and the possibility to restore solvency, and to take measures to protect the interests of policyholders, insured persons and beneficiaries. (2) The Financial Supervision Authority has the exclusive right to establish a special regime with respect to Estonian insurance undertakings and Contracting State branches of Estonian insurance undertakings. (3) The Financial Supervision Authority has the right to decide on establishment of a special regime with respect to an Estonian branch of a third country insurance undertaking unless a different agreement exists between the Financial Supervision Authority and the financial supervision authority of the relevant third country. Reorganisation measures (1) For the purposes of this Act, reorganisation measures shall mean acts by an administrative authority or court of a Contracting State taken with the objective to maintain or restore the solvency of an insurance undertaking of such state, branch thereof or a branch of a third country insurance undertaking established in such state (hereinafter in this Chapter Contracting State insurance undertakings and branches) which may affect the pre-existing rights held by third persons and which may involve the suspension of payment of insurance indemnities, making of other payments or enforcement proceeding, or the reduction of claims. (2) Competent administrative authorities and courts of the Contracting State which is the home country of an insurance undertaking (hereinafter in this Chapter competent authorities of Contracting State) have the exclusive right to decide on the application of reorganisation measures with respect to the insurance undertaking of the Contracting State and its branches. (3) A decision concerning application of reorganisation measures shall enter into force in Estonia on the date on which such decision enters into force in the home country of the Contracting State insurance undertaking. (4) The decision specified in subsection (3) of this section together with its consequences is valid in Estonia under the same terms and conditions and to the same extent as in the home country of the Contracting State insurance undertaking. Motives for establishment of special regime The Financial Supervision Authority may establish a special regime with respect to an insurance undertaking or an Estonian branch of a third country insurance undertaking if: 1) the insurance undertaking or Estonian branch of a third country insurance undertaking fails, due to its financial position, to perform its obligations with respect to a policyholder, insured person, beneficiary or other entitled person in a timely manner or in conformance with the requirements; 2) the Financial Supervision Authority finds the financial position of the insurance undertaking or Estonian branch of a third country insurance undertaking to be inadequate to enable performance of its obligations at all times or in conformance to the requirements. Decision for establishment of special regime and consequences thereof (1) The following shall be indicated in a decision to establish a special regime: 1) the motives for and duration of the special regime; 2) procedure for performance of the liabilities underwritten by the insurance undertaking during the special regime; 3) the name and personal identification code of the special regime trustee and his or her rights and obligations, including the terms and procedure for submission of regular reports to be submitted by the special regime trustee to the Financial Supervision Authority; 4) other circumstances of importance upon the establishment of the special regime. (2) The duration of a special regime shall not exceed six months. (3) The decision to establish the special regime shall be promptly delivered by the Financial Supervision Authority to the insurance undertaking. (4) During a special regime, insurance undertakings are prohibited from concluding new insurance contracts and extending existing contracts, increasing sums insured and paying insurance indemnities and making other payments, unless otherwise provided for in the decision to establish the special regime. (5) The decision for establishment of special regime does not affect the validity of disposition for the exercise of rights or performance of obligations arising from a financial collateral arrangement specified in § 3141 of the Law of Property Act, or the netting performed through a payment system specified in subsection 87 (2) of the Credit Institutions Act and through a securities settlement system or a linked system specified in subsection 213 (1) or 2131 (1) of the Securities Market Act. (6) Establishment of a financial guarantee or disposal of the object of the financial guarantee provided in § 3141 of the Law of Property Act carried out after establishment of the special regime remains in force if such acts were performed on the date of declaration of the special regime and the other party to the financial guarantee agreement is able to prove that the party was not nor should have been aware of the establishment of the special regime. (7) A decision to establish the special regime shall enter in force on the same date in all Contracting States as such decision enters into force in Estonia. (8) A decision to establish the special regime together with its consequences is valid in all Contracting States under the same conditions and to the same extent as in Estonia. Notification of decision to establish special regime and decision to apply reorganisation measures (1) The Financial Supervision Authority shall promptly forward a decision to establish the special regime for making a corresponding entry to the commercial register of the location of the insurance undertaking and to similar registers of the Contracting States of the location of the branches of an Estonian insurance undertaking, and shall specify the name and personal identification code of the person appointed as special regime trustee. The commercial register shall decide on making an entry without delay but not later than within three working days after receiving a corresponding request from the Financial Supervision Authority. (2) The Financial Supervision Authority shall promptly forward a decision to establish the special regime to the financial supervision authorities of all Contracting States, explaining the consequences of the decision, the competence of the special regime trustee and other circumstances which the Financial Supervision Authority deems to be relevant to the case. (3) The Financial Supervision Authority shall publish a notice on establishment of a special regime not later than within two working days as of the date of making the decision in at least one national daily newspaper, and at the earliest opportunity, in the Official Journal of the European Union. (4) In the case where a Contracting State financial supervision authority informs the Financial Supervision Authority of application of reorganisation measures with respect to an insurance undertaking of such Contracting State and the branches thereof, the Financial Supervision Authority shall publish a corresponding notice prepared in Estonian in at least one national daily newspaper not later than within five working days after receiving such information. (5) The notice provided in subsection (4) of this section shall set out, among other, the name of the competent authority of the Contracting State, law applicable to the reorganisation measures in accordance with subsection 108 (2) of this Act, and the person responsible for application of the reorganisation measures (hereinafter in this Chapter financial recovery trustee) if such person has been appointed, together with the personal data and contact details of such person. (6) A decision to establish the special regime shall enter into force and reorganisation measures shall be applied regardless of whether or not the Financial Supervision Authority has forwarded the information specified in subsections (3) and (4) of this section unless otherwise provided by the decision to establish the special regime or, in the case of application of reorganisation measures, by the legislation of the corresponding Contracting State, or the competent authority has not decided otherwise. Law applicable to special regime and reorganisation measures (1) Unless otherwise provided by this section, the special regime is applied with respect to insurance undertakings pursuant to the provisions of Estonian law. (2) Unless otherwise provided by this section, reorganisation measures are applied with respect to a Contracting State insurance undertaking and branch thereof pursuant to the provisions of the law of the home country of the Contracting State insurance undertaking. (3) The consequences of the special regime or reorganisation measures for any pending proprietary disputes in which a participant in the proceedings is an insurance undertaking or Contracting State insurance undertaking or branch thereof with regard to whom, correspondingly, the special regime or reorganisation measures are applied, shall be determined pursuant to the provisions of the law of the state conducting the proceedings in the matter. (4) The effect of the special regime or reorganisation measures on an employment relationship and employment contract shall be determined pursuant to the provisions of the law of the state which applies to the employment contract. (5) The effect of the special regime or reorganisation measures on a contract based on which the right to acquire or use an immovable arises shall be determined pursuant to the provisions of the law of the state of the location of the immovable. (6) The effect of the special regime or reorganisation measures on the rights of an insurance undertaking or Contracting State insurance undertaking or branch thereof related to an immovable, ship or aircraft to be entered in a public register, including on the validity of a disposition concerning an immovable, ship or aircraft made after the establishment of the special regime or application of reorganisation measures with respect to the insurance undertaking or Contracting State insurance undertaking or branch thereof, shall be determined pursuant to the provisions of the law of the state of the location of the immovable or pursuant to the provisions of the law of the state which exercises supervision over maintaining the corresponding register. (7) The effect of the special regime or reorganisation measures on the rights and obligations of the participants in a regulated market shall be determined pursuant to the provisions of the law of the state which are applicable on the regulated market. (8) The effect of the special regime or reorganisation measures on the right of an insurance undertaking or Contracting State insurance undertaking or branch thereof to use book-entry securities after the establishment of the special regime or application of reorganisation measures with respect to the undertaking or branch shall be determined pursuant to the provisions of § 231 of the Private International Law Act. (9) Establishment of the special regime or application of reorganisation measures does not affect the right of creditors to set off the claim thereof against the claim of the insurance undertaking unless set-off is prohibited pursuant to the law applicable to the claim of the insurance undertaking. (10) Establishment of the special regime or application of reorganisation measures does not affect the real rights in rem of the creditors or third parties encumbering an object owned by the insurance undertaking located in a Contracting State or, where Estonia is not initiating the proceedings, in Estonia, including, above all, the following rights: 1) right of sale of an object arising from a right of security; 2) pre-emptive right to the satisfaction of a claim arising, above all, from a right of security or agreement to assign a security; 3) right to claim delivery from every person who possesses an object without legal basis; 4) right to the fruits of the object. (11) The provisions of subsection (10) of this section also apply to the right to acquire the right in rem provided in that section which is entered in a public register and is valid with respect to third parties. (12) Establishment of the special regime or application of reorganisation measures with respect to an insurance undertaking or Contracting State insurance undertaking or branch thereof does not affect the rights arising from reservation on ownership of the seller of the movable acquired by such insurance undertaking or Contracting State insurance undertaking or branch thereof provided that at the time of establishment of the special regime or application of reorganisation measures the movable was located in a Contracting State or Estonia, and the establishment of the special regime or application of reorganisation measures was not decided in such country. (13) Establishment of the special regime or application of reorganisation measures with respect to an insurance undertaking or Contracting State insurance undertaking or branch thereof selling a movable does not create a right to cancel or terminate the contract of sale or prevent the acquisition of the thing by the buyer provided that at the time of establishment of the special regime or application of reorganisation measures the movable was located in a Contracting State or Estonia, and the establishment of the special regime or application of reorganisation measures was not decided in such country. Special regime trustee and administrator and competence thereof (1) Special regime trustees shall meet the requirements established for members of management boards of insurance undertakings by this Act. Special regime trustees shall not be employees of the Financial Supervision Authority. (2) A special regime trustee is the legal representative of the insurance undertaking during the special regime. The authority of the management board, supervisory board, general meeting, procurator and other representatives of the insurance undertaking, or of the director and other representatives of an Estonian branch of a third country insurance undertaking are suspended during a special regime unless otherwise prescribed by the decision to establish the special regime. The special regime trustee has the right to suspend compliance with resolutions of the management board, supervisory board or general meeting of the insurance undertaking, or of the director of an Estonian branch of a third country insurance undertaking. (3) Within two days after appointment, a special regime trustee is required to: 1) display a notice at the seat of an insurance undertaking, a branch thereof in a foreign state or an Estonian branch of a third country insurance undertaking and at every place of business thereof concerning the appointment of the special regime trustee, indicating the names of the persons whose authority to conclude transactions in the name of the insurance undertaking has been suspended; 2) publish a notice with the content provided for in clause 1) of this subsection in at least one national daily newspaper; 3) inform, for making a corresponding entry in the register, the registrars of the Estonian Central Register of Securities, the land register and the ship register as well as other known registrars of similar registers of the Contracting States where branches of an Estonian insurance undertaking have been established of persons who are no longer authorised to dispose, in the name of the insurance undertaking, the assets of the insurance undertaking or assets administered on the basis an authorisation and of persons to whom corresponding authorisation has been granted. (4) A special regime trustee may transfer the insurance portfolio of an insurance undertaking or a part thereof to another insurance undertaking pursuant to the procedure provided by Chapter 6 of this Act. (5) The insurance undertaking shall bear the costs of remuneration of the special regime trustee which shall correspond to the nature and volume of his or her work. The amount of remuneration shall be determined by the Financial Supervision Authority. (6) A special regime trustee is required to act firstly pursuant to the interests of policyholders, insured persons, beneficiaries and other creditors and then pursuant to the interests of the insurance undertaking. Transactions concluded during a special regime are not subject to recovery in the course of bankruptcy proceedings. (7) A special regime trustee is required, in addition to activity reports specified by the decision to establish the special regime decision, to submit all information and documentation requested by the Financial Supervision Authority thereto. (8) The powers of a special regime trustee in a Contracting State are confirmed by a copy of the decision to establish the special regime together with a translation thereof into the official language or one of the official languages of the corresponding Contracting State. (9) A special regime trustee has the right to exercise the same powers in a Contracting State as he or she exercises in Estonia. In addition to the above, a special regime trustee has the right to appoint persons to assist or where necessary, represent him or her during the special regime. In exercising his or her rights, selling assets or providing information to employees, a special regime trustee shall adhere to the provisions of the legislation of the corresponding Contracting State. In exercising his or her rights, a special regime trustee has no right to apply coercive measures or to decide on issues which are the object of court action. (10) The powers of an administrator in Estonia are confirmed by a copy of the decision to appoint the administrator, or other certificate issued by the competent authority of the Contracting State. Such document shall be presented together with a translation into Estonian made by a sworn translator or certified by a notary. (11) An administrator has the right to exercise the same powers in Estonia as he or she exercises in the home country of a Contracting State insurance undertaking. In addition to the above, an administrator has the right to appoint persons to assist or where necessary, represent him or her in application of the reorganisation measures. Upon exercise of his or her rights, selling of assets and providing of information to employees, an administrator shall adhere to the provisions of the legislation of Estonia. In exercising his or her rights, a special regime trustee has no right to apply coercive measures or to decide on issues which are the object of court action. (12) Promptly after application of reorganisation measures with respect to a Contracting State insurance undertaking and branches thereof, the administrator is required to request the making of a corresponding entry in the public registers maintained in Estonia under the conditions and to the extent provided by Estonian law. Termination of special regime (1) The Financial Supervision Authority shall make a decision on the basis of activity reports, information and documentation submitted by a special regime trustee on whether the insurance undertaking is able to resume its activities or it is necessary to revoke its authorisation or authorisation to establish a branch in part or in full, to reorganise its activities or to file a bankruptcy petition with respect of an Estonian insurance undertaking. (2) The Financial Supervision Authority shall decide on termination of the special regime at the date specified in the decision on establishment of the special regime. The special regime trustee may request termination of the special regime before the established date. (3) The Financial Supervision Authority shall decide to terminate the special regime, and grant consent for commencement of the activities of the insurance undertaking, if: 1) according to the report of the special regime trustee, the solvency problems of the insurance undertaking have been eliminated and the proprietary interests of the policyholders, insured persons, beneficiaries and other entitled persons are protected, and 2) according to the opinion of the Financial Supervision Authority, no grounds exist, in the case of an Estonian insurance undertaking, to revoke the authorisation specified in § 27 of this Act or, in the case of a branch of a third country insurance undertaking, the authorisation for establishment of a branch specified in subsection 44 (3) of this Act. (4) On the basis of a resolution passed pursuant to subsection (3) of this section, an insurance undertaking shall reacquire the right to dispose of its assets and the authority of the members of the governing bodies are resumed. (5) If, at the end of the term of the special regime but not later than within six months after establishment of the special regime, an insurance undertaking fails to comply with the requirements provided for in this Act, the Financial Supervision Authority shall decide on the revocation of the authorisation of an Estonian insurance undertaking or the authorisation to establish an Estonian branch of a third country insurance undertaking on the bases prescribed in § 27 or subsection 44 (3) of this Act, or decide on filing of a bankruptcy petition against an Estonian insurance undertaking on the basis prescribed in § 122 of this Act. Chapter 9 DISSOLUTION OF INSURANCE UNDERTAKINGS Division 1 Bases for Dissolution of Insurance Undertakings and Cross-border Winding-up Procedure Bases for dissolution of insurance undertakings (1) An insurance undertaking is dissolved: 1) on the bases prescribed by law and the articles of association according to the decision of the general meeting of the shareholders of the insurance undertaking (voluntary dissolution); 2) on the initiative of the Financial Supervision Authority, on the basis of a court ruling (compulsory dissolution); [RT I 2008, 59, 330 - entry into force 01.01.2009] 3) in the case of insolvency, in accordance with this Act and the Bankruptcy Act. (2) A decision to grant permission for voluntary dissolution of an insurance undertaking, a ruling on compulsory dissolution, a bankruptcy ruling or a court ruling concerning the termination of bankruptcy proceedings due to abatement shall enter into force in all Contracting States at the same date on which the corresponding decision, order or ruling enters into force in Estonia. [RT I 2008, 59, 330 - entry into force 01.01.2009] (3) A decision, order or ruling specified in subsection (2) of this section are valid in all Contracting States under the same terms and conditions, and to the same extent as they are in Estonia. Winding-up procedure (1) For the purposes of this Act, winding-up procedure shall mean a procedure concerning all creditors of a Contracting State insurance undertaking and branches thereof or a branch of a third country insurance undertaking established in the Contracting State (hereinafter in this Division Contracting State insurance undertaking and branches) requiring the involvement of a competent administrative authority or court of such state (hereinafter in this Division competent bodies of Contracting States), which may be voluntary or compulsory, or arise from the insolvency of the Contracting State insurance undertaking and its branches, in the process of which transactions and acts necessary for the winding-up of the Contracting State insurance undertaking and its branches are carried out, including making a compromise or concluding other such agreement. (2) Only competent bodies of a Contracting State are authorised to initiate a winding-up procedure with respect to Contracting State insurance undertakings and branches. (3) A decision concerning initiation of a winding-up procedure shall enter into force in Estonia on the date on which such decision enters into force in the home country of the Contracting State insurance undertaking. (4) The decision specified in subsection (3) of this section together with its consequences is valid in Estonia under the same terms and conditions and to the same extent as in the home country of the Contracting State insurance undertaking. Information concerning decision concerning dissolution of insurance undertaking (1) The Financial Supervision Authority shall promptly forward a decision to grant permission for voluntary dissolution of an insurance undertaking, a decision on compulsory dissolution, a bankruptcy ruling or a court ruling concerning the termination of bankruptcy proceedings due to abatement to the financial supervision authorities of all Contracting States, and explain the consequences of the decision, order or ruling, set out the competence of the liquidators, trustee in bankruptcy or, in the case provided in § 29 of the Bankruptcy Act, the temporary trustee in bankruptcy, and any other matter which in the opinion of the Financial Supervision Authority has relevance to the case. [RT I 2008, 59, 330 - entry into force 01.01.2009] (2) In the case of a corresponding inquiry is made by a financial supervision authority of a Contracting State, the Financial Supervision Authority is required to provide such authority with information on the process of the winding-up procedure or bankruptcy proceedings of an insurance undertaking. (3) A notice concerning the dissolution of an insurance undertaking shall be published in the Official Journal of the European Union at the earliest opportunity by the liquidators, trustee in bankruptcy or, in the case provided in § 29 of the Bankruptcy Act, the temporary trustee in bankruptcy. (4) In addition to the requirements provided in clause 120 (1) 3) of this Act and subsection 34 (1) of the Bankruptcy Act, the liquidators, trustee in bankruptcy or, in the case provided in § 29 of the Bankruptcy Act, the temporary trustee in bankruptcy are required to send a written notice on dissolution of an insurance undertaking to every known creditor whose habitual place of stay, residence or seat is located in a Contracting State. (5) A notice specified in subsection (4) of this section shall contain at least the following information: 1) time-limits for proceedings, and sanctions and other consequences upon failure to comply therewith; 2) the person authorised to receive claims and information and documents related to the claims; 3) information on whether a creditor must file a claim even if such claim has a preferential right or is secured by a right in rem; 4) the effect of liquidation or bankruptcy proceedings to insurance contracts, including the date of termination of the insurance contracts and the rights and obligations arising from the insurance contracts to the insured persons. (6) The information specified in subsection (5) of this section shall be presented in Estonian. The information shall be presented on a form bearing the title "Invitation to file claim. Established deadlines" in all official languages of the Contracting States. If the claim of a creditor arises from an insurance contract, the information specified in subsection (5) of this section shall be provided in the official language or one of the official languages of the Contracting State of the habitual place of stay, residence or seat of the creditor. (7) Creditors whose habitual place of stay, residence or seat is in a Contracting State, may submit their claims in the official language or one of the official languages of such Contracting State. In such case, the claim submitted by the creditor shall bear the Estonian title " Nõude esitamine " [filing of claim]. (8) The liquidators, trustee in bankruptcy or, in the case provided in § 29 of the Bankruptcy Act, the temporary trustee in bankruptcy are required to regularly notify the creditors of any circumstances which become known during the liquidation or bankruptcy proceedings, and which the creditors need to be aware of in order to be able to protect their interests. Information related to initiation of winding-up procedure (1) In the case where a Contracting State financial supervision authority informs the Financial Supervision Authority of initiation of winding-up procedure with respect to an insurance undertaking and branches established in such Contracting State, the Financial Supervision Authority shall publish a corresponding notice prepared in Estonian in at least one national daily newspaper not later than within five working days after receiving such information. (2) The notice specified in subsection (1) of this section shall set out, among other, the name of the competent body of the Contracting State, law applicable to the winding-up procedure in accordance with subsection 116 (2) of this Act, and the person responsible for carrying out the winding-up procedure (hereinafter in this Division winding-up administrator) if such person has been appointed, together with the personal data and contact details of such person. Winding-up administrator and competence thereof The principles set out in subsections 109 (10)–(12) of this Act also apply with respect to winding-up administrators. Law applicable to winding-up procedure (1) Unless otherwise provided by this section, a winding-up procedure is applied with respect to Contracting State insurance undertakings and branches thereof pursuant to the provisions of the law of the home country of the Contracting State insurance undertaking. (2) The principles set out in subsections 108 (3)–(13) of this Act with respect to the special regime and reorganisation measures also apply, as appropriate, upon determining the law applicable to winding-up procedure. (3) Above all, the following shall be determined by the law of the corresponding state in the case specified in subsection (1) of this section: 1) composition of the assets of the Contracting State insurance undertaking and branches, and the legal status of assets acquired by the branches of the Contracting State insurance undertaking after initiation of winding-up procedure; 2) rights and obligations of the Contracting State insurance undertaking and branches, and the winding-up administrator; 3) terms for set-off; 4) effect of winding-up procedure to contracts to which the Contracting State insurance undertaking and branches are parties; 5) effect of winding-up procedure to proceedings initiated by creditors, except on any court proceedings currently before an Estonian court concerning assets or rights transferred from the Contracting State insurance undertaking and branches; 6) claims filed against the Contracting State insurance undertaking and branches, and terms for carrying out proceedings in the matter of claims which arise after initiation of the winding-up procedure; 7) procedure for notification, verification and acceptance of claims; 8) distribution of proceeds from sale of assets, rankings of claims, and rights of creditors where their claims are satisfied only in part due to the sale or set-off of a security relating to rights in rem; 9) terms and effect of termination of winding-up procedure, including in the case of a compromise; 10) rights of creditors after termination of winding-up procedure; 11) person required to cover the costs incurred during winding-up procedure; 12) rules for declaring legal acts which damage the interests of all debtors to be invalid or recoverable. (4) Clause 12 (3) of this section does not apply if a person who received benefit from such legal act provides proof that the law of a country other than the state specified in subsection (1) of this section applies to the legal act, and pursuant to such law, no grounds exist for contestation of the legal act. (5) The law of the home country of a Contracting State insurance undertaking and branches applies to the recovery of the transactions provided in subsections 108 (7), (9), (10), (12) and (13) of this Act. (6) The principles provided in this section of winding-up procedure also apply, as appropriate, to voluntary and compulsory dissolution of Estonian insurance undertakings and their branches in Contracting States and of Estonian branches of third country insurance undertakings, as well as to bankruptcy proceedings of Estonian insurance undertakings. (7) The provisions of this section shall apply to winding-up procedure of such insurance undertaking of a Contracting State, whose Estonian branch has entered into pension contracts, taking into consideration the specifications arising from subsection 127 (43) of this Act. Division 2 Voluntary and Compulsory Dissolution of Insurance Undertakings Voluntary dissolution (1) Voluntary dissolution of an insurance undertaking or a branch thereof established in a foreign country is permitted only if the insurance portfolio has been transferred pursuant to the established procedure, the insurance contracts have been terminated, all commitments arising from the insurance contracts have been fulfilled and the undertaking or branch has adequate assets necessary for the complete satisfaction of the legitimate claims of all creditors. (2) In order to make a decision, by way of general meeting, on the voluntary dissolution of an insurance undertaking or its foreign branch, the management board shall provide the general meeting with an overview of the financial activities of the insurance undertaking or its foreign branch during the current year and the financial position thereof. The overview shall set out the term and funds for satisfaction in full by the insurance undertaking of the justified claims of all creditors. (3) In coordination with the supervisory board, the management board of an insurance undertaking is required to submit, at least twenty days before the date of the general meeting, an application for authorisation for voluntary dissolution of the insurance undertaking or a branch thereof established in a foreign state together with the information specified in subsection (1) of this section to the Financial Supervision Authority. (4) The Financial Supervision Authority gives permission for voluntary dissolution of an insurance undertaking or a branch thereof established in a foreign state only if the conditions provided in subsection (1) of this section are met. (5) The provisions of § 119 and clause 120 (1) 5) of this Act do not apply to voluntary dissolution. (6) The provisions of this section also apply in the case of voluntary dissolution of Estonian branches of third country insurance undertakings. Compulsory dissolution of insurance undertakings (1) The Financial Supervision Authority may file a petition with a court for the compulsory dissolution of an insurance undertaking or an Estonian branch of a third country insurance undertaking if the Financial Supervision Authority has revoked in full the authorisation of the insurance undertaking or the authorisation for establishment of the Estonian branch of a third country insurance undertaking. (2) A court shall adjudge the compulsory dissolution of an insurance undertaking or an Estonian branch of a third country insurance undertaking without delay but not later than within three working days after receipt of the corresponding request. (3) [Repealed - RT I 2008, 59, 330 - entry into force 01.01.2009] (4) A judgment on compulsory dissolution shall be executed promptly, and the filing of and proceedings regarding an appeal do not suspend the activities of liquidators. (5) If, during liquidation proceedings, it becomes evident that the assets of the insurance undertaking are not sufficient to satisfy the recognised claims of all creditors in full, the liquidators shall suspend their activities and file a bankruptcy petition, and shall notify the Financial Supervision Authority thereof in advance in writing. Requirements for liquidators (1) At least three persons who have experience in insurance, at least one of whom meets the requirements established for members of the management board of the insurance undertaking shall be elected or appointed liquidators. (2) Liquidators shall remain impartial upon performance of their duties. The Financial Supervision Authority has the right to intervene in the activities of liquidators and demand, through a court, the appointment of new liquidators if data exists to show that the activities of the liquidators are not in compliance with law or that the claims of creditors are not satisfied objectively. (3) Liquidators shall receive remuneration corresponding to their tasks from the funds of the insurance undertaking or Estonian branch of a third country insurance undertaking being liquidated but not more than the average remuneration of the members of the management boards of an operating insurance undertaking or the director of an Estonian branch of a third country insurance undertaking. Remuneration paid to assistants to liquidators, including experts and auditors, shall not exceed the average remuneration paid by an operating insurance undertaking or an Estonian branch of a third country insurance undertaking to persons working in corresponding positions. Obligations and rights of liquidators (1) Liquidators are required to: 1) carry out a full inventory of all assets of the insurance undertaking as of the date of entry into force of the dissolution resolution; 2) publish a notice of the liquidation proceedings of the operating insurance undertaking or Estonian branch of a third country insurance undertaking in at least one national newspaper; 3) notify all known creditors of the liquidation proceedings in writing; 4) submit a notice concerning the liquidation of the insurance undertaking to the registrars of the Estonian Central Register of Securities, the land register and the ship register and, where necessary or prescribed by the legislation of the relevant Contracting State, other known registrars of similar registers of the Contracting States where branches of the insurance undertaking have been established; 5) transfer the insurance portfolio pursuant to the procedure established by this Act, terminate the insurance contracts and adhere to the commitments arising from insurance contracts; 6) present the activity reports and final balance sheet. (2) The powers of a liquidator in a Contracting State are confirmed by a copy of the permission for voluntary dissolution or decision on compulsory dissolution of the insurance undertaking together with a translation of such document into the official language or one of the official languages of the corresponding Contracting State. (3) A liquidator has the right to exercise the same powers in a Contracting State as he or she exercises in Estonia. In addition to the above, a liquidator has the right to appoint persons to assist or where necessary, represent him or her in the course of the liquidation proceedings. Upon exercise of his or her rights, selling of assets of the insurance undertaking and providing of information to employees, a liquidator shall adhere to the provisions of the corresponding Contracting State. In exercising his or her rights, a liquidator has no right to apply coercive measures or to decide on issues which are the object of court action. (4) In the case specified in § 29 of the Bankruptcy Act, the provisions of this section apply to interim trustees in bankruptcy. Division 3 Bankruptcy of Insurance Undertakings Commencement of bankruptcy proceedings against insurance undertakings (1) Bankruptcy proceedings against an insurance undertakings may be commenced only on the bases of a petition filed by the Financial Supervision Authority or the liquidators. (2) Bankruptcy cautions shall not be submitted to insurance undertakings. Submission of bankruptcy petition by Financial Supervision Authority If the assets of an insurance undertaking are insufficient for satisfaction of all the claims of the creditors or for covering the technical provisions and financial liabilities, the Financial Supervision Authority shall file a bankruptcy petition against the insurance undertaking. [RT I 2007, 4, 20 - entry into force 20.01.2007] Commencement of bankruptcy proceedings and hearing of petitions (1) Based on a petition of the Financial Supervision Authority, a court shall promptly decide on the commencement of bankruptcy proceedings with regard to an insurance undertaking but not later than within three working days after submission of the bankruptcy petition. (2) The provisions of §§ 17-24 of the Bankruptcy Act do not apply if the bankruptcy petition against an insurance undertaking is submitted by the Financial Supervision Authority. A court shall hear a bankruptcy petition promptly but not later than on the following working day and decide on the declaration of bankruptcy on the basis of evidence annexed to the bankruptcy petition. (3) On the basis of a petition by the liquidators, a court shall hold a preliminary hearing for the commencement of bankruptcy proceedings with regard to an insurance undertaking. A representative of the Financial Supervision Authority shall be summoned to a preliminary hearing to give his or her opinion on the commencement of bankruptcy proceedings with regard to the insurance undertaking. (4) A court shall review the bankruptcy petition specified in subsection (3) of this section within seven days as of the filing of the bankruptcy petition. Appointment of interim trustee and trustee in bankruptcy (1) A court shall appoint the interim trustee and the trustee in bankruptcy of an insurance undertaking on the proposal of the Financial Supervision Authority. The provisions of § 61 of the Bankruptcy Act do not apply to the trustees in bankruptcy of insurance undertakings. (2) A court shall release a trustee in bankruptcy at his or her request. A trustee in bankruptcy shall notify the Financial Supervision Authority of his or her request to be released thirty days in advance. A trustee in bankruptcy shall submit an activity report to the Financial Supervision Authority within ten days after release. (3) A court shall release a trustee in bankruptcy on the basis of a request of the Financial Supervision Authority or the decision of the bankruptcy committee if the trustee in bankruptcy loses the confidence of the Financial Supervision Authority or the bankruptcy committee. (4) If a trustee in bankruptcy is released, a new trustee in bankruptcy shall be appointed pursuant to the procedure prescribed in subsection (1) of this section. (5) The provisions of the second sentence of subsection 65 (5) of the Bankruptcy Act do not apply to determination of the remuneration of a trustee in bankruptcy of an insurance undertaking. The provisions of subsection 119 (3) of this Act apply to payment of remuneration to assistants to a trustee in bankruptcy, including experts and auditors. Obligations and rights of trustees in bankruptcy (1) A trustee in bankruptcy is required to: 1) publish a bankruptcy notice conforming to the requirements of subsection 33 (2) and (3) of the Bankruptcy Act with regard to the insurance undertaking in at least one national daily newspaper; 2) promptly provide the Financial Supervision Authority and the guarantee fund with the information requested thereby and enable them to examine all documentation concerning the bankruptcy proceedings of the insurance undertaking; 3) where necessary or prescribed by the legislation of the relevant Contracting State, notify the commercial register, the registrar of the land register and other known registrars of similar registers of the Contracting States where branches of the insurance undertaking have been established of the bankruptcy ruling concerning the insurance undertaking. [RT I 2008, 59, 330 - entry into force 01.01.2009] (2) The provisions of subsection 34 (2) of the Bankruptcy Act do not apply to notification of the known creditors of an insurance undertaking. (3) The powers of a trustee in bankruptcy in a Contracting State are confirmed by a copy of the bankruptcy ruling together with a translation of such document into the official language or one of the official languages of the corresponding Contracting State. [RT I 2008, 59, 330 - entry into force 01.01.2009] (4) A trustee in bankruptcy has the right to exercise the same powers in a Contracting State as he or she exercises in Estonia. In addition to the above, a trustee in bankruptcy has the right to appoint persons to assist or where necessary, represent him or her in the course of the bankruptcy proceedings. Upon exercise of his or her rights, selling of assets of the insurance undertaking and providing of information to employees, a trustee in bankruptcy shall adhere to the provisions of the corresponding Contracting State. In exercising his or her rights, a trustee in bankruptcy has no right to apply coercive measures or to decide on issues which are the object of court action. Bankruptcy committee (1) The bankruptcy committee of an insurance undertaking shall consist of at least three members, at least one of whom shall be appointed by the Financial Supervision Authority. (2) A court shall appoint the bankruptcy committee of an insurance undertaking on the proposal of the Financial Supervision Authority. (3) The provisions of the second and third sentence of subsection 74 (1) and subsections 74 (5) and (7) of the Bankruptcy Act do not apply to bankruptcy proceedings of insurance undertakings. Claims arising from insurance contracts (1) Claims arising from insurance contracts which are not submitted to the trustee in bankruptcy during the prescribed term shall be determined and deemed protected on the basis of the documentation of the insurance undertaking. (2) Insurance contract shall terminate upon the declaration of bankruptcy of an insurance undertaking. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) Claims arising from insurance contracts shall be given priority over the claims specified in subsection 153 (1) of the Bankruptcy Act. (4) Upon termination of a life insurance contract in the case provided for in subsection (3) of this section, the claim of the policyholder, insured person or beneficiary shall be satisfied to the extent of the technical provisions and financial liabilities corresponding to the insurance contract. [RT I 2008, 48, 269 - entry into force 14.11.2008] (41) The assets covering technical provisions corresponding to pension contracts shall not be included in the bankruptcy estate of the insurance undertaking and these shall be used to satisfy only the claims of the policyholders and beneficiaries under the pension contracts to the extent of the technical provisions and financial liabilities corresponding to these pension contracts. If the assets covering technical provisions corresponding to pension contracts are insufficient for satisfaction of such claims, the remaining part of these claims shall be satisfied together with other claims of policyholders, insured persons and beneficiaries under life contracts on account of the bankruptcy estate of the insurance undertaking. The claims of the policyholders and beneficiaries under the pension contracts shall not be satisfied on account of the assets covering technical provisions corresponding to other life contracts of the insurance undertaking. (42) A sum subject to payment based on a claim of a policyholder under a pension contract shall be transferred only to a new insurance undertaking chosen by the policyholder as an insurance premium of the policyholder's new pension contract. [RT I 2008, 48, 269 - entry into force 14.11.2008] (43) The provisions of subsections (4)–(42) of this section shall apply also in the case of bankruptcy of a Contracting State insurance undertaking with regard to the insurance portfolio of pension contracts entered into by its Estonian branch. (5) Upon termination of a non-life insurance contract in the case specified in subsection (3) of this section, the claim of the policyholder, insured person or beneficiary shall be satisfied to the extent of the insurance indemnity payable on the basis of the insurance contract and insurance premiums with respect to which the insured risk remains. [RT I 2008, 48, 269 - entry into force 14.11.2008] (6) Subsections (1) and (3)–(5) of this section do not apply in the case of bankruptcy of a reinsurance undertaking with regard to its reinsurance contracts. [RT I 2007, 68, 421 - entry into force 01.01.2008] Rehabilitation of insurance undertaking and compromise (1) The rehabilitation plan of an insurance undertaking may be submitted by a trustee in bankruptcy to the general meeting of creditors for approval only with the consent of the Financial Supervision Authority. (2) A compromise may be made in the course of the bankruptcy proceedings of an insurance undertaking only with the consent of the Financial Supervision Authority. In order to commence operations, the insurance undertaking must obtain a new authorisation pursuant to the provisions of this Act. Chapter 10 INSURANCE MEDIATION Division 1 General Provisions Types of mediation (1) Insurance brokerage means engagement in mediation by a person in the interests of a policyholder or, in the case of reinsurance, in the interests of an insurance undertaking with the purpose to offer an insurance contract which corresponds to their insurable interest and demands. (2) The activities of an insurance agent consist of a person’s engagement in mediation in the case of which one or several insurance undertakings are represented on the basis of an authorisation. Representation of several insurance undertakings is permitted only on the condition that their insurance contracts are not competing. Insurance contracts are not competing if they are entered into regarding different classes or subclasses of insurance. [RT I 2007, 68, 421 - entry into force 01.01.2008] Insurance intermediary (1) For the purposes of this Act, an insurance intermediary (hereinafter intermediary) is a person who, for remuneration, takes up or pursues mediation. (2) The following are intermediaries: 1) insurance brokers; 2) insurance agents. (3) Only an insurance broker may engage in insurance brokerage and only an insurance agent may engage in the activities of insurance agents. (4) This Act does not apply to persons engaged in mediation if an insurance contract mediated thereby complies with the provisions of subsection (5) of this section and all the following conditions are met: [RT I 2009, 37, 250 - entry into force 10.07.2009] 1) entry into the insurance contract requires knowledge only of the class or subclass of insurance being mediated; 2) the insurance contract is not a life insurance contract or a liability insurance contract; 3) mediation is not the main occupation of the person; 4) the amount of the annual premium of the insurance contract being mediated does not exceed EUR 500 and the total duration of the insurance contract, including any renewals, does not exceed five years. (5) An insurance contract being mediated shall be ancillary to the offered goods or services and shall cover: 1) the risk of breakdown, loss of or damage to the goods, or 2) the risk of breakdown of, damage to or loss of baggage and other risks linked to the travel service booked with that provider, even if the insurance covers life insurance or liability risks, provided that the cover is ancillary to the main cover for the risks linked to that travel. List of intermediaries (1) Only an intermediary entered in the list of intermediaries (hereinafter list) may act as an intermediary. (2) An insurance undertaking may only use the services of intermediaries entered in the list or persons provided for in subsection 130 (4) of this Act. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) An insurance broker shall be entered in the list and deleted from the list by the Financial Supervision Authority. (4) An insurance agent shall be entered in the list and deleted from the list by the insurance undertaking whom the agent represents or, in the cases provided by law, by the Financial Supervision Authority. An insurance undertaking shall make an entry in the list electronically pursuant to the contract entered into between the Financial Supervision Authority and the insurance undertaking. (5) The list of intermediaries shall be published on the website of the Financial Supervision Authority. (6) In addition to the list of intermediaries, the Financial Supervision Authority shall publish the contact details of the competent authorities of the Contracting States engaged in the entry in the list or register of intermediaries or, if possible, the links to the analogous lists or registers of intermediaries in the Contracting States, which provide an opportunity to verify whether a Contracting State intermediary is entered in the list or register of intermediaries in its country of location and in what states it holds the right to engage in mediation. [RT I 2007, 68, 421 - entry into force 01.01.2008] Extent of mediation (1) An intermediary may, pursuant to §§ 16 and 41-47 of this Act, mediate the entry into insurance contracts by persons who have the right to engage in insurance activities in Estonia and, in the cases provided for in §§ 151-159 of this Act, persons who have the right to engage in insurance activities in a foreign state. (2) If an insured risk is not situated in Estonia within the meaning of subsections 42 (2) or (3) of this Act, an intermediary may mediate to a policyholder an insurance contract of an insurance undertaking which has permission to engage in insurance activities in the state where the insured risk is situated if legislation of the specified state permits this. Training in field of insurance (1) In the cases provided for in this Act, an intermediary shall undergo training in the field of insurance. (2) A person who has undergone training in the field of insurance must know: 1) the general principles of insurance; 2) the nature of the class or subclass of insurance being mediated; 3) the procedures for the conclusion of insurance contracts; 4) the conditions of insurance contracts, including insured events and restrictions and exclusions relating to the contracts; 5) the principles for the determination of the sum insured; 6) factors affecting insurance premiums; 7) the principles of compensation in the event of the occurrence of an insured event; 8) Acts regulating insurance contracts. (3) Training in the field of insurance shall be repeated with the frequency which ensures that an insurance broker is constantly able to comply with the requirements for the mediation of insurance contracts provided for in § 141 of this Act and an insurance agent is constantly able to comply with the requirements provided for in § 148 of this Act. Liability insurance contract of intermediary (1) In order to ensure compensation for damage caused due to professional negligence, an intermediary shall enter into an obligatory liability insurance contract on the following conditions: 1) the insured event involves direct pecuniary loss caused due to professional negligence to the policyholder, insured person or beneficiary set out in the insurance contract mediated by the intermediary or a representative thereof; 2) the sum insured is at least 1.2 million euros for one insured event and 1.7 million euros per year for all the submitted claims; [RT I 2009, 37, 250 - entry into force 10.07.2009] 3) the insurance cover is valid within the European Economic Area; 4) the insurance cover applies to damage which is caused by an event or act which took place during the period of insurance. (2) In order to ensure compensation for damage caused due to professional negligence, an intermediary may, instead of a liability insurance contract, enter into a guarantee contract with an insurance undertaking or a credit or financial institution and the guarantee contract shall be equivalent to the provisions of subsection (1) of this section. (3) The requirements provided for in subsections (1) and (2) of this section do not apply to an insurance agent in respect of whom an insurance undertaking has provided a confirmation that they are responsible for the mediation activities of the agent. Separation of assets (1) An intermediary is required to keep the insurance premiums which are paid by a policyholder to the intermediary and which belong to an insurance undertaking on a separate bank account. (2) An intermediary shall not use the funds on the bank account specified in subsection (1) of this section in the economic activities of the intermediary, they do not form a part of the bankruptcy estate of the intermediary and the claims of creditors shall not be satisfied out of such funds. (3) The insurance premiums paid to an intermediary by a policyholder are deemed to be paid to an insurance undertaking, regardless of whether the intermediary has forwarded the premiums to the insurance undertaking or not. If the insurance undertaking pays an insurance indemnity through an intermediary, the indemnity is deemed to be paid when the insured person or the beneficiary has received the money or the indemnity. Protection of interests of clients and maintaining confidentiality (1) The provisions of subsections 142 (4), (7), (8) and (10) of this Act concerning insurance undertakings shall apply to intermediaries. [RT I 2007, 68, 421 - entry into force 01.01.2008] (2) [Repealed - RT I 2008, 48, 269 - entry into force 14.11.2008] (3) [Repealed - RT I 2007, 68, 421 - entry into force 01.01.2008] Manner of notification of policyholder (1) Information provided for in §§ 141 and 148 of this Act shall be forwarded to a policyholder in writing, or on a durable medium which enables reproduction in writing which is specified in subsection (2) of this section, unambiguously worded and clearly organised in Estonian or, if so agreed, in another language. (2) For the purposes of this Chapter, durable medium which enables reproduction in writing means any instrument which enables the client to store information addressed personally to him or her in a way accessible for future reference for a period of time adequate to the purposes of the information and which allows the unchanged reproduction of the information stored. (3) At the request of the policyholder or if necessary, information specified in subsection (1) of this section may be submitted orally, but immediately after entry into an insurance contract, information shall be communicated to the insurance undertaking also in writing or in a format which can be reproduced in writing. Division 2 Insurance Brokers Requirements for insurance brokers (1) An insurance broker who is a natural person, a member of the management board of an insurance broker company and a natural person directly engaged in mediation (hereinafter representative of insurance broker) must have an impeccable professional and business reputation. (2) The following persons shall not act as a person provided for in subsection (1) of this section: 1) persons whose activities have caused the bankruptcy of a company or the termination or revocation of the authorisation of a company on the initiative of a state agency or a financial supervision authority or who are subjected to a prohibition on business; 2) persons who have been punished for an economic offence, official misconduct or offence against property and information concerning the punishment has not been expunged pursuant to the Punishment Register Act. (3) In addition to the provisions of subsection (1) of this section, an insurance broker who is a natural person and a member of the management board of an insurance broker which is a company, responsible for mediation, must have experience of working in the field of insurance or other financial services and must have received training in the field of insurance provided for in § 133 of this Act. (4) In addition to the provisions of subsection (1) of this section, a representative of an insurance broker must have received training in the field of insurance specified in § 133 of this Act. Business name of insurance broker (1) The business name of an insurance broker shall include the word " kindlustusmaakler " [insurance broker]. (2) The business name or trade mark of a legal person, if the person is not an insurance broker, shall not include the word “ kindlustusmaakler ” [insurance broker] as a simple or compound word in Estonian or a foreign language. (3) Subsection (2) of this section does not apply to a non-profit association uniting insurance brokers. Extent of activities of insurance broker (1) With the permission of the Financial Supervision Authority, an insurance broker may engage in other activities besides insurance brokerage. (2) The Financial Supervision Authority permits an insurance broker to engage in activities specified in subsection (1) of this section if the activities correspond to the knowledge and skills of the broker, do not damage the financial situation thereof or question the independence and objectivity thereof. Requirements for mediation of insurance contracts (1) Each time before the entry into an insurance contract and, if necessary, also before the amendment or extension of an insurance contract which has been entered into, an insurance broker shall: 1) inform the client of the address and telephone numbers thereof; 2) inform the client that the insurance broker offers insurance contracts on the basis of an independent analysis and refer to the list in which the insurance broker is entered by the Financial Supervision Authority and the possibility to check the entry made concerning the insurance broker; 3) inform the client of any insurance undertaking, if it exists, in which the insurance broker has a qualifying holding and of any insurance undertaking or parent undertaking of an insurance undertaking which directly or indirectly owns 10 per cent or more of the insurance broker's shares or holds votes determined by shares or possesses any other right which makes it equally possible to exert influence over the management of the insurance broker; 4) specify, on the basis of information provided by the client, the insurable interests and the demands for the insurance contract of that client; 41) assess, in the mediation of unit-linked life insurance contracts, the suitability of the contract and its underlying assets for the client to the extent and pursuant to the procedure provided for in § 143 of this Act; 5) submit offers of a sufficiently large number of insurance undertakings to the client for entry into the insurance contract; 6) recommend to the client, on the basis of the offers specified in clause 5) of this subsection, an insurance contract which corresponds to the insurable interest and demands thereof best of all; 7) justify the advice and recommendations provided to the costumer with a thoroughness which corresponds to the complexity of the insurance contract; 8) introduce the conditions of the insurance contract to be entered into, particularly the size of the insurance premiums and the restrictions and exclusions relating to the contract; 81) submit the client, in the case of unit-linked life insurance, information concerning the nature of the underlying assets of the insurance and the risks related thereto which provide the client with an opportunity to make a carefully considered investment decision, whereas it is not permitted to emphasise any potential benefits arising from the entry into a unit-linked life insurance without simultaneous clear indication of the risks related to the entry into that contract; [RT I 2010, 2, 3 - entry into force 22.01.2010] 9) inform the client of the principles of compensation in the event of the occurrence of an insured event, including the court where the client may file a claim on the basis of the insurance contract; 10) advise the client on other issues relating to the insurance contract; 11) inform the client of the amount of the brokerage, including the brokerage received from the insurance undertaking, for each intermediated insurance contract separately. [RT I 2007, 4, 20 - entry into force 01.07.2007] (2) Subsection (1) of this section does not apply to representatives of insurance brokers who mediate insurance contracts specified in subsections 427 (2) or (3) of the Law of Obligations Act. (3) In addition to the provisions of subsection (1) of this section, an insurance broker shall inform the client of the data and principles provided for in § 50 of the Funded Pensions Act each time prior to the entry into a pension contract and, if necessary, also prior to the amendment of a pension contract entered into. [RT I 2008, 48, 269 - entry into force 14.11.2008] Reporting by insurance broker (1) An insurance broker shall submit reports to the Financial Supervision Authority. (2) The contents, format, bases of preparation and procedure for submission and publication of and the terms for the reports of insurance brokers and the Estonian branches of foreign insurance brokers shall be established by a regulation of the Minister of Finance. (3) The Financial Supervision Authority shall have the right to request additional reports and information necessary for the exercise of supervision to the extent provided by this Act, as well as the information and reports concerning the services provided by an insurance broker, which are necessary for the performance of the duties of the Financial Supervision Authority on the basis of Regulation (EU) No 1094/2010 of the European Parliament and of the Council. Division 3 Entry of Insurance Broker in List Application for entry in list (1) In order to be entered in the list, an applicant shall submit to the Financial Supervision Authority a written application and the following information and documents: 1) the articles of association of the applicant which is a company and, in the case of an operating company, also the resolution of the general meeting on amendment of the articles of association and the amended text of the articles of association; 2) in the case of a company being founded, a notarised transcript of the memorandum of association or foundation resolution and a notice of the credit institution concerning payment of the share capital; 3) a list of the shareholders or unit-holders of the applicant which is a company, which sets out the name, the personal identification code or registry code of each shareholder or unit-holder, or the date of birth in the absence of a personal identification code or registry code, and information on the amount of contribution, number of shares or units and votes of each shareholder or unit-holder; 4) the business name of the insurance undertaking in which the applicant has a qualifying holding and the size of the holding; 5) information on the members of the management board of the applicant which is a company, responsible for mediation, which sets out each member’s given name and surname, personal identification code or date of birth in the absence of a personal identification code, residence, educational background, and a complete list of places of employment and positions held during the last five years; 6) in the case of an applicant who is a natural person, information provided for in clause 5) of this subsection; 7) a confirmation that circumstances provided for in subsection 138 (2) of this Act which preclude membership in the management board do not exist in respect of the applicant who is a natural person or a member of the management board of the applicant which is a company; 8) an offer of a valid liability insurance contract of the insurance broker which is prepared under the conditions provided for in this Act or an offer of a guarantee contract of an insurance undertaking or a credit or financial institution. (2) An applicant shall notify the Financial Supervision Authority immediately of any changes in the information or documents submitted upon application specified in subsection (1) of this section, which occur during application for entry in the list and after entry in the list. Decision to enter or refuse to enter in list (1) An applicant shall be entered in the list if the submitted information and documents comply with the requirements, and if it is possible to verify on the basis of the submitted information and documents that the applicant has the sufficient facilities and organisational capacity to carry on mediation, and that the interests of policyholders, insured persons and beneficiaries are sufficiently protected. (11) If the applicant, upon application for entry in the list of intermediaries, has failed to submit all the information and documents specified in clauses 143 (1) 1)–8) of this Act or if such information or documents are incomplete or have not been prepared in accordance with the requirements, the Supervision Authority shall demand elimination of the deficiencies by the applicant providing an additional term therefor. [RT I 2010, 7, 30 - entry into force 26.02.2010] (2) The Financial Supervision Authority shall make a decision to enter or refuse to enter in the list within one month after submission of all the required documents and information and after the requirements are complied with, but not later than within three months after receipt of the application for entry in the list. (3) The Financial Supervision Authority shall promptly inform an applicant of a decision to enter or refuse to enter in the list. (4) The Financial Supervision Authority shall enter an applicant in the list of intermediaries immediately after the corresponding decision is made, but not before the receipt from the applicant of a copy of the valid liability insurance contract which meets the requirements provided for in § 134 of this Act or of a guarantee contract. [RT I 2007, 68, 421 - entry into force 01.01.2008] (5) The given name, surname, personal identification code and details shall be entered in the list regarding an insurance broker who is a natural person. (6) The business name, registry code, address of the seat and the given name or surname of the member of the management board responsible for mediation shall be entered in the list regarding an insurance broker which is a company. (7) [Repealed - RT I 2007, 68, 421 - entry into force 01.01.2008] Bases for refusal to enter in list The Financial Supervision Authority may refuse to enter an applicant in the list if: 1) the applicant does not comply with the requirements established for insurance brokers in this Act; 2) a member of the management board of the applicant which is a company does not meet the requirements provided for in this Act or legislation established on the basis thereof; 3) the applicant does not have a valid offer of a liability insurance contract or of a guarantee contract of an insurance undertaking or a credit or financial institution which meets the requirements of this Act or, on the basis of the conditions set out in the offer of the liability insurance contract or of the guarantee contract of the insurance undertaking or the credit or financial institution, compensation for the damage caused due to the professional negligence of an insurance broker is not sufficiently guaranteed in the opinion of the Financial Supervision Authority. Deletion from list (1) The Financial Supervision Authority shall delete an insurance broker from the list if: 1) the insurance broker submits an application to be deleted from the list; 2) the insurance broker which is a company is dissolved or the insurance broker who is a natural person dies; 3) the insurance broker does not hold a valid liability insurance contract or a guarantee contract of an insurance undertaking or a credit or financial institution which meets the requirements of this Act. (2) The Financial Supervision Authority may delete an insurance broker from a list if: 1) the insurance broker does not meet the requirements for insurance brokers provided for in this Act or legislation issued on the basis thereof; 2) a member of the management board of the insurance broker which is a company does not meet the requirements provided for in this Act or legislation established on the basis thereof; 3) the insurance broker has violated the requirements provided for in § 141 of this Act concerning mediation of insurance contracts; 4) the insurance broker has violated the requirement of training in the field of insurance provided for in subsections 138 (3) and (4) of this Act; 5) the insurance broker has violated this Act or the interests of policyholders, insured persons or beneficiaries are not sufficiently protected against risks arising from the activities or omissions of the broker. Division 4 Insurance Agents Requirements for insurance agents (1) An insurance agent who is a natural person, a member of the management board of an insurance agent which is a company (hereinafter insurance agency) and a natural person directly engaged in mediation (hereinafter representative of insurance agency) shall meet the requirements provided for in subsection 138 (2) of this Act and they must have an impeccable professional and business reputation. (2) If mediation of insurance contracts is an ancillary activity of an insurance agency, the member of the management board who is responsible for mediation shall meet the requirements provided for in subsection (1) of this section. (3) In addition to the provisions of subsection (1) of this section, an insurance agent who is a natural person and a member of the management board of an insurance agency whose main activity is the mediation of insurance contracts, responsible for mediation, must have experience of working in the field of insurance or other financial services and must have received training in the field of insurance provided for in § 133 of this Act. (4) In addition to the provisions of subsection (1) of this section, a representative of an insurance agency whose main activity is the mediation of insurance contracts must have undergone training in the field of insurance provided for in § 133 of this Act. (5) If mediation of insurance contracts is an ancillary activity of an insurance agency, a representative of the agency who directly mediates entry into insurance contracts must only have undergone training in the field of insurance provided for in § 133 of this Act. (6) Training in the field of insurance shall be ensured to an insurance agent by the insurance undertaking whom the agent represents. Requirements for mediation of insurance contracts (1) Each time before the entry into an insurance contract or, if necessary, also before the amendment or extension of an insurance contract which has been entered into, an insurance agent shall: 1) inform the client of the address and telephone numbers thereof; 2) inform the client that the insurance agent acts as an insurance agent and refer to the list in which the insurance agent is entered by the insurance undertaking and the possibility to check the entry made concerning the insurance agent; 3) inform the client of the insurance undertaking whom the agent represents, the types of contracts mediated and the extent of the authorisation granted by the insurance undertaking; 31) specify, on the basis of information provided by the client, on which terms and conditions he or she wishes to enter into the insurance contract; [RT I 2007, 4, 20 - entry into force 20.01.2007] 32) assess, in the mediation of unit-linked life insurance contracts, the suitability of the contract and its underlying assets for the client to the extent and pursuant to the procedure provided for in § 143 of this Act; 4) submit an offer to the client for entry into the insurance contract, justifying the advice and recommendations provided to the client with a thoroughness which corresponds to the complexity of the insurance contract; [RT I 2007, 4, 20 - entry into force 20.01.2007] 5) introduce the conditions of the insurance contract to be entered into, including the size of the insurance premiums and the restrictions and exclusions relating to the contract; 51) inform the client of the amount of the brokerage for each intermediated insurance contract separately. [RT I 2007, 4, 20 - entry into force 01.07.2007] 6) inform the client of the principles of compensation for damage in the event of the occurrence of an insured event, including the court where the client may file a claim on the basis of the insurance contract; 7) submit the client, in the case of unit-linked life insurance, information concerning the nature of the underlying assets of the insurance and the risks related thereto which provide the client with an opportunity to make a carefully considered investment decision, whereas it is not permitted to emphasise any potential benefits arising from the entry into a unit-linked life insurance without simultaneous clear indication of the risks related to the entry into that contract. [RT I 2010, 2, 3 - entry into force 22.01.2010] (2) Subsection (1) of this section does not apply to insurance agents who mediate insurance contracts specified in subsections 427 (2) or (3) of the Law of Obligations Act. (3) In addition to the provisions of subsection (1) of this section, an insurance agent shall inform the client of the data and principles provided for in § 50 of the Funded Pensions Act each time prior to the entry into a pension contract and, if necessary, also prior to the amendment of a pension contract entered into. [RT I 2008, 48, 269 - entry into force 14.11.2008] Division 5 Entry of Insurance Agent in List Entry of insurance agent in list (1) A person is entered in the list on the basis of the person’s application. (2) An insurance undertaking who receives an application shall make a decision to enter in the list or refuse to enter in the list within fourteen days as of the receipt of the application. The insurance undertaking shall enter the applicant in the list immediately after the corresponding decision is made. (3) A person who does not comply with the requirements established for insurance agents in this Act shall not be entered in the list. (4) Upon application, an applicant shall inform the insurance undertaking of a qualifying holding in another insurance undertaking and of any insurance undertaking or parent undertaking of an insurance undertaking which directly or indirectly owns 10 per cent or more of the applicant's shares or units or holds votes determined by shares or units or possesses any other right which makes it equally possible to exert influence over the management of the applicant. (5) The given name, surname, personal identification code and details shall be entered in the list regarding an insurance agent who is a natural person. (6) The business name, registry code, address of the seat and the given name or surname of the member of the management board responsible for mediation shall be entered in the list regarding an insurance agency. (7) An insurance undertaking who makes an entry is responsible for the correctness of the entry made in the list. Deletion of insurance agent from list (1) An insurance undertaking which is represented by an insurance agent shall delete the insurance agent immediately from the list if: 1) the insurance agent submits an application to be deleted from the list; 2) the insurance agency is dissolved or the insurance agent who is a natural person dies; 3) the authorisation relationship between the insurance agent and insurance undertaking terminates; 4) the insurance agent does not hold a valid liability insurance contract or a guarantee contract of the insurance undertaking or the credit or financial institution, which meets the requirements of this Act, or a confirmation from the insurance undertaking that the insurance agent engages in mediation at the full responsibility of the insurance undertaking; 5) the insurance agent does not meet the requirements for insurance agents provided for in this Act or legislation issued on the basis thereof; 6) a member of the management board of the insurance agency does not meet the requirements provided for in this Act or legislation established on the basis thereof; 7) the insurance agent has violated the requirements provided for in § 148 of this Act concerning mediation of insurance contracts; 8) a person specified in subsections 147 (3)-(5) has not undergone training in the field of insurance; 9) the insurance agent has violated this Act or the interests of policyholders, insured persons or beneficiaries are not sufficiently protected; 10) any of the circumstances specified in this subsection occurs and the Financial Supervision Authority demands that the insurance agent be deleted from the list. (2) If circumstances specified in subsection (1) of this section occur, the Financial Supervision Authority has the right to delete the insurance agent from the list. Division 6 Activities of Estonian Intermediaries in Foreign States Bases of activities of intermediary in foreign state (1) An intermediary entered in the list in Estonia may engage in mediation in a foreign state by founding a branch or engaging in cross-border mediation. (2) For the purposes of this Division, cross-border mediation means mediation business by an Estonian intermediary in a foreign state without founding a branch therefor. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) Upon engaging in mediation in a foreign state, an intermediary shall comply with the requirements provided for in this Act, legislation issued on the basis thereof and legislation of the foreign state. (4) The provisions of sections 156, 157, 158 and 159 of this Act apply to the mediation business of intermediaries in a Contracting State. [RT I 2010, 7, 30 - entry into force 26.02.2010] (5) The provisions of sections 152–155 and 1571 of this Act apply to the mediation business of intermediaries in a third country. [RT I 2010, 7, 30 - entry into force 26.02.2010] Branch of intermediary which is Estonian company in third country (1) An intermediary which is a company and wishes to found a branch in a third country shall apply for a corresponding authorisation (hereinafter in this Division authorisation for foundation of a branch) from the Financial Supervision Authority. (2) In order to apply for an authorisation for the foundation of a branch in a third country, an intermediary which is a company shall submit a written application and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority: 1) the name of the state where the intermediary wishes to found a branch together with a reference to the legislation of the corresponding state, according to which foundation of the branch of the intermediary is permitted; 2) the address of the registered office of the branch; 3) information provided for in clause 143 (1) 5) of this Act concerning the director of the branch who must have sufficient right of representation for operating in the name of the intermediary in relation to third parties, the correctness of which is verified by the signature of the said person; 4) a list of the types of insurance contracts which the intermediary plans to mediate in the third country; 5) a copy of the valid liability insurance contract of the intermediary provided for in § 134 of this Act or of a guarantee contract of an insurance undertaking or a credit or financial institution or a confirmation from the insurance undertaking that the intermediary engages in mediation at the full responsibility of the insurance undertaking. The insurance cover or guarantee must be valid in a third country where the insurance undertaking wishes to found a branch and the confirmation shall contain a condition that the insurance undertaking is also responsible for the mediation business of the intermediary in the specified third country. (3) An intermediary which is a company is required to promptly inform the Financial Supervision Authority of any changes to the information or amendment of the documents specified in clauses (2) 2)–5) of this section. Processing of applications for authorisation for foundation of branch and decision on granting of authorisation (1) The provisions of §§ 134, 138 and 147 of this Act apply to the processing of applications for an authorisation for the foundation of a branch, verification of the submitted information and verification of the financial situation, organisational structure and technical systems of the applicant and the sufficiency of resources for the foundation of a branch. (11) If the applicant, upon application for authorisation for foundation of a branch, has failed to submit all the information and documents specified in clauses 143 (2) 1)-5) of this Act or if such information or documents are incomplete or have not been prepared in accordance with the requirements, the Supervision Authority shall demand elimination of the deficiencies by the applicant providing an additional term therefor. [RT I 2010, 7, 30 - entry into force 26.02.2010] (2) The Financial Supervision Authority shall make a decision to grant or refuse to grant an authorisation for the foundation of a branch within two months after submission of all the necessary and conforming information and documents, but not later than within three months after receipt of the corresponding application. (3) The Financial Supervision Authority shall promptly deliver a decision to grant or refuse to grant an authorisation for the foundation of a branch to the intermediary. (4) The Financial Supervision Authority shall add the name of the third country where an intermediary has founded a branch to the information presented in the list concerning the intermediary. Refusal to grant authorisation for foundation of branch The Financial Supervision Authority may refuse to grant an authorisation for the foundation of a branch if: 1) the information or documents submitted upon application for the authorisation do not meet the requirements provided for in this Act or legislation established on the basis thereof, or are inaccurate, misleading or incomplete; 2) the director of the branch does not comply with the requirements established in § 138 of this Act concerning a member of the management board of an insurance broker responsible for mediation; 3) the financial situation, organisational structure and other resources of the intermediary which is a company are insufficient for engaging in mediation in a third country; 4) the foundation of the branch may damage the interests of the policyholders, insured persons or beneficiaries, the financial position of the intermediary which is a company or the reliability of its activities; 5) the intermediary does not have a contract or a confirmation from the insurance undertaking specified in clause 152 (2) 5) of this Act or the specified documents do not comply with the requirements provided for in this Act; 6) the financial supervision authority of a third country has no legal basis or possibilities for cooperation with the Financial Supervision Authority and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the branch; 7) the intermediary has been punished for an economic offence, official misconduct, offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act. Revocation of authorisation for foundation of branch (1) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch and delete an intermediary from the list of intermediaries if the intermediary which is a company: 1) has submitted false information upon application for the authorisation for the foundation of a branch which was of material importance in the decision to grant the authorisation, and also in the case where false information has been submitted to the Financial Supervision Authority; 2) has repeatedly or materially violated the requirements provided for in the legislation of the third country, which may damage the interests of policyholders, insured persons or beneficiaries; 3) or its branch does not meet the valid requirements for the granting of an authorisation for the foundation of a branch; 4) fails to submit reports on its branch as required; 5) has failed to implement a precept of the Financial Supervision Authority relating to the activities of the branch within the term or to the extent prescribed; 6) has been deleted from the list of intermediaries. (2) The Financial Supervision Authority shall promptly deliver a decision to revoke an authorisation for the foundation of a branch and to delete an intermediary from the list of intermediaries to the intermediary which is a company and the financial supervision authority of the third country. (3) After becoming aware of revocation of an authorisation for the foundation of a branch and deletion of an intermediary from the list of intermediaries, the intermediary which is a company shall terminate mediation business not later than by the due date specified by the Financial Supervision Authority. (4) The Financial Supervision Authority is required to inform the financial supervision authority of a third country also of the coercive measures and sanctions imposed on the intermediary which is a company. Branch of intermediary which is Estonian company in Contracting State (1) An intermediary which is a company and wishes to found its branch in a Contracting State shall notify the Financial Supervision Authority of its intention and submit the following information and documents: 1) the name of the Contracting State where the intermediary wishes to found the branch; 2) the address of the registered office of the branch; 3) information provided for in clause 143 (1) 5) of this Act concerning the director of the branch who must have sufficient right of representation for operating in the name of the intermediary in relation to third parties, the correctness of which is verified by the signature of the said person; 4) a list of the types of insurance contracts which the intermediary plans to mediate in the Contracting State. (2) The documents specified in subsection (1) of this section shall be submitted together with a translation made by a sworn translator or certified by a notary into the official language or one of the official languages of the Contracting State of the location of the branch. (3) The Financial Supervision Authority shall inform the financial supervision authority of the Contracting State where an intermediary which is a company wishes to found a branch of the intention of the intermediary within one month and shall forward the information and documents provided for in subsection (1) of this section, including information on entry of the intermediary in the list. (4) The Financial Supervision Authority shall inform an intermediary which is a company of forwarding information and documents to the financial supervision authority of the Contracting State. (5) An intermediary which is a company may found a branch one month after the date of receipt of a notice from the Financial Supervision Authority which sets out that information and documents concerning the intermediary have been forwarded, except in the case provided for in subsection (6) of this section. (6) An intermediary which is a company may found a branch immediately after forwarding information and documents to the Financial Supervision Authority, unless the Contracting State wishes that the Financial Supervision Authority notifies the Contracting State of foundation of branches. (7) An intermediary which is a company shall notify the Financial Supervision Authority and the financial supervision authority of the Contracting State of the location of the branch of changes in the information or amendment of the documents specified in clauses (1) 2)-4) of this section at least one month before entry into force of the changes or amendments. (8) The Financial Supervision Authority is required to inform the financial supervision authority of the Contracting State of deletion of an intermediary which is a company from the list and of the coercive measures and sanctions imposed on the intermediary. (9) The Financial Supervision Authority shall add the name of the Contracting State where an intermediary has founded a branch to the information presented in the list concerning the intermediary. Precept for termination of mediation through branch (1) In addition to a prohibition on operation through a branch upon deletion from the list provided for in §§ 146 and 150 of this Act, the Financial Supervision Authority may prohibit, by its precept, operation of an intermediary which is a company through a branch if the financial supervision authority of the Contracting State has informed the Financial Supervision Authority of a violation of legislation of the Contracting State by the intermediary which is a company. (2) The Financial Supervision Authority shall promptly deliver the precept specified in subsection (1) of this section to the intermediary which is a company. Cross-border mediation in third countries (1) An Estonian intermediary, who wishes to engage in cross-border mediation in third countries, is required to apply for a corresponding authorisation (hereinafter in this Division authorisation for cross-border mediation) from the Financial Supervision Authority. Upon application for authorisation for cross-border mediation, the intermediary shall submit a written application and the following information and documents to the Financial Supervision Authority: 1) name of the third country where the intermediary wishes to engage in cross-border mediation together with reference to the provisions of the legislation of the corresponding country, pursuant to which the cross-border mediation of the intermediary are permitted in this state; 2) a list of the types of insurance contracts which the intermediary plans to mediate in the third country; 3) a copy of the liability insurance contract provided for in § 134 of this Act or of a guarantee contract of an insurance undertaking or a credit or financial, which states that such contract is also effective in the corresponding third country. (2) If the intermediary, upon application for authorisation for cross-border mediation, has failed to submit all the information and documents specified in clauses (1) 1)–3) of this section or the information and documents do not conform to the requirements provided for in this Act or legislation established on the basis thereof, the Financial Supervision Authority shall demand elimination of the deficiencies by the applicant providing an additional term therefor. (3) A decision to grant or refuse to grant an authorisation for cross-border mediation shall be made by the Financial Supervision Authority within two months after receipt of all necessary and conforming information and documents and compliance with requirements, but not later than within three months after the receipt of an application. (4) The Financial Supervision Authority shall promptly deliver a decision to grant or refuse to grant an authorisation for cross-border mediation to the intermediary. (5) The Financial Supervision Authority shall add the name of the third country where an intermediary has the right to engage in cross-border mediation to the information presented in the list of intermediaries concerning the intermediary. (6) The Financial Supervision Authority may refuse to grant authorisation for cross-border mediation if: 1) the information and documents submitted upon application for authorisation for cross-border mediation do not conform to the requirements provided for in this Act or legislation established on the basis thereof and the applicant has failed to eliminate the deficiencies within an additional term established by the Financial Supervision Authority on the basis of subsection (2) of this section; 2) the information or documents submitted upon application for authorisation for cross-border mediation are incorrect, misleading or incomplete; 3) the activities of the intermediary in a third country may significantly damage the interests of the policyholders, insured persons or beneficiaries or damage the reliability of the intermediary; 4) the liability insurance contract of the intermediary or a guarantee contract of an insurance undertaking or a credit or financial institution does not comply with the requirements provided for in subsection 134 (1) of this Act or is not effective in this third country; 5) the financial supervision authority of a third country has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority, and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the intermediary; 6) the intermediary has been punished for an economic offence, official misconduct, offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act. (7) An intermediary is required to promptly notify the Financial Supervision Authority of any changes to the circumstances specified in clauses (1) 2) and 3) of this section. (8) The Financial Supervision Authority may revoke an authorisation for cross-border mediation if: 1) the intermediary has submitted false information upon application therefor, which was of material importance in the decision to grant the authorisation for cross-border mediation; 2) the intermediary has failed to notify the Financial Supervision Authority of the change to the circumstances related to cross-border mediation; 3) the intermediary has repeatedly or significantly violated the provisions of legislation regulating its activities; 4) the intermediary does not meet the conditions for the granting of authorisations for cross-border mediation; 5) the intermediary has failed to implement a precept of the Financial Supervision Authority concerning the cross-border mediation by the prescribed due date or to the extent prescribed; 6) the intermediary has been deleted from the list of intermediaries. (9) The Financial Supervision Authority shall promptly deliver a decision to revoke an authorisation for cross-border mediation to the intermediary and the financial supervision authority of a third country. [RT I 2010, 7, 30 - entry into force 26.02.2010] Cross-border mediation in Contracting State (1) An intermediary which for the first time wishes to engage in cross-border mediation in one or several Contracting States shall notify the Financial Supervision Authority of its intention and submit the following information and documents: 1) the name of the Contracting State where the intermediary wishes to engage in cross-border mediation; 2) a list of the types of insurance contracts which the intermediary plans to mediate in the Contracting State. (2) The information and documents specified in subsection (1) of this section shall be submitted together with a translation made by a sworn translator or certified by a notary into the official language or one of the official languages of the Contracting State in which the intermediary wishes to engage in mediation. (3) The Financial Supervision Authority shall inform the financial supervision authority of the Contracting State of the intention of an intermediary within one month and shall forward to the Financial Supervision Authority the information and documents provided for in subsection (1) of this section, including information on entry of the intermediary in the list. (4) The Financial Supervision Authority shall inform an intermediary of forwarding information and documents to the financial supervision authority of the Contracting State. (5) An intermediary may start business one month after the date of receipt of a notice from the Financial Supervision Authority which sets out that information and documents concerning the intermediary have been forwarded, except in the case provided for in subsection (6) of this section. (6) An intermediary may start business immediately after forwarding information and documents to the Financial Supervision Authority unless the Contracting State wishes that the Financial Supervision Authority notifies the Contracting State of cross-border mediation. (7) If information specified in clause (1) 2) of this section changes, an intermediary shall notify the Financial Supervision Authority of the changes at least one month before entry into force of the changes and the Financial Supervision Authority shall forward the specified information to the financial supervision authority of the Contracting State. (8) The Financial Supervision Authority is required to inform the financial supervision authority of the Contracting State of deletion of an intermediary from the list and of the sanctions imposed on the intermediary. (9) The Financial Supervision Authority shall add the name of the Contracting State where an intermediary engages in cross-border mediation to the information presented in the list concerning the intermediary. Precept for termination of cross-border mediation (1) In addition to a prohibition on engagement in cross-border mediation upon deletion from the list provided for in §§ 146 and 150 of this Act, the Financial Supervision Authority may, by its precept, prohibit an intermediary to engage in cross-border mediation if the financial supervision authority of the Contracting State has informed the Financial Supervision Authority of a violation of legislation of the Contracting State by the intermediary. (2) The Financial Supervision Authority shall promptly deliver a precept specified in subsection (1) of this section to the intermediary. Division 7 Activities of Foreign Intermediaries in Estonia Bases for activities of foreign intermediaries in Estonia (1) A person who pursuant to the legislation of the home country has the right to engage in mediation may engage in mediation also in Estonia by founding a branch or engaging in cross-border mediation. (2) For the purposes of this Division, cross-border mediation means mediation business by a foreign intermediary in Estonia without founding a branch. [RT I 2010, 7, 30 - entry into force 26.02.2010] (3) Upon engagement in mediation in Estonia, a foreign intermediary shall comply with the requirements provided for in this Act, legislation issued on the basis thereof and legislation of the foreign state. (4) The provisions of § 165 of this Act apply to the mediation business of intermediaries of Contracting States in Estonia. [RT I 2007, 68, 421 - entry into force 01.01.2008] (5) The provisions of §§ 161–164 and 1651 of this Act apply to the mediation business of intermediaries of third countries in Estonia. [RT I 2010, 7, 30 - entry into force 26.02.2010] Branch of intermediary which is company of third country in Estonia (1) In order to found a branch in Estonia, an intermediary which is company of third country is required to apply for a corresponding authorisation (hereinafter in this Division authorisation for foundation of a branch) from the Financial Supervision Authority. (2) Upon application for an authorisation for the foundation of a branch, a written application and the following information and documents (hereinafter in this Division application) shall be submitted to the Financial Supervision Authority: 1) the business name and address of the intermediary; 2) the business name and address of the branch in Estonia; 3) information provided for in clause 143 (1) 5) of this Act concerning the director of the branch who must have sufficient right of representation for operating in the name of the intermediary in relation to third parties, the correctness of which is verified by the signature of the said person; 4) the information and documents provided for in clauses 386 (2) 1) and 3)–5) of the Commercial Code; 5) the audited annual reports of the intermediary for the past two financial years; 6) a list of the types of insurance contracts which the intermediary plans to mediate in Estonia; 7) a copy of the valid liability insurance contract provided for in § 134 of this Act or of a guarantee contract of an insurance undertaking or a credit or financial institution. (3) In addition to the information specified in subsection (2) of this section, an intermediary which is company of a third country shall submit the following to the Financial Supervision Authority: 1) the permission of the financial supervision authority of the home state to found a branch in Estonia; 2) confirmation of the financial supervision authority of the home country to the effect that the intermediary has the right to engage in mediation in its home country and that it pursues its activities in a correct manner and in accordance with the public interest. (4) A third country intermediary who is a company shall submit the information and documents specified in this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. (5) A third country intermediary which is a company shall notify the Financial Supervision Authority of any changes in the information or amendment of the documents specified in clauses (2) 1)-4), 6) and 7) of this section at least one month before entry into force of the changes or amendments. Processing of application for authorisation for foundation of branch and decision on granting of authorisation (1) The provisions of §§ 134, 138 and 147 of this Act apply to the processing of applications for an authorisation for the foundation of a branch, verification of the submitted information and verification of the financial situation, organisational structure and technical systems of the applicant and the sufficiency of resources for the foundation of a branch. (11) If the applicant, upon application for authorisation for foundation of a branch, has failed to submit all the information and documents specified in clauses 161 (2) 1)-7) and subsection 161 (3) of this Act or if such information or documents are incomplete or have not been prepared in accordance with the requirements, the Supervision Authority shall demand elimination of the deficiencies by the applicant providing an additional term therefor. [RT I 2010, 7, 30 - entry into force 26.02.2010] (2) The Financial Supervision Authority shall make a decision to grant or refuse to grant an authorisation for the foundation of a branch within two months after receipt of all the necessary information and documents, but not later than within three months after submission of the application. (3) The Financial Supervision Authority shall promptly deliver a decision to grant or refuse to grant an authorisation for the foundation of a branch to the intermediary. (4) The Financial Supervision Authority shall enter in the list the business name and commercial registry code of a branch of a third country intermediary in Estonia, the address of its seat in Estonia and the name of the director of the branch responsible for mediation. Refusal to grant authorisation for foundation of branch The Financial Supervision Authority may refuse to grant an authorisation for the foundation of a branch if: 1) the information or documents submitted upon application for the authorisation do not meet the requirements provided for in this Act or legislation established on the basis thereof, or are inaccurate, misleading or incomplete; 2) the director of the branch does not comply with the requirements established in § 138 of this Act concerning a member of the management board of an insurance broker responsible for mediation; 3) the financial situation, organisational structure and other resources of the intermediary which is a company are insufficient for engaging in mediation in Estonia; 4) the foundation of the branch may damage the interests of policyholders, insured persons or beneficiaries; 5) the intermediary does not have a contract specified in clause 161 (2) 7) of this Act or does not comply with the requirements provided for in this Act; 6) the financial supervision authority of a third country has no legal basis or possibilities for cooperation with the Financial Supervision Authority and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the branch. Revocation of authorisation for foundation of branch (1) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch and delete an intermediary from the list of intermediaries if the intermediary company: 1) has submitted false information upon application for the authorisation for the foundation of a branch which was of material importance in the decision to grant the authorisation, and also in the case where false information has been submitted to the Financial Supervision Authority; 2) has repeatedly or materially violated the requirements provided for in the legislation of Estonia, which may damage the interests of policyholders, insured persons or beneficiaries; 3) or its branch does not meet the valid requirements for the granting of authorisations for the foundation of a branch; 4) fails to submit reports on its branch as required; 5) has failed to implement a precept of the Financial Supervision Authority relating to the activities of the branch within the term or to the extent prescribed. (2) The Financial Supervision Authority shall promptly deliver a decision to revoke an authorisation for the foundation of a branch and to delete an intermediary from the list of intermediaries to the intermediary which is a company and the financial supervision authority of the third country. (3) After becoming aware of revocation of an authorisation for the foundation of a branch and deletion of an intermediary's branch from the list of intermediaries, the intermediary which is a company shall terminate mediation business in Estonia not later than by the due date specified by the Financial Supervision Authority. (4) The Financial Supervision Authority is required to inform the financial supervision authority of a third country of the sanctions and coercive measures imposed on the branch. (5) The Financial Supervision Authority may refuse to revoke an authorisation for the foundation of a branch if policyholders, insured persons or beneficiaries of the branch have claims against the branch or the intermediary of a third country who founded the branch. Foundation of branch of intermediary which is company of Contracting State in Estonia (1) If an intermediary which is a company registered in a Contracting State wishes to found a branch in Estonia, it shall inform the Financial Supervision Authority thereof through the financial supervision authority of the home country. The following information and documents shall be submitted to the Financial Supervision Authority: 1) the business name and address of the seat of the branch in Estonia; 2) the name of the director of the branch who must have sufficient right of representation for operating in the name of the intermediary in relation to third parties; 3) a list of the types of insurance contracts the mediation of which is planned through the branch. (2) An intermediary who is a company of a Contracting State shall submit the information and documents specified in subsection (1) of this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. (3) The Financial Supervision Authority shall inform an intermediary through the financial supervision authority of the home country of the conditions pursuant to which the intermediary of the Contracting State must provide its services in Estonia within one month after the financial supervision authority of the home country has forwarded the information and documents specified in subsection (1) of this section to the Financial Supervision Authority. (4) An intermediary of a Contracting State may found a branch in Estonia after the receipt of the conditions specified in subsection (3) of this section or one month after the information and documents specified in subsection (1) of this section are forwarded to the Financial Supervision Authority. (5) The Financial Supervision Authority shall enter in the list the business name and commercial registry code of a branch of an intermediary of a Contracting State in Estonia, the address of its seat in Estonia and the name of the director of the branch responsible for mediation. (6) An intermediary which is a company of a Contracting State shall notify the Financial Supervision Authority of any changes to the information or amendment of the documents specified in subsection (1) of this section at least one month in advance through the financial supervision authority of the Contracting State. Within one month as of becoming aware of the changes or amendments, the Financial Supervision Authority may amend the conditions specified in subsection (3) of this section or establish the conditions unless it has been made earlier. Cross-border mediation of third country intermediary in Estonia (1) A third country intermediary, who wishes to engage in cross-border mediation in Estonia, is required to apply for a corresponding authorisation (hereinafter in this Division authorisation for cross-border mediation) from the Financial Supervision Authority. Upon application for authorisation for cross-border mediation, the intermediary shall submit a written application and the following information and documents to the Financial Supervision Authority: 1) the business name and address of the intermediary; 2) the audited annual reports of the intermediary for the past two financial years; 3) a list of the types of insurance contracts which the intermediary plans to mediate in Estonia; 4) a liability insurance contract which meets the requirements provided for in § 134 of this Act and which is effective in Estonia or a guarantee contract of an insurance undertaking or a credit or financial institution. (2) In addition to the information specified in subsection (1) of this section, a third country intermediary shall submit to the Financial Supervision Authority the consent of the financial supervision authority of the home state for the engagement of the intermediary in cross-border activities in Estonia, and also a confirmation regarding the fact that the intermediary has the right to engage in mediation activities in its home country. (3) If the intermediary, upon application for authorisation for cross-border mediation, has failed to submit all the information and documents specified in clauses (1) 1)-4) and subsection (2) of this section or the information and documents do not conform to the requirements provided for in this Act or legislation established on the basis thereof, the Financial Supervision Authority shall demand elimination of the deficiencies by the applicant providing an additional term therefor. (4) The Financial Supervision Authority may refuse to grant authorisation for cross-border mediation if: 1) the information and documents submitted upon application for authorisation for cross-border mediation do not conform to the requirements provided for in this Act or legislation established on the basis thereof and the applicant has failed to eliminate the deficiencies within an additional term provided by the Financial Supervision Authority; 2) the information or documents submitted upon application for authorisation for cross-border mediation are incorrect, misleading or incomplete; 3) the financial situation, organisational structure and other resources of the intermediary are insufficient to meet the requirements applicable in Estonia with regard to mediation; 4) the activities of the intermediary in Estonia may damage the interests of policyholders, insured persons or beneficiaries; 5) the liability insurance contract of the intermediary or a guarantee contract of an insurance undertaking or a credit or financial institution does not comply with the requirements provided for in § 134 of this Act or is not effective in Estonia; 6) the financial supervision authority of a third country has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority, and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the intermediary. (5) A decision to grant or refuse to grant an authorisation for cross-border mediation shall be made by the Financial Supervision Authority within two months after receipt of all necessary and conforming information and documents and compliance with requirements, but not later than within three months after the submission of an application for authorisation for cross-border mediation. (6) The Financial Supervision Authority shall promptly deliver a decision to grant or refuse to grant an authorisation for cross-border mediation to the intermediary. (7) The Financial Supervision Authority shall enter the business name and the address of the location of a third country intermediary in the home state in the list of intermediaries. (8) An intermediary is required to promptly notify the Financial Supervision Authority of any changes to the information specified in clauses (1) 1), 3) and 4) and subsection (2) of this section. (9) The Financial Supervision Authority may revoke an authorisation for cross-border mediation and delete an intermediary from the list of intermediaries if: 1) the intermediary has submitted false information upon application for the authorisation for cross-border mediation, which was of material importance in the decision to grant the authorisation; 2) the intermediary has failed to notify the Financial Supervision Authority of the change to the information; 3) the intermediary has failed to implement a precept of the Financial Supervision Authority concerning the cross-border mediation by the prescribed due date or to the extent prescribed; 4) the intermediary has repeatedly or significantly violated the provisions of legislation regulating its activities; 5) the intermediary does not meet the requirements for the granting of authorisations for cross-border mediation. (10) The Financial Supervision Authority shall promptly deliver a decision to revoke an authorisation for cross-border mediation and to delete an intermediary from the list of intermediaries to the intermediary and the financial supervision authority of the third country. (11) After becoming aware of revocation of an authorisation for cross-border mediation and deletion of an intermediary from the list of intermediaries, the intermediary shall terminate mediation business in Estonia not later than by the due date specified by the Financial Supervision Authority. (12) The Financial Supervision Authority may refuse to revoke the authorisation for cross-border mediation at the request of the intermediary if the policyholders, insured persons or beneficiaries have claims against the intermediary or if the revocation of the authorisation for cross-border mediation would damage the interests of the policyholders, insured persons or beneficiaries. (13) A third country intermediary shall submit all the information and documents specified in this section which are in a foreign language together with translations into Estonian made by a sworn translator or certified by a notary. [Repealed - RT I 2007, 68, 421 - entry into force 01.01.2008] Chapter 11 SUPERVISION OVER INSURANCE ACTIVITIES AND MEDIATION Division 1 General Supervision Bases for supervision over insurance activities and mediation (1) The Financial Supervision Authority exercises supervision over the compliance of the activities of persons engaging in insurance activities and mediation in Estonia and persons with a qualifying holding in an insurance undertaking and third parties from whom the operations related to insurance activities are outsourced pursuant to § 65 of this Act, with this Act and other legislation regulating their activities. (2) The purpose of supervision is to ensure that the foundation, activities and dissolution of insurance undertakings and intermediaries comply with Acts and other legislation, with particular attention to protection of the interests and rights of the policyholders, insured persons and beneficiaries. (3) The Financial Supervision Authority exercises supervision over branches of Estonian insurance undertakings or intermediaries founded in a Contracting State or over cross-border insurance activities or mediation. (4) The Financial Supervision Authority exercises supervision over a branch founded in a third country or cross-border insurance activities or mediation of an Estonian insurance undertaking or intermediary unless the financial supervision authority of the corresponding third country and the Financial Supervision Authority have agreed otherwise. [RT I 2010, 7, 30 - entry into force 26.02.2010] (5) The financial supervision authority of a Contracting State exercises supervision over branches of Contracting State insurance undertakings or intermediaries founded in Estonia or over cross-border insurance activities or mediation. (6) The Financial Supervision Authority exercises supervision over a branch founded in Estonia or cross-border insurance activities or mediation of a third country insurance undertaking or intermediary unless the financial supervision authority of the corresponding third country and the Financial Supervision Authority have agreed otherwise. [RT I 2010, 7, 30 - entry into force 26.02.2010] (7) If an insurance undertaking is part of a financial conglomerate within the meaning of § 1101 of the Credit Institutions Act, supplementary supervision over the insurance undertaking as a unit of a financial conglomerate shall be exercised pursuant to the provisions of Chapter 91 of the Credit Institutions Act. Functions of Financial Supervision Authority In the exercise of supervision, the Financial Supervision Authority shall: 1) decide on the grant, amendment and revocation of authorisations provided for in this Act; 2) verify everything relating to the acquisition, increase or reduction of holdings; 3) perform the registrations and approvals provided for in this Act; 4) monitor and assess the strategies, processes and organisation of internal reporting established by an insurance undertaking and intermediary; 5) monitor the conformity of the management system of an insurance undertaking to the requirements provided for in this Act; 6) [Repealed - RT I, 23.12.2013, 4 - entry into force 01.01.2014] 7) verify the compliance of the required solvency margin of an insurance undertaking with the provisions of this Act; 8) verify the compliance of the technical provisions and financial liabilities of an insurance undertaking with the provisions of this Act; [RT I 2007, 4, 20 - entry into force 20.01.2007] 9) verify the compliance of the assets covering technical provisions of an insurance undertaking with the provisions of this Act; 10) verify the existence and sufficiency of means necessary for the provision of assistance which are at the disposal of an insurance undertaking holding an authorisation for assistance insurance; 11) verify the sufficiency of the rules of procedure for the assessment of insured risks and adjustment of losses; 12) verify the compliance of the reinsurance program of an insurance undertaking with the requirements established by this Act and their correspondence to the nature of insured risks; 13) issue, as necessary, mandatory precepts to insurance undertakings and intermediaries; 14) perform other duties arising from Acts or legislation issued on the basis thereof, and duties arising from protection of the interests of policyholders, insured persons and beneficiaries. Rights and obligations of parties to proceedings upon supervisory proceedings regarding insurance undertaking (1) If necessary, the Financial Supervision Authority shall explain the rights and obligations of a participant in proceedings in supervision proceedings to the participant in proceedings. (2) Participants in proceedings have the right to access information concerning themselves which is collected by the Financial Supervision Authority and to copy or make extracts of such information. The Financial Supervision Authority has the right to refuse to submit information if this damages or may damage the legitimate interests of third parties or access to the information hinders achievement of the objectives of supervision or hinders the truth from being ascertained in administrative, misdemeanour or criminal proceedings. (3) In supervisory proceedings, a party to a proceeding has the right to submit written questions to witnesses through the Financial Supervision Authority. The Financial Supervision Authority has the right to refuse to forward questions to witnesses with good reason. Receipt of information (1) In order to exercise supervision, the Financial Supervision Authority has the right to demand information, documents and oral or written explanations without charge concerning facts which are relevant in the exercise of supervision from the following persons: 1) insurance undertakings and managers and employees of insurance undertakings; 2) intermediaries and managers and employees of intermediaries; 3) managers and employees of companies belonging to the same consolidation group as insurance undertakings or intermediaries; 4) shareholders of insurance undertakings or shareholders or unit-holders of intermediaries; 5) liquidators, trustees in bankruptcy or special regime trustees of insurance undertaking or intermediaries; 6) state and local government agencies and chief processors and authorised processors of state databases. (2) In order to exercise supervision, the Financial Supervision Authority has the right to demand the information specified in subsection (1) of this section from third parties only if there is a justified need therefor. (3) For the purposes of supervision activities, the Financial Supervision Authority has the right to: 1) perform the on-site inspection of insurance undertakings and companies belonging to the same consolidation group as the insurance undertakings, intermediaries and companies belonging to the same consolidation group as the intermediaries, or third parties from whom the operations related to insurance activities are outsourced pursuant to § 65 of this Act in order to verify the information communicated to the Financial Supervision Authority and demand submission of the documents and information necessary for the exercise of supervision in the necessary format; 2) receive information from the internal auditors of insurance undertakings and cooperate with them. (4) If necessary, the Financial Supervision Authority may, by its order, require that a person appear at the offices of the Financial Supervision Authority at the time designated by the Financial Supervision Authority in order to provide oral or written explanations concerning facts which are relevant in the exercise of supervision. (5) For the purposes of supervision, the Financial Supervision Authority has the right to receive information relating to an insurance undertaking from a third person without informing the specified insurance undertaking of communication of the information. Upon communication of the information to the Financial Supervision Authority, the third person is required not to inform the insurance undertaking thereof. Bases for refusal to provide information A person obligated to provide explanations may refuse to provide explanations to the Financial Supervision Authority on the bases provided for in §§ 71 or 73 of the Code of Criminal Procedure. Precept The Financial Supervision Authority has the right to issue a precept: 1) if, upon exercise of supervision, violations of this Act or the Acts specified in subsection 2 (1) or clause 6 (1) 7) of the Financial Supervision Authority Act or legislation issued on the basis thereof have been discovered; [RT I 2009, 61, 401 - entry into force 26.12.2009] 2) for the prevention of violations specified in clause 1) of this section; 3) if circumstances emerge which endanger or may endanger the activities of an insurance undertaking or an intermediary or the interests of policyholders, insured persons or beneficiaries or the reliability or transparency of the insurance market as a whole. Rights upon issue of precepts The Financial Supervision Authority has the right, by issuing a precept, to: 1) prohibit certain transactions or activities from being conducted or to establish restrictions on their volume; 2) prohibit, wholly or partially, payments from the profit of an insurance undertaking; 21) to demand the reduction of the performance pay of the members of the management board of the insurance undertaking, suspension of their payment or return of the payments made, if grounds specified in subsection 481 (4) of this Act exist; 3) demand that an insurance undertaking or intermediary operating in a foreign state terminate violation of the requirements of valid legislation; 4) prohibit engagement in insurance activities by a Contracting State insurance undertaking in Estonia or by an Estonian insurance undertaking in a Contracting State; 5) prohibit engagement in mediation by an intermediary of a Contracting State in Estonia or by an Estonian intermediary in a Contracting State; 51) demand changing the management system of an insurance undertaking to ensure compliance with the requirements provided for in this Act; 6) demand amendment of the internal rules, rules of procedure and principles of remuneration of an insurance undertaking; 7) demand that the supervisory board of an insurance undertaking or an intermediary remove a member of the management board; 8) make a proposal to the general meeting of an insurance undertaking or an intermediary for removal of a member of the supervisory board; 9) make a proposal to the general meeting of an insurance undertaking or an intermediary for changing an auditor; 10) demand that an insurance undertaking submit a recovery plan and an extraordinary recovery plan; 101) demand the transfer of the pension contracts insurance portfolio in compliance with the provisions of this Act if an insurance undertaking fails to comply with the requirements established on the basis of subsection 76 (2), subsection 77 (10) or subsection 78 (9) of this Act, an insurance undertaking fails to submit to the Financial Supervision Authority the reports as required or fails to comply with other requirements established by legislation regarding pension contracts and entry into these; 11) make other demands for the implementation of legislation regulating the activities of insurance undertakings or intermediaries. Calling meeting of managing bodies (1) In order to protect the interests of policyholders, insured persons and beneficiaries, the Financial Supervision Authority has the right to issue a precept to an insurance undertaking or an intermediary to: 1) call a meeting of the supervisory board or management board of the insurance undertaking or intermediary or to call the general meeting of the insurance undertaking or intermediary; 2) include an issue on the agenda of a meeting of the supervisory board or management board or the general meeting of the insurance undertaking or intermediary if this is necessary in the opinion of the Financial Supervision Authority. (2) An insurance undertaking shall notify the Financial Supervision Authority of a general meeting which is known to take place at least two weeks in advance. Notice of an extraordinary general meeting shall be given at least one week in advance, if possible. (3) On the basis of its precept, the Financial Supervision Authority has the right to send a representative of the Financial Supervision Authority to the meetings specified in subsections (1) and (2) of this section. The precept shall be communicated not later than on the working day before the date of the meeting. At the meeting, the representative of the Financial Supervision Authority has the right to present positions, make proposals and demand the recording thereof in the minutes of the meeting. On-site inspection (1) In order to exercise supervision, the Financial Supervision Authority has the right to perform the on-site inspection of insurance undertakings and companies belonging to the same consolidation group as the insurance undertakings, intermediaries and companies belonging to the same consolidation group as the intermediaries, and third parties from whom the operations related to insurance activities are outsourced pursuant to § 65 of this Act. (2) In order to carry out an on-site inspection, the Financial Supervision Authority shall issue an order which sets out the purpose, extent, duration of the period and time of the inspection. The order shall be delivered to the person being inspected at least three working days before the on-site inspection is commenced, unless giving such notice damages attainment of the objectives of the inspection. An on-site inspection shall be carried out by an employee authorised by the Financial Supervision Authority, unless otherwise prescribed in this Act. (3) During on-site inspection, the person carrying out the inspection has the right to: 1) enter all premises, in compliance with all security requirements in force with regard to the person being inspected; 2) request existence of necessary working conditions and use a separate room necessary for their work; 3) study documents and media necessary for exercising supervision, make copies, extracts and transcripts thereof and monitor the work processes without restrictions; 4) obtain oral and written explanations from the managers and employees of the person being inspected. Minutes shall be taken of the explanations when necessary or at the request of the person providing the explanations. (4) The management board of a person being inspected is required to appoint a competent representative who shall provide the inspector with documents and other information necessary for the performance of his or her duties and shall provide the necessary explanations with regard to such documents and information. (5) If on-site inspection is performed in connection with an application of the financial supervision authority of a Contracting State to verify the information received from a Contracting State insurance undertaking or a company belonging to the same consolidation group as the insurance undertaking, the Financial Supervision Authority may authorise the financial supervision authority of the Contracting State or an auditor or expert appointed thereby to perform the on-site inspection. Report concerning on-site inspection (1) An inspector is required to prepare a report concerning the results of an on-site inspection within two months after completion of the inspection and the Financial Supervision Authority shall promptly deliver the report to the person being inspected. (2) Upon delivery of the report, the Financial Supervision Authority shall grant the manager or an employee of the person being inspected the possibility to submit written explanations within not less than fourteen days. (3) After reviewing the written explanations of the person being inspected, but not later than within four months after the on-site inspection is completed, the Financial Supervision Authority shall prepare a final report which is delivered to the person being inspected. (4) In the event of disagreement with the facts indicated in a report, the person being inspected has the right to append a written dissenting opinion to the report. (5) If, after the on-site inspection or the written explanations of the person being inspected, additional circumstances become evident or the Financial Supervision Authority obtains additional information, the term for preparation of the report of the Financial Supervision Authority or a final report specified in subsection (3) of this section may be extended by up to two months, and the new term for preparation of the report or the final report shall be communicated to the person being inspected and the reason for extension of the initial term shall be indicated. Assessment and special audit in supervisory proceedings (1) The Financial Supervision Authority may involve experts in proceedings in the cases where expertise is required to ascertain facts which are relevant to the matter. (2) The Financial Supervision Authority has the right to demand the conduct of a special audit if: 1) there is reasonable doubt that the reports or information submitted to the Financial Supervision Authority or the public are misleading or inaccurate; 2) transactions have been concluded which may result or have resulted in significant damage to an insurance undertaking, a company belonging to the same consolidation group as the insurance undertaking, an intermediary, a company belonging to the same consolidation group as the intermediary or their clients, policyholders, insured persons or beneficiaries; 3) other issues relevant to the financial situation of an insurance undertaking or a company belonging to the same consolidation group as the insurance undertaking, an intermediary or a company belonging to the same consolidation group as the intermediary, or a third person from whom the operations related to insurance activities are outsourced pursuant to § 65 of this Act need additional clarification in the supervisory proceedings. (3) The Financial Supervision Authority shall involve an expert or, for a special audit, an auditor on its own initiative or at the request of a participant in the proceeding. The name of the expert or auditor and the reasons for involvement of the expert or auditor shall be communicated to a participant in the proceeding before involvement of the expert or auditor, unless it is necessary to conduct expedited proceedings in the matter or communication of the information may impede attainment of the objectives of the assessment or special audit. (4) If an expert or an auditor who performs a special audit ascertains facts relevant in the supervision proceedings which have not been referred to the expert or auditor, the expert or auditor shall also provide his or her opinion or assessment with regard to the facts. (5) An expert or an auditor who performs a special audit has the right to exercise the rights provided for in subsection 175 (3) of this Act in order to perform the tasks assigned to the expert or auditor and make proposals to the Financial Supervision Authority and participants in proceedings for the submission of additional information and documents. The expert or auditor who performs the special audit may exercise the right provided for in clause 175 (3) 1) of this Act only with the permission or in the presence of the person being inspected. The expert is required to maintain the confidentiality of any confidential information which becomes known to him or her in connection with performance of the duties of an expert. (6) Costs related to the conduct of an assessment or a special audit shall be covered from the budget of the Financial Supervision Authority. If an expert or auditor is involved at the request of a participant in the proceeding, costs related to the conduct of an assessment or a special audit shall be covered by the participant in the proceeding. Requirement to notify Financial Supervision Authority (1) An insurance undertaking is required to immediately inform the Financial Supervision Authority of changes in the following information and circumstances: 1) upon amendment of the articles of association, including the business name and address of the seat of the insurance undertaking, amendments to the articles of association and the amended text; 2) upon changes in the details of the insurance undertaking, the new details; 3) [Repealed – RT I, 24.03.2011, 1 - entry into force 03.04.2011] 4) upon amendment of the standard terms of pension contracts, the amended standard terms; [RT I 2008, 48, 269 - entry into force 14.11.2008] 5) upon amendments concerning pension contracts belonging to technical business plan for annuity payments, the amended technical business plan; [RT I 2008, 48, 269 - entry into force 14.11.2008] 6) circumstances which affect or may materially affect the financial situation of the insurance undertaking. (2) At the request of the Financial Supervision Authority, an insurance undertaking shall immediately disclose the information specified in clauses (1) 1) and 2) of this section. (3) An insurance undertaking is required to inform the Financial Supervision Authority promptly of amendments of its internal rules and establishment of new internal rules. Supervision over activities of Estonian insurance undertakings and intermediaries in foreign states (1) If an Estonian insurance undertaking or intermediary who engages in cross-border insurance activities or mediation in a foreign state or whose branch is founded in a foreign state violates the requirements of legislation established in the foreign state, the Financial Supervision Authority shall promptly apply measures for termination of the violation on the proposal of the financial supervision authority of the corresponding foreign state. The Financial Supervision Authority shall inform the appropriate foreign financial supervision authority of the taken measures. [RT I 2010, 7, 30 - entry into force 26.02.2010] (2) In the course of exercise of supervision, the Financial Supervision Authority may perform the on-site inspection provided for in § 175 of this Act regarding a branch of an insurance undertaking or intermediary located in a foreign state, and shall inform the financial supervision authority of the Contracting State thereof beforehand. The financial supervision authority of the Contracting State has the right to participate in the on-site inspection of the branch. (3) The Financial Supervision Authority shall promptly inform the financial supervision authority of the Contracting State where an insurance undertaking has founded a branch or where an insurance undertaking engages in cross-border insurance activities of revocation of the authorisation and of precepts specified in §§ 37 and 40 of this Act, and shall at the same time apply all measures to protect the interests of policyholders, insured persons and beneficiaries. Supervision over activities of foreign insurance undertakings and intermediaries in Estonia (1) A foreign insurance undertaking whose authorisation has been suspended or revoked by the foreign financial supervision authority shall not engage in insurance activities in Estonia and a foreign intermediary who has been deleted from the register of intermediaries shall not engage in mediation in Estonia. (2) The Financial Supervision Authority may demand that Contracting State insurance undertaking or intermediary specified in subsection (4) of this section which engages in insurance activities or mediation, respectively, in Estonia submit information and documents which an insurance undertaking which has received an authorisation or an intermediary entered in the list in Estonia are also obliged to submit and which are necessary for the exercise of supervision over the insurance undertaking or intermediary. (3) If a third country insurance undertaking or intermediary which engages in insurance activities or mediation in Estonia violates the requirements provided for in this Act or other legislation, the Financial Supervision Authority may implement necessary measures for the termination of the violation or revoke an authorisation for the foundation of a branch or an authorisation for cross-border insurance activities or cross-border mediation. [RT I 2010, 7, 30 - entry into force 26.02.2010] (4) The Financial Supervision Authority may demand that Contracting State insurance undertaking or intermediary which engages in insurance activities or mediation, respectively, in Estonia terminate violation of the requirements provided for in Acts or legislation established on the basis thereof. (5) If a Contracting State insurance undertaking or intermediary specified in subsection (4) of this section continues to violate the requirements provided for in legislation, the Financial Supervision Authority shall inform the financial supervision authority of the Contracting State thereof. (6) If the measures taken by a financial supervision authority of a Contracting State are insufficient and the Contracting State insurance undertaking or intermediary continues to violate the requirements provided for in legislation, the Financial Supervision Authority may, by its precept, introduce measures provided for in this Act for the termination of the violation or prohibit the Contracting State insurance undertaking or intermediary to engage in insurance activities or mediation, respectively, in Estonia and shall inform the financial supervision authority of the Contracting State thereof beforehand. (7) The Financial Supervision Authority shall inform the Contracting State insurance undertaking or intermediary of the measures taken. (8) The Financial Supervision Authority shall promptly inform the European Commission of the measures taken on the basis of subsection (6) of this section. (9) If the financial supervision authority of a Contracting State performs an on-site inspection of a branch of an insurance undertaking or intermediary located in Estonia, the Financial Supervision Authority has the right to participate in the specified inspection. (10) A branch of a foreign insurance undertaking or intermediary located in Estonia and a foreign insurance undertaking or intermediary which engages in cross-border insurance activities or mediation, respectively, in Estonia shall submit the information and documents required by the Financial Supervision Authority together with translations into Estonian made by a sworn translator or certified by a notary. Upper limit for penalty payment for each imposition thereof (1) In the event of failure to comply or inappropriate compliance with a precept issued pursuant to this Act or another administrative act, the Financial Supervision Authority has the right to impose a penalty payment pursuant to the procedure provided for in the Substitutive Enforcement and Penalty Payment Act. (2) In the event of failure to comply or inappropriate compliance with an administrative act, the upper limit for a penalty payment is, in the case of a natural person, up to 1200 euros for the first occasion and altogether up to 4800 euros for each subsequent occasion to enforce the performance of the same obligation and, in the case of a legal person, up to 3200 euros for the first occasion and altogether up to 48,000 euros for each subsequent occasion to enforce the performance of the same obligation. [RT I 2010, 22, 108 - entry into force 01.01.2011] Division 2 Supplementary Supervision over Consolidation Group Persons subject to supplementary supervision of insurance activities (1) The Financial Supervision Authority shall exercise the supplementary supervision over the insurance activities provided for in this Division (hereinafter in this Division supplementary supervision) of an Estonian insurance undertaking: 1) which is a participating undertaking in at least one insurance undertaking; [RT I 2007, 68, 421 - entry into force 01.01.2008] 2) the parent undertaking of which is an insurance undertaking, mixed financial holding company or third country insurance undertaking; 3) the parent undertaking of which is a mixed-activity insurance holding company. (2) The following are subject to supplementary supervision: 1) related undertakings of an insurance undertaking; 2) participating undertakings in an insurance undertaking; 3) subsidiaries of a participating undertakings in an insurance undertaking. (3) The Financial Supervision Authority is not required to exercise supplementary supervision over an undertaking provided for in subsection (2) of this section if: 1) the undertaking is of insignificant importance in respect of the insurance undertaking subject to supplementary supervision, 2) inclusion of the financial situation of the undertaking would be inappropriate or misleading in respect of the insurance undertaking subject to supplementary supervision or 3) the undertaking is registered in a third country where, in the opinion of the Financial Supervision Authority, legal impediments to the transfer of the necessary information exist according to the legislation of the third country. (4) Members of the supervisory board and management board of an insurance holding company are deemed to be managers of the insurance holding company and the provisions of §§ 48-51 of this Act concerning managers of insurance undertakings apply to them. (5) If the provisions concerning supplementary supervision exercised over a financial conglomerate, which are provided for in Chapter 91 of the Credit Institutions Act, are applied to a mixed financial holding company in addition to the provisions of this Division, the Financial Supervision Authority may, after consulting the other financial supervision authorities involved, adopt a resolution that only the provisions concerning supplementary supervision shall be applied with regard to the mixed financial holding company. (6) If the provisions concerning consolidated supervision, which are provided for in §§ 96 and 97 of the Credit Institutions Act, are applied to a mixed financial holding company in addition to the provisions of this Division and the average of the ratios calculated pursuant to subsection 1103 (3) of the Credit Institutions Act in case of the banking and investment services sector is larger than in case of the insurance sector, the Financial Supervision Authority may adopt a resolution that only the provisions concerning consolidated supervision, which are provided for in §§ 96 and 97 of the Credit Institutions Act, shall be applied with regard to the mixed financial holding company, and if the corresponding indicator of the insurance sector is larger than that of the banking and investment services sector, the Financial Supervision Authority may adopt a resolution that only the provisions concerning supplementary supervision over consolidation group provided for in this Division shall be applied with regard to the mixed financial holding company. (7) The Financial Supervision Authority shall notify of the resolutions specified in subsections (5) and (6) of this section the European Banking Authority and the European Insurance and Occupational Pensions Authority. (8) If an insurance undertaking is part of a financial conglomerate for the purposes of § 1101 of the Credit Institutions Act, the provisions of Chapter 91 of the Credit Institutions Act shall apply thereto. Activities of supplementary supervision (1) The activities of supplementary supervision are: 1) the disclosure and verification of information provided for in § 184 of this Act; 2) supervision over intra-group transactions provided for in § 185 of this Act; 3) supervision over the adjusted solvency margin provided for in § 70 of this Act and the amount of assets included in adjusted solvency margin provided for in § 71 of this Act. (2) Activities of supplementary supervision specified in subsection (1) of this section apply to insurance undertakings specified in clauses 182 (1) 1) and 2) of this Act. (3) Activities of supplementary supervision specified in clauses (1) 1) and 2) of this section apply to insurance undertakings specified in clause 182 (1) 3) of this Act. Information necessary for exercise of supplementary supervision (1) In order to exercise supplementary supervision over an insurance undertaking specified in subsection 182 (1) of this Act (hereinafter insurance undertaking subject to supplementary supervision), the Financial Supervision Authority has the right to demand, free of charge, information, documents together with all amendments, alterations and annexes, and oral or written explanations concerning facts which are relevant in the exercise of supplementary supervision. (2) If an insurance undertaking subject to supplementary supervision fails to communicate to the Financial Supervision Authority the information and documents specified in subsection (1) of this section, the Financial Supervision Authority has the right to ask the necessary information from an undertaking specified in subsection 182 (2) of this Act. (3) In order to receive the information, documents or explanations specified in subsection (1) of this section, the Financial Supervision Authority has the right to perform an on-site inspection of an insurance undertaking subject to supplementary supervision and its subsidiaries, parent undertaking and other subsidiaries of the parent undertaking. (4) If the Financial Supervision Authority wishes to specify or verify the information, documents or explanations specified in subsection (1) of this section and relevant for the purpose of supplementary supervision, which concern a related insurance undertaking, subsidiary, parent undertaking or another subsidiary of the parent undertaking of an insurance undertaking subject to supplementary supervision and the related insurance undertaking, subsidiary, parent undertaking or the other subsidiary of the parent undertaking is located in a Contracting State, the Financial Supervision Authority shall submit the corresponding application to the financial supervision authority of the corresponding Contracting State. (5) If a financial supervision authority of a Contracting State addresses the Financial Supervision Authority to specify or verify relevant information, documents or explanations which concern a related insurance undertaking, subsidiary, parent undertaking or another subsidiary of the parent undertaking of an insurance undertaking subject to supplementary supervision and the related insurance undertaking, subsidiary, parent undertaking or the other subsidiary of the parent undertaking is located in Estonia, the Financial Supervision Authority shall take the necessary measures to satisfy the application, allow the financial supervision authority of the Contracting State which submitted the application to carry it out itself or authorise an auditor or expert therefor. (6) A financial supervision authority of a Contracting State which submits an application specified in subsection (5) of this section may participate in the proceedings conducted to specify or verify the information, documents or explanations necessary for the authority if the proceedings are conducted by the Financial Supervision Authority or an auditor or expert authorised thereby. Intra-group transactions The Financial Supervision Authority shall exercise general supervision provided for in Division 1 of this Chapter over transactions between an insurance undertaking subject to supplementary supervision and: 1) a related undertaking of the insurance undertaking; 2) a participating undertaking in the insurance undertaking; 3) a related undertaking of a participating undertaking in the insurance undertaking; 4) a natural person who holds a participation in the insurance undertaking or any of its related undertakings; 5) a natural person who holds a participation in a participating undertaking in the insurance undertaking; 6) a natural person who holds a participation in a related undertaking of a participating undertaking in the insurance undertaking. Cooperation with financial supervision authority of Contracting State (1) If an insurance undertaking of Estonia and a Contracting State insurance undertaking have a common parent undertaking which is an insurance holding company, mixed financial holding company, third country insurance undertaking or mixed-activity insurance holding company, the Financial Supervision Authority shall agree with the financial supervision authority of the corresponding Contracting State on the person who exercises supplementary supervision over the insurance undertaking. (2) If an Estonian insurance undertaking is directly or indirectly related to a Contracting State insurance undertaking or they have a common participating undertaking, the Financial Supervision Authority shall communicate, at the request of the financial supervision authority of the corresponding Contracting State, the necessary information which allows or facilitates the exercise of supplementary supervision. The Financial Supervision Authority shall also communicate to the financial supervision authority of the corresponding Contracting State on its own initiative all other information which the financial supervision authority of the Contracting State, in the opinion of the Financial Supervision Authority, needs for the exercise of supplementary supervision. Division 3 Supervision over Financial Conglomerates [Repealed - RT I, 12.07.2013, 2 - entry into force 22.07.2013] [Repealed - RT I, 12.07.2013, 2 - entry into force 22.07.2013] Chapter 12 LIABILITY Violation of requirements for available solvency margin Failure by an insurance undertaking to comply with the requirement for the available solvency margin provided for in this Act, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Failure to submit information (1) Failure to publish by the due date or to submit to the Financial Supervision Authority mandatory reports, documents, explanations or information, or submission or publication of false or misleading information, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Failure to submit information to persons wishing to enter into insurance contracts (1) Failure to submit to the policyholder the mandatory information prior to entry into an insurance contract, which constitutes a prerequisite for the entry into the contract, or submission or publication of false or misleading information, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Failure to submit information to policyholders (1) Failure to submit the mandatory information concerning the insurance contract, or submission or publication of false or misleading information, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Failure to assess suitability of unit-linked life insurance contracts (1) Failure to perform the obligation provided for in § 143, clause 141 (1) 41) or clause 148 (1) 32) of this Act by an insurance undertaking, intermediary or the director or an employee of a branch of a foreign insurance undertaking or other person acting in their interests, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros Violation of procedure for acquisition of qualifying holding in insurance undertaking (1) Acquisition or transfer of a qualifying holding in an insurance undertaking or turning an insurance undertaking into a controlled company without giving prior notification to the Financial Supervision Authority according to this Act or in violation of the precept specified in subsection 62 (3) of this Act, and exercise of the right to vote or other rights enabling control in the insurance undertaking in violation of the precept of the Financial Supervision Authority, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of obligations by manager of insurance undertaking or intermediary Violation of the obligations provided for in this Act by the manager of an insurance undertaking or intermediary, which brings about failure to ensure sufficient protection of the interests of the policyholders, insured persons or beneficiaries or such danger, is punishable by a fine of up to 300 fine units. Violation of requirements established regarding activities of foreign insurance undertakings Engagement in insurance activities in Estonia by a Contracting State insurance undertaking without giving notification to the Financial Supervision Authority or violation of the requirements for the activities of foreign insurance undertakings established in this Act, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of requirements set for engagement in classes of insurance activities Violation of the requirements established in § 141 of this Act by an insurance undertaking is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of restriction on use of intermediaries Disregarding a requirement provided for in subsection 131 (2) of this Act by an insurance undertaking is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of obligation to submit information (1) Failure to submit information to a client by an intermediary according to this Act is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of requirements established regarding activities of foreign intermediaries (1) Engagement in intermediation in Estonia by a Contracting State intermediary without giving notification to the Financial Supervision Authority or violation of the requirements for the activities of foreign intermediaries established in this Act, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 3200 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of confidentiality requirement (1) Violation of the confidentiality requirement provided for in this Act by the manager or an employee of an insurance undertaking or intermediary or other person acting in their interests is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. [RT I 2010, 22, 108 - entry into force 01.01.2011] Violation of prohibition on interconnection between insurance contract and mandatory funded pension (1) Failure to comply with the requirements established in subsection 14 (51), subsection 25 (21) and the second subsection 37 (2) of the Funded Pensions Act concerning the terms and conditions of the insurance contract and the entry into and amendment of the contract by the manager or an employee of an insurance undertaking or intermediary or other person acting in their interests, is punishable by a fine of up to 300 fine units. (2) The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros. Proceedings (1) The provisions of the General Part of the Penal Code apply to the misdemeanours provided for in §§ 199-2071 of this Act. (2) Extra-judicial proceedings concerning the misdemeanours provided for in this Act shall be conducted by the Financial Supervision Authority. Chapter 13 AMENDMENT OF INVESTMENT FUNDS ACT [Omitted from this text.] Chapter 14 AMENDMENTS TO OTHER ACTS [Omitted from this text.] Chapter 15 IMPLEMENTATION AND ENTRY INTO FORCE OF ACT Validity of authorisations (1) An authorisation for supplementary insurance granted to an insurance undertaking who deals in life insurance before the entry into force of this Act is after the entry into force of this Act, arising from subsection 17 (6) of this Act, deemed to be an authorisation granted pursuant to clauses 12 1) and 2) of this Act. (2) An authorisation for pension insurance granted to an insurance undertaking who deals in life insurance before the entry into force of this Act is after the entry into force of this Act deemed to be an authorisation granted pursuant to clause 13 (1) 4) of this Act. (3) A management company which holds a valid authorisation and has the right to provide services specified in clause 13 (1) 1) of the Investment Funds Act and provides a service of safekeeping of units of shares of a fund for a client within the meaning of clause 44 1) of the Securities Market Act at the time this Act enters into force are required to notify the Financial Supervision Authority thereof not later than within two months as of the entry into force of this Act. (4) If a management company has failed to submit a relevant notice to the Financial Supervision Authority within a term provided for in subsection (3) of this section, the management company is deemed not to have the right to provide the service specified in clause 9 (2) 3) of the Investment Funds Act. Bringing of activities of insurance undertakings into compliance (1) Insurance undertakings which hold a valid authorisation at the time this Act enters into force shall bring their activities and documents into compliance with the provisions of this Act within six months as of the entry into force of this Act. (2) Until bringing into compliance with this Act, the activities and documents of insurance undertakings shall comply with the Insurance Activities Act in force until the entry into force of this Act. (21) The insurance undertakings shall follow in the entry into insurance contracts the provisions of § 141 of this Act as of 1 January 2008. [RT I 2007, 68, 421 - entry into force 01.01.2008] (3) Until 1 January 2010, a responsible actuary of an insurance undertaking must have at least completed an academic higher education, have sufficient actuary knowledge and qualifications and three years’ experience of employment as an actuary in an insurance undertaking of Estonia or a Contracting State insurance undertaking. [RT I 2007, 4, 20 - entry into force 20.01.2007] (4) The share capital of insurance undertakings which hold a valid authorisation at the time this Act enters into force shall comply with the provisions of § 56 of this Act and the minimum solvency margin shall comply with the provisions of § 71 of this Act not later than by 1 January 2007. [RT I 2007, 4, 20 - entry into force 20.01.2007] (5) Until the due date specified in subsection (4) of this section, the share capital and minimum solvency margin of insurance undertakings which hold a valid authorisation at the time this Act enters into force shall comply with the Insurance Activities Act in force until the entry into force of this Act. (6) An actuary which is involved in the audit of an insurance undertaking by the auditor of the insurance undertaking shall meet the requirements provided for in subsection 86 (5) of this Act not later than as of 1 January 2007. (7) Pursuant to this Act and legislation issued on the basis thereof, reports shall be prepared for accounting periods beginning on 1 January 2005 and later. (8) Reports for accounting periods beginning before the date specified in subsection (7) of this section shall be prepared pursuant to the Insurance Activities Act and legislation issued on the basis thereof which were in force until the entry into force of this Act. (9) Pursuant to this Act and legislation issued on the basis thereof, the required solvency margin of insurance undertakings shall be calculated for accounting periods beginning on 1 January 2005 and later. (10) The required solvency margin of insurance undertakings for accounting periods beginning before the date specified in subsection (9) of this section shall be calculated pursuant to the Insurance Activities Act and legislation issued on the basis thereof which were in force until the entry into force of this Act. (11) [Repealed - RT I 2009, 37, 250 - entry into force 10.07.2009] (111) The maximum interest rate used in the calculation of technical provisions and financial liabilities of insurance contracts conforming to this Act and the legislation issued on the basis thereof, except for pension contracts, shall be applied with regard to life insurance contracts which were entered into after 1 January 2005. [RT I 2010, 7, 30 - entry into force 26.02.2010] (12) The provisions of subsection 20 (4) of this Act do not apply to insurance undertakings which have obtained an authorisation prior to 2009 and such insurance undertakings are required to submit to the Financial Supervision Authority a report on the implementation of the scheme of operations together with the annual report only during the first three years of operation. [RT I 2008, 48, 269 - entry into force 14.11.2008] (13) Insurance undertakings which have obtained an authorisation prior to 2009 are required to bring their the internal rules into compliance with the provisions of § 84 of this Act by 1 April 2009. [RT I 2008, 48, 269 - entry into force 14.11.2008] (14) Insurance undertakings are required to bring their activities and documents into compliance with the requirements provided for in §§ 143 and 481, subsection 53 (8), clause 84 (2) 5) and subsection 84 (3) of the version of this Act passed on 23 February 2011 at the latest by 30 June 2011. Until bringing into compliance with the aforementioned version, the activities and documents of the insurance undertakings shall comply with regard to the aforementioned requirements with the legislation in force until the entry into force of the specified version. (15) The provisions of subsection 141 (1) of this Act do not apply to life insurance, accidents insurance and sickness insurance contracts entered into prior to 21 December 2012 on the prerequisite that the differences between the insurance premiums and insurance indemnities of persons of different gender are proportionate to the magnitude of the effect of the gender factor taken into account in the assessment of the insured risk. (16) Insurance undertakings are required to bring their activities and documents into compliance with the requirements concerning the management system and outsourcing of the operations related to insurance activities set out in the version of this Act passed on 5 December 2013 at the latest by 1 April 2014 and with the requirement set out in the second sentence of subsection 476 (2) no later than by 1 January 2015. Bringing of activities of intermediaries into compliance (1) Intermediaries who operate at the time this Act enters into force shall bring their activities into compliance with the provisions of this Act by 15 January 2005. (2) Until bringing into compliance with this Act, the activities of intermediaries shall comply with the Insurance Activities Act in force until the entry into force of this Act. (3) Insurance brokers entered in the list by the date of the entry into force of this Act shall, not later than by 15 January 2005, submit to the Financial Supervision Authority a copy of the valid liability insurance contract which meets the requirements provided for in § 134 of this Act or of a guarantee contract of an insurance undertaking or a credit or financial institution. (4) Until the due date specified in subsection (3) of this section, the liability insurance contracts of insurance brokers entered in the list by the date of the entry into force of this Act shall comply with the Insurance Activities Act in force until the entry into force of this Act. (5) Insurance brokers entered in the list prior to the entry into force of the version of the Insurance Activities Act passed on 10 June 2009 shall, not later than by 1 July 2009, submit to the Financial Supervision Authority a copy of the valid liability insurance contract which meets the requirements provided for in § 134 of this Act or of a guarantee contract of an insurance undertaking or a credit or financial institution. [RT I 2009, 37, 250 - entry into force 10.07.2009] (6) Until the due date specified in subsection (5) of this section, the sum insured of the liability insurance contract of an insurance broker entered in the list or the chargeable amount of a guarantee contract of an insurance undertaking or a credit or financial institution shall be at least one million euros for one insured or guarantee event and 1.5 million euros per year for all the submitted claims. [RT I 2009, 37, 250 - entry into force 10.07.2009] (7) Intermediaries are required to bring their activities and documents into compliance with the requirements provided for in clause 141 (1) 41) and clause 148 (1) 32) of the version of this Act passed on 23 February 2011 at the latest by 30 June 2011. Bringing of list of intermediaries into compliance (1) Insurance undertakings are required to enter into a contract specified in subsection 131 (4) of this Act with the Financial Supervision Authority and enter the insurance agents who meet with the requirements of this Act in the list by 15 January 2005. (2) Subsection 143 (1) of this Act does not apply to insurance brokers entered in the list by the time of the entry into force of this Act. (3) The Financial Supervision Authority is required to bring the list of intermediaries into compliance with the requirements of this Act and enter into contracts specified in subsection 131 (4) of this Act with insurance undertakings by 15 January 2005. (4) Until the due date specified in subsection (3) of this section, the list of intermediaries shall comply with the Insurance Activities Act in force until the entry into force of this Act. [Repealed - RT I 2010, 22, 108 - entry into force 01.01.2011] Repeal of Act [Omitted from this text] Entry into force of Act This Act enters into force on 1 January 2005. 1Council Directive 64/225/EEC on the abolition of restrictions on freedom of establishment and freedom to provide services in respect of reinsurance and retrocession (OJ P 056, 04.04.1964, p. 878–883); Council Directive 73/239/EEC on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct insurance other than life assurance (OJ L 228, 16.08.1973, p. 3–19), amended by Directives 76/580/EEC (OJ L 189, 13.07.1976, p. 13–14); 84/641/EEC (OJ L 339, 27.12.1984, p. 21–25); 87/343/EEC (OJ L 185, 4.07.1987, p. 72–76); 87/344/EEC (OJ L 185, 04.07.1987, p. 77–80); 88/357/EEC (OJ L 172, 04.07.1988, p. 1–14); 90/618/EEC (OJ L 330, 29.11.1990, p. 44–49); 92/49/EEC (OJ L 228, 11.08.1992, p. 1–23); 95/26/EC (OJ L 168, 18.07.1995, p. 7–13); 2000/26/EC (OJ L 181, 20.07.2000, p. 65–74); 2002/13/EC (OJ L 77, 20.03.2002, p. 17–22); 2002/87/EC (OJ L 35, 11.02.2003, p. 1–27); Council Directive 73/240/EEC abolishing restrictions on freedom of establishment in the business of direct insurance other than life assurance (OJ L 228, 16.08.1973, p. 20–22); Council Directive 76/580/EEC amending Directive 73/239/EEC on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct insurance other than life assurance (OJ L 189, 13.07.1976, p. 13–14); Council Directive 78/473/EEC on the coordination of laws, regulations and administrative provisions relating to Community co-insurance (OJ L 151, 07.06.1978, p. 25–27); Council Directive 84/641/EEC amending, particularly as regards tourist assistance, the First Directive (73/239/EEC) on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance (OJ L 339, 27.12.1984, p. 21–25); Council Directive 87/343/EEC amending, as regards credit insurance and suretyship insurance, First Directive 73/239/EEC on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance (OJ L 185, 04.07.1987, p. 72–76); Council Directive 87/344/EEC on the coordination of laws, regulations and administrative provisions relating to legal expenses insurance (OJ L 185, 04.07.1987, p. 77–80); Council Directive 88/357/EEC on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC (OJ L 172, 04.07.1988, p. 1-14), amended by Directive 90/618/EEC (OJ L 330, 29.11.1990, p. 44-49); Directive 92/49/EEC (OJ L 228, 11.08.1992, p. 1-23); Council Directive 90/618/EEC amending, particularly as regards motor vehicle liability insurance, Directive 73/239/EEC and Directive 88/357/EEC which concern the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance (OJ L 330, 29.11.1990, p. 44–49); Council Directive 91/371/EEC on the implementation of the Agreement between the European Economic Community and the Swiss Confederation concerning direct insurance other than life assurance (OJ L 205, 27.07.1991, p. 48–48); Council Directive 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings (OJ L 374, 31.12.1991, p. 7–31); Council Directive 92/49/EEC on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive) (OJ L 228, 11.08.1992, p. 1–23), amended by Directive 95/26/EC (OJ L 168, 18.07.1995, p. 7-13); Directive 2000/64/EC (OJ L 290, 17.11.2000, p. 27-28); Directive 2002/87/EC (OJ L 35, 11.02.2003, p. 1-27); Directive 98/78/EC of the European Parliament and of the Council on the supplementary supervision of insurance undertakings in an insurance group (OJ L 330, 05.12.1998, p. 1–12), last amended by Directive 2011/89/EU (OJ L 326, 08.12.2011, p. 113-141); [RT I, 12.07.2013, 2 - entry into force 22.07.2013] Directive 2001/17/EC of the European Parliament and of the Council on the reorganisation and winding-up of insurance undertakings (OJ L 110, 20.04.2001, p. 28–39); Directive 2002/13/EC of the European Parliament and of the Council amending Council Directive 73/239/EEC as regards the available solvency margin requirements for non-life insurance undertakings (OJ L 77, 20.03.2002, p. 17–22); Directive 2002/83/EC of the European Parliament and of the Council concerning life assurance (OJ L 345, 19.12.2002, p. 1-51); Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (OJ L 035 , 11.02.2003 p. 1 –27); Directive 2002/92/EC of the European Parliament and of the Council on insurance mediation (OJ L 009, 15.01.2003, p. 3–10). Directive 2005/14/EC of the European Parliament and of the Council amending Council Directives 72/166/EEC, 84/5/EEC, 88/357/EEC and 90/232/EEC and Directive 2000/26/EC of the European Parliament and of the Council relating to insurance against civil liability in respect of the use of motor vehicles (OJ L 149, 2.10.2009, p. 14-21); [RT I 2007, 55, 368 - entry into force 02.11.2007] Directive 2005/68/EC of the European Parliament and of the Council on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC of the European Parliament and of the Council (OJ L 323, 09.12.2005, p. 1–50); [RT I 2007, 68, 421 - entry into force 01.01.2008] Council Directive 2004/113/EC implementing the principle of equal treatment between men and women in the access to and supply of goods and services (OJ L 373, 21.12.2004, p. 37–43); [RT I 2007, 68, 421 - entry into force 01.01.2008] Directive 2007/44/EC of the European Parliament and of the Council amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (EJ L 247, 21.09.2007, p. 1–16). [RT I 2009, 37, 250 - entry into force 10.07.2009]
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Family Travel Agency d.o.o. (Obiteljska putovanja d.o.o.) Split, registered under number 74/2011 of Real Estate Agencies Registar in the Ministry of Economy of Croatia, at Chamber of Commerce of Croatia. Opci uvjeti poslovanja Sukladno s odredbama Zakona o posredovanju u prometu nekretnina („NN” br.107/07) Agencija za posredovanje u prometu nekretnina Obiteljska putovanja d.o.o., donosi ispod navedene Opce uvjete poslovanja. Opcim uvjetima poslovanja urecuje se poslovni odnos izmecu Agencije za posredovanje u prometu nekretnina Obiteljska putovanja d.o.o. (u daljem tekstu: Agencija) kao posrednika i nalogodavca (fizicke ili pravne osobe). Sklapanjem Ugovora o posredovanju nalogodavac potvrcuje da je upoznat i suglasan s odredbama svih uvjeta poslovanja Agencije. OPCI UVJETI POSLOVNJA Ponude Ponude Agencije temelje se na podacima koje zaprimamo pismenim ili usmenim putem, te su uvjetovane potvrdom. Zadržavamo mogucnost greške ili zabune u opisu i cijeni nekretnine, te mogucnosti da je nekretnina vec prethodno prodana, iznajmljena ili je vlasnik nekretnine odustao od prodaje (ili najma/ zakupa). Naše ponude i obavijesti primatelj (nalogodavac) mora cuvati u povjerenju i samo ih uz naše pismeno odobrenje smije prenijeti trecoj osobi. Ako je primatelju naše ponude neki od objekata koje smo mu ponudili vec poznat, obvezan nas je, bez odgode, o tome obavijestiti. Obveze agencije - sklopiti Ugovor o posredovanju s nalagodavcem u pisanom obliku (standardni ili iskljucivi, tzv. ekskluzivni); - nastojati naci i dovesti u vezu s nalogodavcem osobu radi zakljucivanja posredovanog posla; - upoznati nalogodavca s prosjecnom tržišnom cijenom slicne nekretnine; - upozoriti nalogodavca sa nedostacima nekretnine; - obaviti uvid u isprave kojima se dokazuje vlasništvo ili drugo stvarno pravo na predmetnoj nekretnini i upozoriti nalogodavca na ocite nedostatke i moguce rizike zbog neurecenog zemljišnoknjižnog stanja nekretnine; - upoznati nalogodavca sa svim zakonskim, poreznim i drugim obvezama koje za njega proizlaze iz pravnog posla glede predmetne nekretnine; - obaviti potrebne radnje radi predstavljanja (prezentacije) nekretnine na tržištu, oglasiti nekretninu na odgovarajuci nacin koji odredi Agencija; - omoguciti pregled nekretnina; - cuvati osobne podatke nalogodavca, te po pisanom nalogu nalogodavca kao poslovnu tajnu podatke o nekretnini za koju posreduje ili u vezi s tom nekretninom ili s poslom za koji posreduje; - obavijestiti nalogodavca o svim okolnostima znacajnim za namjeravani posao koje su Agenciji poznate. - posredovati u pregovorima i nastojati da doce do sklapanja pravnog posla kupoprodaje; - nazociti sklapanju pravnog posla (Predugovora i Ugovora); Smatra se da je agencija omogucila nalogodavcu stupanje u vezu s drugom osobom (fizickom ili pravnom) s kojom je pregovarao za sklapanje pravnog posla, a narocito ako je: neposredno odveo ili uputio nalogodavca u razgledavanje predmetne nekretnine; organizirao susret izmecu nalogodavca i druge ugovorne osobe radi pregovaranja za sklapanje pravnog posla; nalogodavcu priopcio ime, broj telefona, emaila, ili telefaksa druge osobe ovlaštene za sklapanje pravnog posla ili mu je priopcio tocnu lokaciju tražene nekretnine. Obveze nalogodavca - sklopiti Ugovor o posredovanju s Agencijom u pisanom obliku (standardni ili iskljucivi tzv; ekskluzivni); - obavijestiti Agenciju o svim okolnostima koje su važne za obavljanje posredovanja i predociti tocne podatke o nekretnini te ako posjeduje dati posredniku na uvid lokacijsku, gracevinsku, odnosno uporabnu dozvolu za nekretninu koja je predmet ugovora te dati na uvid posredniku dokaze o ispunjavanju obveza prema trecoj strani; - dati posredniku na uvid isprave koje dokazuju njegovo vlasništvo na nekretnini, odnosno drugo stvarno pravo na nekretnini koja je predmet ugovora te upozoriti posrednika na sve uknjižene i neuknjižene terete koji postoje na nekretnini; - omoguciti, odnosno osigurati Agenciji i trecoj osobi zainteresiranoj za zakljucivanje posredovanog posla razgledanje nekretnine; - obavijestiti Agenciju o svim bitnim podacima o traženoj nekretnini što posebno ukljucuje opis nekretnine i cijenu; - odmah nakon zakljucivanja posredovanoga pravnog posla, odnosno predugovora kojim se obvezao zakljuciti posredovani pravni posao, isplatiti Agenciji ugovorenu naknadu (proviziju) osim ako nije drukcije ugovoreno; - nadoknaditi Agenciji eventualne troškove ucinjene tijekom posredovanja, koje prelaze uobicajene troškove posredovanja, ako je tako dogovoreno; - obavijestiti Agenciju pismenim putem o svim promjenama vezanim uz posao za koji je ovlastio agenciju, a posebno o promjenama povezanim s vlasništvom na nekretnini; - nalogodavac ce odgovarati za štetu, ako nije pri tom postupio u dobroj vjeri, odnosno ako je postupio prijevarno, te ako je zatajio ili dao netocne podatke bitne za posao posredovanja u cilju okoncanja pravnog posla, te je dužan naknaditi Agenciji sve troškove ucinjene tijekom posredovanja, koji ne mogu biti veci od posrednicke naknade za posredovani posao. Ostvarivanje prava na naknadu Pravni posao se smatra zakljucenim kada su se Nalogodavac i treca osoba sporazumjeli u pogledu predmeta ugovora i cijene, odnosno u trenutku sklapanja ugovora, predugovora i/ili polaganja kapare za posredovani pravni posao. Prema ovim uvjetima posredovani pravni posao je i onaj kada Nalogodavac zakljuci ugovor, predugovor i/ili položi kaparu sa trecom osobom, a sa kojom ju je Posrednik doveo u vezu, za nekretnine koje su vlasništvo trece osobe ili clanova njegove obitelji iako nisu izricito navedene na Ugovoru o posredovanju ili Posrednickom listu.U posrednicku naknadu su kumulativno ukljuceni i svi troškovi koje je Posrednik imao prilikom posredovanja te Posrednik naplatom posrednicke naknade gubi pravo na naknadu istih troškova.To se ne odnosi na troškove za poslove nastale kad posrednik u dogovoru s naruciteljem obavlja za njega i druge usluge u vezi s poslom koji je predmet posredovanja a koji ne ulaze u uobicajene aktivnosti posredovanja.Ugovorena posrednicka naknada ne ukljucuje troškove podmirenja sudskih pristojbi za uknjižbu, predbilježbu i zabilježbu, javnobilježnicke nagrade pri ovjeri potpisa na ispravama, podmirenje pristojbi za ishodovanje vlasnickog lista, kopije katastarskog plana, identifikacije, prijenos hipoteke, pristojbe za skidanje hipoteke, potvrde i druge isprave u svezi zakljucenog pravnog posla. Agencija stjece pravo na naknadu u cijelosti u casu zakljucenja posredovanoga posla, odnosno potpisom predugovora ili ugovora kojim se nalogodavac obvezao zakljuciti posredovani pravni posao. Naknada se isplacuje agenciji u trenutku potpisivanja predugovora ili ugovora dviju ugovornih strana . Visina posrednickih provizija za obavljeno posredovanje prilikom kupoprodaje, zamjene, zakupa i iznajmljivanja nekretnina naplacuje se u skladu s Ugovorom o posredovanju. Agencija može ugovoriti pravo na naknadu troškova nužnih za izvršenje naloga i zatražiti da joj se unaprijed akontiraju sredstva za odrecene izdatke za troškove. Nalogodavac je dužan platiti naknadu i kad je s osobom s kojom ju je u vezu dovela Agencija zakljucio pravni posao razlicit od onoga za koji se posredovalo, koji je iste vrijednosti kao i pravni posao odnosno kojim se postiže ista svrha kao i posredovanim pravnim poslom. Agencija ima pravo na naknadu ako bracni, odnosno izvanbracni drug, potomak ili roditelj, ovlaštenik, zaposlenik ili suradnik nalogodavca zakljuci posredovani pravni posao s osobom s kojom je Agencija nalogodavca dovela u vezu. Iznosi naknada Dalje navedeni postoci placaju se kao posrednicka naknada i na njih se obracunava PDV. Prodaja Provizija Agencije iznosi od 2% do 4% + PDV od postignutog iznosa kupoprodajne cijene nekretnine, ili kako se ugovorne strane dogovore. Kod nalogodavaca s kojim Agencija ima iskljucivi posrednicki Ugovor provizija se naplacuje prema iznosu ugovorenom i navedenom u ugovoru. Kupnja Provizija Agencije iznosi od 2% do 4% + PDV od postignutog iznosa kupoprodajne cijene nekretnine ili kako se ugovorne strane dogovore. Provizija se naplacuje od kupca ukoliko je ugovorena ili ukoliko je Agencija od strane kupca dobila pismeni ili usmeni nalog za potražnjom nekretnine. U slucaju u kojem Agencija ima iskljucivi posrednicki Ugovor naplacuje se provizija prema iznosu ugovorenom i navedenom u ugovoru. Kada se potencijalni kupac odluci za razgledavanje odrecenog broja nekretnina koje su mu najinteresantnije iz naše ponude, obavezno prvo sa agencijom potpisuje Nalog za pregled nekretnina, u kojem se pojedinacno tocno navode nekretnine sa njihovim detaljima i tek se tada ide u razgledavanje. U slucaju da se klijent – potencijalni kupac odluci za kupnju neke od pokazanih nekretnina, sa nama potpisuje Ugovor o posredovanju za kupce, gdje se detaljno navode njegove i posrednicke obaveze. Visina posrednicke naknade koju je kupac obavezan platiti agenciji za obavljene usluge posredovanja ( za što klijent dobiva racun ), navedena je u Opcim uvjetima poslovanja. Ukoliko se klijent – potencijalni kupac ne odluci za kupnju niti jedne od pokazanih nekretnina, klijent Posredniku ne placa nikakvu naknadu, niti placa bilo kakav iznos za razgledavanje. Klijentu ce biti ispostavljen racun za proviziju od usluge posredovanja ako direktno kontaktira vlasnika nekretnine s kojim ga je agencija dovela u vezu. Zamjena Provizija Agencije iznosi 2,5% i naplacuje se od svake strane u zamjeni, a postotak se racuna od vrijednosti nekretnine koju je strana stekla zamjenom. Najam/Zakup Kod ugovora o najmu/ zakupu (ugovoreno trajanje najma/ zakupa do 5 godina) naplacuje se 100% iznosa mjesecne najamnine/ zakupnine od najmodavca/ zakupodavca. Isti iznos za isto ugovoreno, vremensko trajanje se naplacuje i od najmoprimca/ zakupnika. Kod ugovora duljih od 5 godina trajanja najma/ zakupa, naplacujemo 150% iznosa mjesecne najamnine/ zakupnine od najmodavca/ zakupodavca, odnosno najmoprimca/ zakupnika . Kod nalogodavaca s kojima imamo iskljucivi posrednicki Ugovor naplacujemo prema iznosu ugovorenom i navedenom u istom. Posrednicka satnica Iznos posrednicke satnice sa ukljucenim troškovima (utrošeno vrijeme, izrada i oglašavanje te ostali troškovi vezani uz posredovani posao) iznosi 300,00 HRK. Prestanak ugovora Ugovor o posredovanju sklapa se na odreceno vrijeme i prestaje istekom roka na koji je sklopljen, ako u tome roku nije sklopljen ugovor za koji je posredovano. Stranke mogu odustati od ugovora o posredovanju u prometu nekretnina prije isteka ugovorenog roka samo iz osobito opravdanog razloga. Nalogodavac je u tom slucaju dužan nadoknaditi agenciji ucinjene troškove. Ako u roku ne dužem od vremena trajanja sklopljenog ugovora o posredovanju, nakon prestanka tog ugovora nalogodavac sklopi pravni posao koji je pretežito posljedica djelovanja Agencije prije prestanka ugovora o posredovanju, dužan je Agenciji platiti posrednicku naknadu u cijelosti, osim ako ugovorom nije drukcije ugovoreno. Kad ugovor prestane zbog isteka vremena, nalogodavac je dužan naknaditi Agenciji ucinjene troškove za koje je inace bilo izricito ugovoreno da ih nalogodavac posebno placa. Suradnja s drugim agencijama Agencija je spremna za suradnju s drugim agencijama za posredovanje u prometu nekretnina koje poštuju temeljna eticka nacela (kojima se iskljucuje iznošenje neistinitih podataka o poslovanju radi pribavljanja poslova i stranaka, omalovažavanje drugih agencija na bilo koji nacin, radi pribavljanja poslova i stranaka, nerealne procjene nekretnina radi pribavljanja posrednickih poslova i istupanje u sredstvima informiranja s namjerom osobne promidžbe, a na štetu drugih). Opce odredbe i rješavanje sporova Na odnose izmecu nalogodavca i agencije proizašle iz ugovora o posredovanju koji nisu ureceni ovim Opcim uvjetima poslovanja niti ugovorom o posredovanju, podredno se primjenjuju odredbe Zakona o posredovanju u prometu nekretnina i opce odredbe Zakona o obveznim odnosima. Moguce sporove ce rješavati nadležnost Opcinskog suda u Splitu. Obiteljska putovanja d.o.o. Split HRVATSKA GOSPODARSKA KOMORA Sektor za trgovinu Udruženje poslovanja nekretninama Zagreb, srpanj 2005. C J E N I K posrednickih provizija za obavljeno posredovanje prilikom kupoprodaje, zamjene, zakupa i iznajmljivanja nekretnina Agencije su za obavljeno posredovanje obvezne naplatiti proviziju. KUPOPRODAJA Provizija se naplacuje u postocima od ukupnog postignutog iznosa kupoprodajne cijene. ——————————————————————————————————————– Najviša ukupna provizija 6% Najniža ukupna provizija 4% ——————————————————————————————————————– PRODAJA ——————————————————————————————————————– Provizija za posredovanje prilikom prodaje nekretnine (naplacuje se od prodavatelja) 2% – 4%, ali ne manje od 6000,00 kn ——————————————————————————————————————— KUPNJA ——————————————————————————————————————— Provizija za posredovanje prilikom kupnje nekretnine (naplacuje se od kupca) ——————————————————————————————————————— 2% – 3%, ali ne manje od 6000,00 kn Provizija se naplacuje od kupca ako je ugovorena ili je posrednik dobio od strane kupca pismeni ili usmeni nalog za potražnjom nekretnine ——————————————————————————————————————— ZAMJENA Prilikom zamjene nekretnine provizija se naplacuje od svake strane u zamjeni, a postotak se racuna od vrijednosti nekretnine koju je strana stekla zamjenom 2% – 3% ————————————————————————————– ZAKUP I NAJAM IZNAJMLJIVANJE I DAVANJE U ZAKUP – provizija od najmodavca i zakupodavca Postotak od mjesecne najamnine 75% Minimalno 100% Za najam ili zakup trajanja od 12 do 59 mjeseci 150% Minimalno za najam ili zakup trajanja od 60 mjeseci (5 godina) i više UNAJMLJIVANJE I ZAKUP – provizija od najmoprimca i zakupnika Postotak od mjesecne najamnine 75% Minimalno za najam 100% Minimalno za zakup 100% Za najam ili zakup trajanja od 12 do 59 mjeseci 150% Minimalno za najam ili zakup trajanja od 60 mjeseci (5 godina) i više PDV nije ukljucen u cijenu HRVATSKA GOSPODARSKA KOMORA, 10000 Zagreb, Rooseveltov trg 2, tel.: 4561-624, fax: 4828-499, e-mail: trgovina@hgk.hr Croatian law on Intermediation in Real Estate OPCE ODREDBE Predmet urecenja clanak 1. Ovim se Zakonom urecuju uvjeti za obavljanje djelatnosti posredovanja u prometu nekretnina, sklapanje ugovora o posredovanju u prometu nekretnina, opci uvjeti poslovanja, prava i obveze posrednika u prometu nekretnina, agenata posredovanja u prometu nekretnina i nalogodavaca, posrednicka naknada, strucni ispit za obavljanje poslova agenta te nadzor i upravne mjere nad obavljanjem posredovanja u prometu nekretnina. Znacenje izraza sadržanih u Zakonu clanak 2. - Pojedini izrazi u smislu ovoga Zakona imaju sljedeca znacenja: - Posrednik u prometu nekretnina ovlašteno je trgovacko društvo, trgovac pojedinac ili obrtnik koji ispunjava uvjete za obavljanje posredovanja u prometu nekretnina. - Ministarstvo je ministarstvo nadležno za gospodarstvo. - Ministar je ministar nadležan za gospodarstvo. - Agent posredovanja u prometu nekretnina fizicka je osoba koja je upisana u Imenik agenata posredovanja u prometu nekretnina. - Posredovanje u prometu nekretnina radnje su posrednika u prometu nekretnina koje se ticu povezivanja nalogodavca i trece osobe te pregovora i priprema za sklapanje pravnih poslova kojih je predmet odrecena nekretnina osobito pri kupnji, prodaji, zamjeni, najmu, zakupu i dr. - Nekretnine su cestice zemljišne površine, zajedno sa svime što je sa zemljištem trajno spojeno na površini ili ispod nje sukladno odredbama opceg propisa o vlasništvu i drugim stvarnim pravima. - Nalogodavac je fizicka ili pravna osoba koja s posrednikom u prometu nekretnina sklapa pisani ugovor o posredovanju (prodavatelj, kupac, zakupnik, zakupodavac, najmodavac, najmoprimac i drugi moguci sudionici u prometu nekretnina). - Treca osoba je osoba koju posrednik u prometu nekretnina nastoji povezati s nalogodavcem radi pregovara o sklapanju pravnih poslova kojih je predmet odrecena nekretnina. Primjena propisa clanak 3. Ako nije drukcije propisano ovim Zakonom, primjenjuju se odredbe Zakona o opcemu upravnom postupku. UVJETI ZA OBAVLJANJE POSREDOVANJA U PROMETU NEKRETNINA clanak 4. Posredovanjem u prometu nekretnina (u daljnjem tekstu: posredovanje) mogu se uz naknadu baviti samo posrednici iz clanka 2. tocke 1. ovoga Zakona koji ispunjavaju uvjete sukladno odredbama ovoga Zakona. Osiguranje od odgovornosti za štetu clanak 5. (1) Posrednik u prometu nekretnina (u daljnjemu tekstu: posrednik) dužan je kod osiguravatelja u Republici Hrvatskoj osigurati i obnavljati osiguranje od odgovornosti za štetu koju bi nalogodavcu ili trecim osobama mogao prouzrociti obavljanjem posredovanja. (2) Za štetu koju bi posrednik mogao prouzrociti obavljanjem posredovanja najniža osigurana svota ne može biti manja od 200.000,00 kuna po jednome štetnom dogacaju, odnosno 600.000,00 kuna za sve odštetne zahtjeve u jednoj osiguravateljskoj godini. (3) Posrednik može biti osiguran i kod osiguravatelja u državi clanici Europske unije i Europskoga ekonomskog prostora. Rješenje o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina i upis u Registar clanak 6. (1) Zahtjev za izdavanje rješenja o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina podnosi se Ministarstvu i mora sadržavati sljedece podatke i dokaze: – temeljni akt društva: društveni ugovor ili statut, odnosno obrtnicu, – ugovor o radu na puno radno vrijeme s osobom koja je agent posredovanja u prometu nekretnina (u daljnjem tekstu: agent), – ugovor o osiguranju s ovlaštenim osiguravateljskim društvom za slucaj odgovornosti za štetu nastalu obavljanjem djelatnosti posrednika, i to za svotu osiguranja najmanje u iznosu iz clanka 5. stavka 2. ovoga Zakona. (2) Ako Ministarstvo utvrdi da su ispunjeni uvjeti iz stavka 1. ovoga clanka, donijet ce rješenje o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina. (3) Posrednik može zapoceti obavljati djelatnost danom prijama rješenja iz stavka 2. ovoga clanka. (4) Ministarstvo ce bez odgacanja dostaviti rješenje iz stavka 2. ovoga clanka posredniku, Poreznoj upravi, Državnom inspektoratu i Hrvatskoj gospodarskoj komori (u daljnjem tekstu: HGK). (5) HGK ce po primitku rješenja iz stavka 2. ovoga clanka bez odgacanja, a najkasnije u roku od 15 dana izvršiti upis posrednika u Registar posrednika u prometu nekretnina (u daljnjem tekstu: Registar). (6) Ako Ministarstvo ne donese rješenje o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina, podnositelj zahtjeva može raskinuti ugovor iz stavka 1. tocke 3. ovoga clanka i tražiti povrat premije osiguranja. Registar clanak 7. (1) Registar se vodi u HGK-u. (2) Oblik, sadržaj i nacin vocenja Registra te sadržaj podataka iz clanka 10. ovoga Zakona propisuje ministar pravilnikom. Brisanje iz Registra clanak 8. (1) Ministarstvo ce donijeti rješenje o brisanju posrednika iz Registra: – ako je posrednik brisan iz sudskog, odnosno obrtnog registra, – ako nema ugovor o radu na puno radno vrijeme s osobom koja je agent, – ako nema ugovor o osiguranju s ovlaštenim osiguravateljskim društvom za slucaj odgovornosti za štetu nastalu obavljanjem djelatnosti posrednika, i to za svotu osiguranja najmanje u iznosu iz clanka 5. stavka 2. ovoga Zakona, – ako je posrednik pravomocno osucen za prekršaj ili kazneno djelo, pa mu je izrecena zaštitna mjera zabrane obavljanja djelatnosti dok ta mjera traje, – ako posrednik poslove posredovanja obavlja protivno odred bama ovoga Zakona ili provedbenim propisima donesenim na temelju ovoga Zakona. (2) Rješenje o brisanju posrednika iz Registra dostavlja se posredniku, Poreznoj upravi, Državnomu inspektoratu, HGK i nadležnom trgovackom sudu, odnosno obrtnom registru, osim u slucaju iz stavka 1. tocke 1. ovoga clanka. (3) HGK ce po zaprimanju rješenja iz stavka 1. ovoga clanka bez odgacanja, a najkasnije u roku od 15 dana izvršiti brisanje posrednika iz Registra. (4) Protiv rješenja iz stavka 1. ovoga clanka nije dopuštena žalba ali nezadovoljna stranka može pokrenuti upravni spor. Prijava podataka u Registar clanak 9. (1) Svaku promjenu podataka koji se evidentiraju u Registru posrednik je dužan prijaviti HGK-u u roku od 30 dana od dana nastanka promjene radi upisa promjene u Registar. (2) HGK ce u roku od 30 dana od dana izvršenog upisa promjene obavijestiti Ministarstvo o izvršenoj promjeni. Uvid u Registar clanak 10. (1) Registar je javan. Dostupnost podataka upisanih u Registar osigurat ce se preko interneta. (2) Zainteresirane osobe mogu zatražiti ovjereni prijepis (izvod) podataka upisanih u Registar uz naknadu koju propisuje HGK. Imenik agenata posredovanja u prometu nekretnina clanak 11. (1) Imenik agenata (u daljnjem tekstu: Imenik) vodi se u HGK. (2) Oblik, sadržaj i nacin vocenja Imenika propisuje ministar pravilnikom. Postupak upisa agenta u Imenik clanak 12. (1) Agent podnosi zahtjev za upis u Imenik Ministarstvu. (2) Ministarstvo ce dostaviti rješenje o upisu agenta u Imenik HGK. (3) HGK ce izvršiti upis agenta u Imenik na temelju rješenja koje ce Ministarstvo izdati sukladno pravilniku iz clanka 11. stavka 2. ovoga Zakona u roku od 15 dana od dana podnošenja zahtjeva ako agent uz zahtjev priloži dokaz o: – najmanje srednjoj strucnoj spremi, – položenome strucnom ispitu iz clanka 29. ovoga Zakona. (4) Svaku promjenu podataka koji se evidentiraju u Imeniku agent je dužan prijaviti HGK-u u roku od 30 dana od dana nastanka promjene radi upisa promjene u Imenik. (5) Zainteresirane osobe mogu zatražiti ovjereni prijepis (izvod) podataka upisanih u Imenik uz naknadu koju propisuje HGK. (6) Protiv rješenja Ministarstva iz stavka 2. ovoga clanka nije dopuštena žalba ali nezadovoljna stranka može pokrenuti upravni spor. Postupak brisanja agenta iz Imenika clanak 13. (1) HGK ce izvršiti brisanje agenta iz Imenika na temelju rješenja koje ce Ministarstvo izdati sukladno pravilniku iz clanka 11. stavka 2. ovoga Zakona. (2) Protiv rješenja Ministarstva iz stavka 1. ovoga clanka nije dopuštena žalba ali nezadovoljna stranka može pokrenuti upravni spor. Obavljanje istovrsnih poslova clanak 14. (1) Agent ne smije bez suglasnosti posrednika za kojeg na temelju ugovora o radu obavlja poslove posredovanja obavljati istodobno istovrsne poslove za drugog posrednika ni druge poslove, odnosno radnje istovjetne ili slicne posredovanju koje obavlja posrednik, odnosno usluge u vezi s poslom koji je predmet posredovanja. (2) Ako agent postupi protivno zabrani iz stavka 1. ovoga clanka, posrednik može od agenta tražiti naknadu pretrpljene štete ili može tražiti da se sklopljeni posao smatra sklopljenim za njegov racun, odnosno da mu agent preda zaradu ostvarenu iz takvoga posla ili da na njega prenese potraživanje zarade iz takvoga posla. III. UGOVOR O POSREDOVANJU U PROMETU NEKRETNINA I OPcI UVJETI POSLOVANJA clanak 15. (1) Ugovorom o posredovanju u prometu nekretnina obvezuje se posrednik da ce nastojati naci i dovesti u vezu s nalogodavcem osobu radi pregovaranja i sklapanja odrecenoga pravnog posla o prijenosu ili osnivanju odrecenoga prava na nekretnini, a nalogodavac se obvezuje da ce mu isplatiti odrecenu posrednicku naknadu ako taj pravni posao bude sklopljen. (2) Ugovor o posredovanju u prometu nekretnina sklapa se u pisanome obliku i na odreceno vrijeme. (3) Ako ugovorne strane ne dogovore rok na koji sklapaju ugovor o posredovanju, smatra se da je ugovor o posredovanju u prometu nekretnina sklopljen na odreceno razdoblje od 12 mjeseci i može se sporazumom stranaka više puta produžiti. (4) Ako nije drukcije propisano ovim Zakonom, na obvezni odnos izmecu posrednika i nalogodavca primjenjuju se odredbe opceg propisa obveznog prava. (5) Ugovorom se odredbe ovoga Zakona ne mogu iskljuciti, odnosno ograniciti, osim ako je u vezi s pojedinom odredbom izricito dopušten drukciji dogovor ugovornih strana, odnosno drukciji dogovor u ocitome interesu nalogodavca. (6) U ugovoru sklopljenu izmecu posrednika i nalogodavca moraju osobito biti navedeni podaci o posredniku, nalogodavcu, vrsti i bitnome sadržaju posla za koji posrednik posreduje, o posrednickoj naknadi te o mogucim dodatnim troškovima koji nastanu kad posrednik u dogovoru s naruciteljem obavlja za njega i druge usluge u vezi s poslom koji je predmet posredovanja. (7) Ugovor o posredovanju u prometu nekretnina može sadržavati i druge podatke u vezi s poslom za koji se posreduje (npr. rok i uvjete isplate posrednicke naknade, podatke o osiguranju od odgovornosti, uvjete osiguranja isplate posrednicke naknade i sl.). Iskljucivo posredovanje clanak 16. (1) Ugovorom o posredovanju nalogodavac se može obvezati da za posredovani posao nece angažirati nijednoga drugog posrednika (iskljucivo posredovanje), koja obveza mora biti izricito ugovorena. (2) Ako je za vrijeme trajanja ugovora o iskljucivome posredovanju nalogodavac sklopio mimo posrednika pravni posao preko drugog posrednika, a za koji je iskljucivom posredniku bio dan nalog za posredovanje, dužan je posredniku platiti stvarne troškove ucinjene tijekom posredovanja. Ako visina posrednicke naknade nije ugovorena, nalogodavac je posredniku dužan nadoknaditi stvarne troškove ucinjene tijekom posredovanja koji ne mogu biti veci od posrednicke naknade za posredovani posao. (3) Prilikom zakljucivanja ugovora o iskljucivome posredovanju posrednik je dužan posebno upozoriti nalogodavca na znacenje i pravne posljedice te klauzule. Prestanak ugovora o posredovanju clanak 17. (1) Ugovor o posredovanju sklopljen na odreceno vrijeme prestaje istekom roka na koji je sklopljen ako u tome roku nije sklopljen ugovor za koji je posredovano ili otkazom bilo koje od ugovornih strana. (2) Nalogodavac je dužan naknaditi posredniku ucinjene troškove za koje je inace bilo izricito ugovoreno da ih nalogodavac posebno placa. (3) Ako u roku ne dužem od vremena trajanja sklopljenog ugovora o posredovanju nakon prestanka tog ugovora nalogodavac sklopi pravni posao koji je pretežito posljedica posrednikova djelovanja prije prestanka ugovora o posredovanju, dužan je posredniku platiti posrednicku naknadu u cijelosti, osim ako ugovorom nije drukcije ugovoreno. (4) Odredbe stavka 2. i 3 ovoga clanka odnose se i na prestanak ugovora o iskljucivome posredovanju. Opci uvjeti poslovanja clanak 18. (1) Posrednik je obvezan odrediti opce uvjete za obavljanje posredovanja (u daljnjem tekstu: opci uvjeti poslovanja) u skladu s ovim Zakonom i drugim propisima. (2) Opci uvjeti poslovanja moraju za svaku vrstu posredovanja sadržavati osobito: – odreceni opis pojedinih poslova koje je posrednik obvezan obaviti pri obavljanju pojedinih radnja, – visinu posrednicke naknade i odreceni opis poslova iz stavka 2. podstavka 1. ovoga clanka, koji su obuhvaceni tim placanjem, a koji obvezatno obuhvacaju povezivanje nalogodavca i trece osobe i provjeravanje stanja nekretnina, potrebne pregovore i pripremne radnje za sklapanje pravnoga posla, – vrstu i visinu troškova, ako posrednik u dogovoru s nalogodavcem obavlja za njega i druge radnje u vezi s poslom koji je predmet posredovanja. (3) Posrednik je obvezan na vidljivu i pristupacnu mjestu istaknuti opce uvjete poslovanja. (4) Posrednik mora poslovati u prostoru primjerenu za poslovanje koji je u cijelosti odvojen od stambenog prostora i koji ima posebnu prostoriju za povjerljive razgovore sa strankama. PRAVA I OBVEZE UGOVORNIH STRANA Pažnja u pravnome prometu clanak 19. Posrednik u obavljanju poslova posredovanja, odnosno drugih radnja u vezi s poslom koji je predmet posredovanja mora postupati s povecanom pažnjom, prema pravilima struke i obicajima (pažnja dobrog strucnjaka). Oglašavanje clanak 20. Posrednik je obvezan prilikom oglašavanja u sredstvima javnoga priopcavanja, odnosno drugim pisanim i elektronickim medijima, u prostorijama posrednika ili na drugim mjestima gdje je dopušteno oglašavanje u svezi s nekretninom koja je predmet poslovanja, objaviti svoju tvrtku. Obveze posrednika clanak 21. Ugovorom o posredovanju u prometu nekretninama posrednik se obvezuje obavljati osobito sljedece: 1. nastojati naci i dovesti u vezu s nalogodavcem osobu radi sklapanja posredovanoga posla, 2. upoznati nalogodavca s prosjecnom tržišnom cijenom slicne nekretnine, 3. izvršiti uvid u isprave kojima se dokazuje vlasništvo ili drugo stvarno pravo na predmetnoj nekretnini i upozoriti nalogodavca na: – ocite nedostatke i moguce rizike u svezi s neurecenim zemljišnoknjižnim stanjem nekretnine, – upisana stvarna prava ili druga prava trecih na nekretninu, – pravne posljedice neispunjavanja obaveza prema trecoj strani, – nedostatke gracevne i uporabne dozvole sukladno posebnomu zakonu, – okolnosti obveze primjene prava prvokupa i ogranicenja u pravnome prometu sukladno posebnim propisima. 4. obaviti potrebne radnje radi predstavljanja (prezentacije) nekretnine na tržištu, oglasiti nekretninu na odgovarajuci nacin te izvršiti sve druge radnje dogovorene ugovorom o posredovanju u prometu nekretninama koje prelaze uobicajenu prezentaciju, a za što ima pravo na posebne, unaprijed iskazane troškove, 5. omoguciti pregled nekretnina, 6. posredovati u pregovorima i nastojati da doce do sklapanja ugovora, ako se na to posebno obvezao, 7. cuvati osobne podatke nalogodavca te po pisanome nalogu nalogodavca cuvati kao poslovnu tajnu podatke o nekretnini za koju posreduje ili u vezi s tom nekretninom ili s poslom za koji posreduje, 8. ako je predmet sklapanja ugovora zemljište, provjeriti namjenu predmetnog zemljišta u skladu s propisima o prostornome urecenju koji se odnose na to zemljište, 9. obavijestiti nalogodavca o svim okolnostima važnim za namjeravani posao koje su mu poznate ili mu moraju biti poznate. clanak 22. Posrednik iznimno može, u ime i za racun nalogodavca, zakljuciti ugovor o posredovanju samo ako je nalogodavac za to izdao posebnu punomoc. Obveza nalogodavca clanak 23. (1) Ugovorom o posredovanju u prometu nekretninama nalogodavac se obvezuje da ce obaviti osobito sljedece: 1. obavijestiti posrednika o svim okolnostima koje su važne za obavljanje posredovanja i predociti tocne podatke o nekretnini te ako posjeduje dati posredniku na uvid lokacijsku, gracevnu, odnosno uporabnu dozvolu za nekretninu koja je predmet ugovora te dati na uvid posredniku dokaze o ispunjavanju obveza prema trecoj strani, 2. dati posredniku na uvid isprave koje dokazuju njegovo vlasništvo na nekretnini, odnosno drugo stvarno pravo na nekretnini koja je predmet ugovora te upozoriti posrednika na sve uknjižene i neuknjižene terete koji postoje na nekretnini, 3. osigurati posredniku i trecoj osobi zainteresiranoj za zakljucivanje posredovanoga posla razgledanje nekretnine, 4. obavijestiti posrednika o svim bitnim podacima o traženoj nekretnini što posebno ukljucuje opis nekretnine i cijenu, 5. nakon sklapanja posredovanoga pravnog posla, odnosno pred ugovora kojim se obvezao sklopiti posredovani pravni posao, ako su posrednik i nalogodavac ugovorili da se pravo na placanje posrednicke naknade stjece vec pri sklapanju predugovora, isplatiti posredniku posrednicku naknadu, osim ako nije drukcije ugovoreno, 6. ako je to izricito ugovoreno naknaditi posredniku troškove ucinjene tijekom posredovanja koji prelaze uobicajene troškove posredovanja, 7. obavijestiti posrednika pisanim putem o svim promjenama povezanim s poslom za koji je ovlastio posrednika, a posebno o promjenama povezanim s vlasništvom na nekretnini. (2) Nalogodavac nije dužan pristupiti pregovorima za sklapanje posredovanog posla s trecom osobom koju je posrednik našao, niti sklopiti pravni posao, a odredba ugovora kojom je ugovoreno druk cije, ništetna je. Nalogodavac ce odgovarati za štetu, ako pri tom nije postupio u dobroj vjeri te je dužan naknaditi sve troškove ucinjene tijekom posredovanja, koji ne mogu biti veci od posrednicke naknade za posredovani posao. Anonimni nalogodavac clanak 24. Posrednik koji poslove posredovanja obavlja za nalogodavca koji želi ostati nepoznat nema obvezu prema trecoj osobi, koja bi s nalogodavcem željela sklopiti pravni posao, otkriti identitet nalogodavca sve do sklapanja pravnoga posla. Ugovor o potposredovanju clanak 25. (1) Posrednik može prenijeti ugovor o posredovanja na druge posrednike ako tako ugovore posrednik i nalogodavac. (2) U slucaju iz stavka 1. ovoga clanka nalogodavac ostaje u ugovornome odnosu samo s posrednikom s kojim je sklopio ugovor, a posrednik ce nalogodavcu predati popis posrednika na koje se ugovor o posredovanju prenosi. Evidencija o posredovanju u prometu nekretnina clanak 26. (1) Posrednik mora voditi evidenciju o posredovanju u prometu nekretnina. (2) Evidencija iz stavka 1. ovoga clanka mora za svaki ugovor obuhvacati sljedece: – vrstu ugovora za cije sklapanje posreduje, – vrstu nekretnine (zemljište s oznakom namjene korištenja, stambeni i poslovni prostor i sl.), – tehnicke podatke o nekretnini (sobnost, kvadratura i sl.), – cijenu, odnosno najamninu, zakupninu i sl. u ukupnome iznosu i jedinicnome iznosu za m2 površine. (3) Posrednik je na zahtjev nadležnih tijela državne uprave dužan dati na uvid podatke iz stavka 2. ovoga clanka (ministarstvu nadležnom za financije i ministarstvu nadležnom za poslove graditeljstva) za potrebe provedbe zemljišne i stambene politike, tržišnog vrednovanja nekretnina i analize tržišta nekretnina. POSREDNIcKA NAKNADA clanak 27. (1) Visina posrednicke naknade odrecuje se ugovorom o posredovanju (u daljnjem tekstu: naknada). (2) Visina naknade ne smije prelaziti 6% kupoprodajne cijene nekretnine. Pravo na posrednicku naknadu clanak 28. (1) Posrednik stjece pravo na naknadu tek nakon sklapanja ugovora za koji je posredovao, osim ako posrednik i nalogodavac nisu ugovorili da se pravo na placanje naknade stjece vec pri sklapanju predugovora. (2) Posrednik ne može zahtijevati djelomicno placanje naknade unaprijed, odnosno prije sklapanja ugovora, odnosno predugovora u skladu sa stavkom 1. ovoga clanka. Troškove dodatnih usluga u vezi s poslom koji je predmet posredovanja posrednik može naplatiti u visini stvarnih troškova ako je to posebno ugovoreno izmecu posrednika i nalogodavca. (3) Nakon prestanka ugovora posrednik ima pravo na naknadu u roku ne dužem od vremena trajanja sklopljenog ugovora, ako ugovorom nije drukcije ugovoreno, i u slucajevima kad nalogodavac sklopi s trecom osobom pravni posao koji je pretežito posljedica posrednikova djelovanja prije prestanka ugovora o posredovanju. (4) Posrednik nema pravo na naknadu za posredovanje ako s nalogodavcem sam kao stranka sklapa ugovor koji je bio predmet posredovanja, odnosno ako takav ugovor s nalogodavcem sklopi agent koji za posrednika obavlja poslove posredovanja, ali ima pravo tražiti naknadu štete od zaposlene osobe sukladno propisima o radu. STRUCNI ISPIT Strucna osposobljenost clanak 29. (1) Posrednik mora biti strucno osposobljen za posredovanje u prometu nekretnina ili imati zaposlenu osobu agenta koji je strucno osposobljen za posredovanje u prometu nekretnina. (2) Strucna osposobljenost iz stavka 1. ovoga clanka dokazuje se polaganjem strucnog ispita za posredovanje u prometu nekretnina iz clanka 30. ovoga Zakona (u daljnjem tekstu: strucni ispit). Strucni ispit clanak 30. (1) Strucni ispit provodi HGK prema Programu osposobljavanja za agenta posredovanja u prometu nekretnina. (2) Strucni ispit polaže se pred ispitnom komisijom koju imenuje ministar. Ispitnu komisiju cine predstavnici Ministarstva, Ministarstva pravosuca, HGK i HOK-a. (3) Strucni ispit sastoji se od pisanoga i usmenoga dijela. (4) Nakon položenog strucnoga ispita HGK izdaje potvrdu o položenome strucnom ispitu. (5) HGK vodi evidenciju o položenim strucnim ispitima. (6) Ministar pravilnikom propisuje Program osposobljavanja za agenta posredovanja u prometu nekretnina na prijedlog HGK. (7) Nacin i postupak provedbe strucnog ispita, visinu naknade troškova strucnog ispita, sadržaj i oblik potvrde o položenome strucnom ispitu, oblik i nacin vocenja evidencije propisuje HGK uz suglasnost Ministarstva. (8) Nadzor nad zakonitošcu organizacije i provedbom strucnog ispita provodi Ministarstvo. VII. NADZOR I UPRAVNE MJERE clanak 31. (1) Upravni nadzor nad primjenom ovoga Zakona i propisa donesenih na temelju ovoga Zakona obavlja Ministarstvo. (2) Inspekcijski nadzor nad provedbom ovoga Zakona i propisa donesenih na temelju ovoga Zakona provodi Državni inspektorat te druge inspekcije sukladno ovlaštenjima utvrcenim posebnim zakonima. clanak 32. Inspektor Državnog inspektorata rješenjem ce: – zabraniti obavljanje posredovanja pravnoj, odnosno fizickoj osobi koja ne ispunjava uvjete sukladno odredbama ovoga Zakona (clanak 4.), – zabraniti obavljanje posredovanja pravnoj, odnosno fizickoj osobi koja posredovanje obavlja bez rješenja Ministarstva o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina ili ne ispunjava propisane uvjete (clanak 6. stavak 2.), – narediti posredniku da u prostoriji u kojoj posluje na vidljivu i pristupacnu mjestu istakne opce uvjete poslovanja (clanak 18. stavak 3.). VIII. KAZNENE ODREDBE clanak 33. (1) Novcanom kaznom u iznosu od 10.000,00 do 30.000,00 kuna kaznit ce se za prekršaj pravna osoba: – ako o promjeni podataka koji se upisuju u Registar ne obavijesti HGK u roku od 30 dana od nastanka promjene (clanak 9.), – ako ne odredi opce uvjete poslovanja, ako na vidljivu i pristupacnu mjestu ne istakne opce uvjete poslovanje, ako obavlja posredovanje u uredskome prostoru koji je u suprotnosti s propisanim uvjetima (clanak 18.), – ako oglašavanje obavlja u suprotnosti s propisanim uvjetima (clanak 20.), – ako ne vodi evidenciju o posredovanju u prometu nekretnina (clanak 26.), – ako na zahtjev nadležnih tijela državne uprave ne da na uvid podatke iz evidencije o posredovanju u prometu nekretnina (clanak 26. stavak 3.). (2) Za prekršaje iz stavka 1. ovoga clanka kaznit ce se i odgovorna osoba u pravnoj osobi novcanom kaznom u iznosu od 5.000,00 do 15.000,00 kuna. (3) Za prekršaje iz stavka 1. ovoga clanka kaznit ce se fizicka osoba novcanom kaznom u iznosu od 5.000,00 do 15.000,00 kuna. clanak 34. (1) Novcanom kaznom u iznosu od 30.000,00 do 100.000,00 kuna kaznit ce se za prekršaj pravna osoba: – ako obavlja posredovanje, a ne ispunjava uvjete za obavljanje posredovanja u prometu nekretnina (clanak 4.), – ako obavlja posredovanje bez rješenja Ministarstva o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina (clanak 6.), – ako postupa suprotno opcim uvjetima poslovanja (clanak 18.), – ako postupa suprotno propisanim radnjama (clanak 21.). (2) Za prekršaje iz stavka 1. ovoga clanka kaznit ce se i odgovorna osoba u pravnoj osobi novcanom kaznom u iznosu od 5.000,00 do 15.000,00 kuna. (3) Za prekršaje iz stavka 1. ovoga clanka kaznit ce se fizicka osoba novcanom kaznom u iznosu od 5.000,00 do 15.000,00 kuna. clanak 35. Novcanom kaznom u iznosu od 5.000,00 do 10.000,00 kuna kaznit ce se za prekršaj agent: – ako posluje, a nije podnio zahtjev za upis u Imenik Ministarstvu (clanak 12. stavak 1.), – ako o promjeni podataka koji se upisuju u Imenik ne obavijesti HGK u roku od 30 dana od nastanka promjene (clanak 12. stavak 4.), – ako bez suglasnosti posrednika za kojeg na temelju ugovora o radu obavlja poslove posredovanja obavlja istodobno istovrsne poslove za drugog posrednika ili druge poslove, odnosno radnje istovjetne ili slicne posredovanju koje obavlja posrednik, odnosno usluge u vezi s poslom koji je predmet posredovanja (clanak 14. stavak 1.). clanak 36. (1) Za prekršaje utvrcene clankom 34. ovoga Zakona pocinjene drugi put u roku od dvije godine od pravomocnosti prvog rješenja o prekršaju, uz novcanu kaznu, izreci ce se posredniku i zaštitna mjera zabrane obavljanja posredovanja u trajanju od dva mjeseca. (2) Za prekršaje utvrcene clankom 34. ovoga Zakona pocinjene treci put u roku od dvije godine od pravomocnosti drugog rješenja o prekršaju, uz novcanu kaznu, izreci ce se posredniku i zaštitna mjera zabrane obavljanja posredovanja u trajanju od tri mjeseca. PRIJELAZNE I ZAVRŠNE ODREDBE clanak 37. (1) Ministar ce u roku od šest mjeseci od dana stupanja na snagu ovoga Zakona donijeti propise iz clanka 7. stavka 2., clanka 11. stavka 2. i clanka 30. stavka 6. ovoga Zakona. (2) HGK je dužan na osnovi ovlaštenja iz ovoga Zakona u roku od šest mjeseci od dana stupanja na snagu ovoga Zakona propisati naknade iz clanka 10. stavka 2. i clanka 12. stavka 5., te propisati nacin i postupak provedbe strucnog ispita, visinu naknade troškova za polaganje strucnog ispita, sadržaj i oblik uvjerenja o položenome strucnom ispitu, oblik i nacin vocenja evidencije iz clanka 30. stavka 7. ovoga Zakona. clanak 38. (1) Posrednik koji na dan stupanja na snagu ovoga Zakona obavlja djelatnost posredovanja u prometu nekretnina dužan je ishoditi rješenje o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina u skladu s odredbama ovoga Zakona u roku od osamnaest mjeseci (18) od dana stupanja na snagu ovoga Zakona. (2) Posredniku koji ne ishodi rješenje sukladno stavku 1. ovoga clanka prestaje pravo na obavljanje djelatnosti. (3) Posredniku koji ne uskladi svoje poslovanje sukladno odredbama ovoga Zakona nadležno tijelo rješenjem ce utvrditi prestanak valjanosti izdanog rješenja o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina. (4) Fizicke osobe koje na dan stupanja na snagu ovoga Zakona obavljaju poslove agenta posredovanja dužne su uskladiti obavljanje tih poslova s odredbama ovoga Zakona u roku od 18 mjeseci od dana stupanja na snagu ovoga Zakona. (5) Osobe koje su do dana stupanja na snagu ovoga Zakona završile osposobljavanje za posrednike u prometu nekretnina, prema programima verificiranim od ministarstva nadležnog za obrazovanje, prema drugom slicnom obrazovnom programu ili prema programu HGK, dužne su u roku od 18 mjeseci od dana stupanja na snagu ovoga Zakona svoju osposobljenost uskladiti s Programom osposobljavanja za agente posredovanja u prometu nekretnina iz clanka 30. ovoga Zakona. clanak 39. (1) Posrednik koji na dan stupanja na snagu ovoga Zakona ima upisanu djelatnost poslovanje nekretnina, u sudskome, odnosno obrtnom registru, dužan je dostaviti registarskomu sudu rješenje o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina u roku od 18 mjeseci od dana stupanja na snagu ovoga Zakona. (2) Posrednik koji na dan stupanja na snagu ovoga Zakona ima upisanu djelatnost poslovanje nekretnina u sudskome, odnosno obrtnome registru i obavlja djelatnost posredovanja u prometu nekretnina, uz zahtjev za izdavanje rješenja o ispunjavanju uvjeta za obavljanje posredovanja u prometu nekretnina Ministarstvu prilaže: – rješenje o upisu posrednika u sudski registar u Republici Hrvatskoj, odnosno u obrtni registar u Republici Hrvatskoj, – ugovor o radu na puno radno vrijeme s osobom koja je agent posredovanja u prometu nekretnina, – ugovor o osiguranju s ovlaštenim osiguravajucim društvom za slucaj odgovornosti za štetu nastalu obavljanjem djelatnosti posrednika, i to za svotu osiguranja najmanje u iznosu iz clanka 5. stavka 2. ovoga Zakona. (3) Posredniku koji ne postupi sukladno stavku 1. i 2. ovog clanka, zabranit ce se obavljanje posredovanja u prometu nekretnina rješenjem Ministarstva. Stupanje Zakona na snagu clanak 40. Ovaj Zakon stupa na snagu osmoga dana od dana objave u »Narodnim novinama«, osim odredbe clanka 5. stavka 3. ovoga Zakona koja stupa na snagu na dan prijama Republike Hrvatske u Europsku uniju. Zagreb, 3. listopada 2007.