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Ownership and organisational requirements
Ownership of (re)insurers
Are there any restrictions on ownership of or investment in (re)insurers in your jurisdiction, including any limits on foreign ownership/investment?
General ownership rules apply when:
- an undertaking seeks authorisation to conduct (re)insurance business; and
- a holding in a (re)insurer is acquired, disposed of or reduced in the course of the ongoing insurance business.
As regards the first bullet point, the applicant must, among other things, notify the Financial Market Authority (FMA) of the identities of any persons that have a qualifying holding in the undertaking – namely a direct or indirect holding which:
- represents 10% or more of the capital or voting rights; or
- makes it possible to exercise a significant influence over the management of the undertaking.
When making a decision regarding an application for authorization, the FMA must consider the need to ensure the sound and prudent management of the (re)insurer. Thus, it must not grant a licence if, among other things, it concludes that a party with a qualifying holding does not meet the requirements for said management.
Further, the acquisition of a qualifying holding in an existing (re)insurer that is registered in Austria is subject to the FMA’s prior approval. The FMA must be notified by any party that, alone or acting in concert:
- wants to acquire a qualifying holding;
- has already acquired such a holding and wants to increase it further, which would result in:
- the proportion of the voting rights or capital held reaching or exceeding 20%, 30% or 50%; or
- the (re)insurer becoming its subsidiary of that party; or
- has decided to dispose of a qualifying holding or reduce it so that:
- the proportion of the voting rights or capital held would fall below 20%, 30% or 50%; or
- the (re)insurer would cease to be a subsidiary of that party.
A (re)insurer must inform the FMA of any acquisitions or disposals of holdings in its capital that cause those holdings to exceed or fall below any of the above thresholds. The (re)insurer must also inform the FMA of the names of shareholders and members that possess qualifying holdings and the sizes of thereof.
The FMA may prohibit an acquisition if there are reasonable grounds for doing so.
What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?
Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?
In order to operate, (re)insurers must be:
- a joint stock company;
- a registered European company; or
- a mutual insurance association.
The most common structure used in Austria is the joint stock company.
This requirement does not apply to (re)insurers that:
- have their registered seat in another European Economic Area member state;
- have passported their home member state licence into Austria; and
- have adopted one of the legal forms set out in Annex III of the EU Solvency II Directive (2009/138/EC).
Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?
Corporate governance requirements (Re)insurers must have an effective governance system in place, which:
- provides for sound and prudent management of the business; and
- is proportionate to the nature, scale and complexity of the (re)insurer’s operations.
Such system must, at a minimum, include:
- an adequate and transparent organisational structure with clear allocation and appropriate segregation of responsibilities; and
- an effective system for ensuring the transmission of information within the (re)insurer.
The governance system must also ensure compliance with the requirements regarding:
- governance functions;
- risk management;
- the actuarial function;
- internal control; and
- the fit-and-proper test.
Further, (re)insurers must have written policies regarding:
- risk management;
- internal control;
- internal audit;
- remuneration; and
- outsourcing (where relevant).
In addition, (re)insurers must have specific governance functions in place regarding, at a minimum:
- risk management;
- internal auditing; and
Eligibility criteria for directors and officers (Re)insurers must ensure that the professional qualifications, knowledge and experience of all persons who effectively run the business or are responsible for governance or other key functions are, at all times:
- adequate to enable sound and prudent management (ie, fit); and
- that said persons are of good repute and integrity (ie, proper).
The same applies to members of the supervisory board. The scope of these requirements depends on the person’s specific duties.
The FMA must be notified of any intended appointment of:
- board members or managing directors at least one month before the appointment; and
- any person who effectively runs the (re)insurer or is responsible for governance or any other key functions immediately after the appointment.
In case of the above appointments, the FMA must also be provided with all information needed to assess the personal and fit-and-proper requirements.
In practice, the FMA undertakes fit-and-proper tests and assessments.
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