ARTICLE
Incorporation of Insurers and Reinsurers in Argentina – Transfer of Shares – Amendments to Legislation in Force
Through Resolution No 37,988, the Argentine Superintendence of Insurance amended the regime for requesting authorization to incorporate an insurer or a reinsurer in Argentina, and to transfer shares.
December 17, 2013
In April 2013, by means of Resolution No 37,449, the Argentine Superintendence of Insurance (the “SSN”, after its acronym in Spanish) replaced Section 7 of the General Regulation of the Insurance Activity (the “General Regulation”), including substantial amendments to the regime for requesting authorization to incorporate an insurer or a reinsurer in Argentina, and to transfer shares (see Insurance News # 12 - Incorporation of Insurers and Reinsurers in Argentina - Transfer of Shares and Capital Contributions - Amendments to Legislation in Force: http://www.marval.com.ar/publicacion/?id=9029).
On November 28, 2013, through Resolution No 37,988 (the “Resolution”), the SSN amended Section 7 of the General Regulation again, including regulatory changes concerning the following: a) the insurer and reinsurer’s business and financial plan; b) shareholders; c) members of the board of directors and supervisory bodies, and managers. We summarize below some of the most important amendments.
a) The Insurer and Reinsurer – Business and Financial Plan
The Resolution replaced Section 7.1.1.1.10 of the General Regulation. The previous version of this Section had introduced a requirement for applicant companies to submit to the SSN a “Business and Financial Plan” (the “Plan”). However, very little guidance was provided by the SSN on the actual content of such Plan. The Resolution has now established more detailed guidelines of what the Plan must contain, establishing different requirements depending on whether the relevant company is an insurer or a reinsurer.
Likewise, in line with other resolutions recently issued by the SSN, the Resolution incorporated matters associated to anti-money laundering and financing of terrorism.
The Resolution maintains the requirement that the Plan must include a three year projection. The SSN has now added that the Plan must be signed by the company’s shareholders, and that it must be complemented by the report of an actuary and an independent auditor.
The Resolution has also established that at the end of the second fiscal year since the beginning of its operations, the insurer or reinsurer shall submit, along with its annual financial statements, a report on how the Plan is actually developing. Should the report reflect differences exceeding 20% of the Plan and what occurred in practice, the company shall explain to the SSN the reasons for such differences.
b) The Shareholders
The Resolution amended Section 7.1.2.a) of the General Regulation, setting forth that shareholders must submit an affidavit stating that they have not been sanctioned by the Financial Information Unit if they are individuals.
The resolution also replaced Section 7.1.2.b) of the General Regulation, amending the contents of some of the affidavits that must be submitted to the SSN by shareholders when they are legal entities.
Although Sections amended (7.1.2.a and 7.1.2.b) refer to the regime for requesting authorization to incorporate an insurer or a reinsurer, this has also indirectly affected the regime for requesting authorization to transfer shares, since the relevant Section of the General Regulation which regulates the transfer of shares refers to Sections 7.1.2.a) and 7.1.2.b).
c) Members of the Board of Directors and Supervisory Bodies, and Managers
The Resolution also replaced Section 7.1.3 of the General Regulation, which describes in detail the documents to be submitted with regard to members of the board of directors and supervisory bodies, and managers. The Resolution has now incorporated the duty of such persons to maintain the suitability conditions that led them to such offices. The relevant insurer or reinsurer shall report to the SSN within 10 days any circumstance that may affect the suitability of an officer.
These requirements must be met not only whenever a new insurer or reinsurer is incorporated but also whenever there is a change in any of the members of the board of directors, supervisory bodies, and managers.
On November 28, 2013, through Resolution No 37,988 (the “Resolution”), the SSN amended Section 7 of the General Regulation again, including regulatory changes concerning the following: a) the insurer and reinsurer’s business and financial plan; b) shareholders; c) members of the board of directors and supervisory bodies, and managers. We summarize below some of the most important amendments.
a) The Insurer and Reinsurer – Business and Financial Plan
The Resolution replaced Section 7.1.1.1.10 of the General Regulation. The previous version of this Section had introduced a requirement for applicant companies to submit to the SSN a “Business and Financial Plan” (the “Plan”). However, very little guidance was provided by the SSN on the actual content of such Plan. The Resolution has now established more detailed guidelines of what the Plan must contain, establishing different requirements depending on whether the relevant company is an insurer or a reinsurer.
Likewise, in line with other resolutions recently issued by the SSN, the Resolution incorporated matters associated to anti-money laundering and financing of terrorism.
The Resolution maintains the requirement that the Plan must include a three year projection. The SSN has now added that the Plan must be signed by the company’s shareholders, and that it must be complemented by the report of an actuary and an independent auditor.
The Resolution has also established that at the end of the second fiscal year since the beginning of its operations, the insurer or reinsurer shall submit, along with its annual financial statements, a report on how the Plan is actually developing. Should the report reflect differences exceeding 20% of the Plan and what occurred in practice, the company shall explain to the SSN the reasons for such differences.
b) The Shareholders
The Resolution amended Section 7.1.2.a) of the General Regulation, setting forth that shareholders must submit an affidavit stating that they have not been sanctioned by the Financial Information Unit if they are individuals.
The resolution also replaced Section 7.1.2.b) of the General Regulation, amending the contents of some of the affidavits that must be submitted to the SSN by shareholders when they are legal entities.
Although Sections amended (7.1.2.a and 7.1.2.b) refer to the regime for requesting authorization to incorporate an insurer or a reinsurer, this has also indirectly affected the regime for requesting authorization to transfer shares, since the relevant Section of the General Regulation which regulates the transfer of shares refers to Sections 7.1.2.a) and 7.1.2.b).
c) Members of the Board of Directors and Supervisory Bodies, and Managers
The Resolution also replaced Section 7.1.3 of the General Regulation, which describes in detail the documents to be submitted with regard to members of the board of directors and supervisory bodies, and managers. The Resolution has now incorporated the duty of such persons to maintain the suitability conditions that led them to such offices. The relevant insurer or reinsurer shall report to the SSN within 10 days any circumstance that may affect the suitability of an officer.
These requirements must be met not only whenever a new insurer or reinsurer is incorporated but also whenever there is a change in any of the members of the board of directors, supervisory bodies, and managers.
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.