Pursuant to the Company Law (National Gazette 111/94) and the Insurance Law (National Gazette 46/97) a company registering for insurance activities can be incorporated by either natural or legal persons (whether domestic or foreign). Insurance companies can be founded only as joint stock companies.
Any single shareholding is limited to 15% of the total shares with voting rights. In exceptional cases the Administration for Control of Insurance Companies (ACIC) can issue permits to shareholders enabling them to acquire a larger percentage.
Limitations on the amount of the company's share capital are particularly important for the incorporation of joint stock companies registering for insurance activities in Croatia. The Insurance Law states that the share capital of a joint stock insurance company must not be lower than:
- eight million kuna if the company deals with life insurance policies;
- four million kuna if the company is incorporated to deal in another area of insurance; and
- 12 million kuna if the company is incorporated to provide several types of non-life insurance.
Non-life insurance activities include:
- accident and health insurance;
- vehicle insurance;
- aircraft, maritime and cargo insurance;
- property insurance; and
- credit, warranty and legal protection insurance and insurance of tourist services.
The minimum share capital for incorporation of a company for reinsurance activities is 12 million kuna.
If the joint stock company meets all the requirements for registration, the ACIC issues the permit for registration.The relevant commercial court will execute the permit (ie, register the company) within 60 days of receipt of the application for incorporation. The permit application is submitted by the founders or by a person or persons appointed by the founders.
The following must be attached to the permit application:
- the articles of association of the company signed by the founders;
- proof that the minimum share capital is provided as well as proof that costs incurred during incorporation and start-up are adequate;
- the regulations in respect to business policy (in particular in respect to the conditions and price list of premiums for all kinds of insurance for which the company is incorporated);
- business plans for the first three years of operation. These plans must contain data on the expected income from premiums, costs for execution of insurance and expected profit, as well as other data to prove the ability to cover future liabilities;
- a report on the financial standing of the founders and their connection in respect to capital and management;
- the structure and amount of each shareholders' shareholding;
- a proposal on the appointment of the company's president;
- the number and structure of personnel necessary to start the company's operations; and
- a proposal on the appointment of a 'manager of mathematical reserves' (if the insurance company deals with life insurance).
The appointment of the president and management requires the consent of the minister of finance pursuant to the proposal made by the ACIC. The management members of the company must have specialist skills and long-term experience in the field of insurance. This is determined at the discretion of the minister of finance. To obtain a permit for appointment and to register the appointment each member of the management must have a university education.
Until recently, only domestic insurance companies operated in Croatia, but during the past year there has been some foreign investment. The largest investment was the acquisition of Adriatic Osiguranje by the Allianz Group. This company operates under the name Allianz Zagreb.
Negotiations are in progress for the privatization of Croatia Osiguranje, the largest insurance company in Croatia. This stateowned insurance company covers over 85% of the market and has subsidiaries in Bosnia and Herzegovina. Obstacles to this privatization are the great number of cases being dealt with by the courts, many of which involve Croatia Osiguranje. In spite of this, negotiations are in the final phase and the privatization is expected to be finalized by the end of the year.
For further information on this topic please contact Mladen Dragicevic at Law Office Dragicevic by telephone (+385 1 48 18 001) or by fax (+385 1 48 18 001) or by e-mail ([email protected]).
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