Royal Decree No. 11/16 on the Issuance of Takaful Insurance Law

Royal Decree
No. 11/16
On the Issuance of Takaful Insurance Law
,We, Qaboos bin Said, Sultan of Oman
After perusal of the Statute of the State promulgated by Oman Sultani Decree No. 101/1996; and The Commercial Companies Law promulgated by Oman Sultani Decree No. 4/1974; and The Insurance Companies Law promulgated by Oman Sultani Decree No. 12/1979; and The Capital Market Law promulgated by Oman Sultani Decree No. 80/1998; and After the presentation to the Council of Oman; and Based on the public interest requirements Have issued the following Decree
Article 1
.The provisions of Takaful Insurance Law hereto attached shall come into force
Article 2
.This Decree shall be published in the Official Gazette Issued on Jumada Al-Awwal 26, 1437 H. Corresponding to March 6, 2016 Qaboos bin Said Sultan of Oman
Chapter 1 - Definitions and General Provisions
:Article 1
In the application of the provisions of this Law, the following terms and expressions shall have :the meaning assigned hereto unless the context requires otherwise .Authority: Capital Market Authority - 1 .Board: Board of Directors of the Authority - 2 .Chief Executive Officer: Chief Executive Officer of the Authority - 3 Company: The Company licensed to carry on Takaful insurance activities in accordance with - 4 .the provisions of this Law Licence: The decision issued by the Authority on the approval of the practice of the activity of - 5 .Takaful insurance in accordance with the provisions of this Law Takaful Insurance Activity: A collaborative activity consistent with the provisions of Islamic - 6 Sharia, based on participation and solidarity of a group of people to address specific potential risks, through the payment of a cash contribution to the Company for the compensation of the

injured party in the event the risk insured against occurs, including the activity re-Takaful .insurance .Participant: Each party to the contract with the Takaful Insurance Company - 7 Executive Management of the Company: The Company's Chief Executive Officer or Director- - 8 General, Chief Financial Officer, Compliance Officer, and any other person holding a senior post .in accordance with the Company's organisational structure Professions related to the Takaful Insurance Sector: Takaful insurance brokers and agents, - 9 consultants in the field of Takaful insurance, loss estimate experts, specialists in the settlement .of insurance claims, and any other professions as determined by a Decision of the Board Actuary: A person scientifically qualified and licensed by the Authority or of any other entity - 10 .recognized by the Authority to practice the profession .Sharia Supervisory Authority: The Authority provided for in Article 22 of this Law - 11 Solvency margin: The minimum capital of the Company or the risk-based capital, whichever - 12 .is greater, as determined in the Regulations Deposit: The total of money allocated to ensure the solvency margin and which the - 13 Company is committed to retain in accordance with the provisions of this Law and the .Regulations Subscriptions: The amounts of money the participants commit to pay to the participants' - 14 .fund provided for in Article (33) of this Law, pursuant to the Takaful Insurance Contract Surplus: The total contributions, reserves and profits minus the total expenditure and paid - 15 .or payable compensations during the year Transfer of activities: The Company's transfer of all or some of the Takaful insurance - 16 contracts to which it is a party to another company licensed to practice Takaful insurance .activities .Regulations: The Implementing Regulations of this Law - 17
Article 2
.The provisions of this Law shall apply to the Takaful Insurance activities in the Sultanate
Article 3
:Takaful Business shall be divided into the following branches .Family Takaful Business branch -1 .General Takaful Business branch -2 .Health Takaful Business branch -3 .The Regulation shall define the branches and the classes of activities included in each of them
Article 4
No person shall engage in Takaful Insurance activities or promote the same unless after obtaining a licence from the Authority in accordance with the provisions of this Law and the .Regulations
Chapter 2

Competences and Powers of the Authority
Article 5
The Authority shall organise the Takaful Insurance Sector in accordance with the provisions of :this Law and the Regulations, and shall particularly do the following .Issue the necessary licences to engage in the activities of Takaful Insurance - 1 Develop the conditions, controls and procedures necessary for licensing to practice - 2 professions relating to the Takaful Insurance Sector, and issue the licences necessary for such .professions Supervise, control and inspect companies to verify their commitment to implement the - 3 .provisions of this Law and Regulations Prepare the necessary studies and the appropriate plans for the enhancement and - 4 .development of the Takaful Insurance activities Raise awareness of Takaful Insurance through the preparation and implementation of - 5 .awareness programs in this regard Enhance cooperation with national and foreign agencies and regional and international - 6 organisations and unions concerned with Takaful Insurance activities, through the conclusion of agreements or memoranda of understanding, and the joining of their membership pursuant to .the provisions of the laws in force in the Sultanate Determine the fees of licences and other services provided by the Authority in the field of - 7 .Takaful Insurance Issue circulars and instructions required for the organisation of the Takaful Insurance Sector - 8 The Board shall establish a High Sharia Supervisory Authority on Takaful insurance activities and which formation, competences, working conditions, and the conditions to be met by its members .and remuneration thereof shall be determined by the decision of the Board
Article 6
The Authority shall have all the necessary powers to exercise its competences, and shall in :particular do the following Conduct the necessary administrative investigations regarding the facts and behaviours that - 1 are in violation of the provisions of this Law and the Regulations as well as the instructions .issued by the Authority Assign the Company's actuary or any another actuary at the expense of the Company to study - 2 the financial position of the Company, including the assessment of its assets and liabilities and any other matter related to the licensed activities, and to prepare a report thereon and submit the same to the Authority in accordance with the procedures and deadlines specified by the .Authority Compel the Company to prepare a report on the overall licensed activities of Family Takaful - 3 Insurance and submit the same to the Authority in accordance with the procedures and .deadlines specified by the Authority Appoint an observer member of the Company's Board of Directors, who shall have the right - 4 to participate in the discussions and record his opinion on the decisions without counting his .vote in the deliberations Dissolve the Company's Board of Directors and appoint a Steering Committee until the - 5

.election of a new Board of Directors
Article 7
The Authority shall exercise all the powers set forth in Article (6) of this Law for the achievement :of the best interests, or in any of the following cases If the Authority deems it necessary to intervene for the protection of the rights and interests - 1 of the participants or the potential participants from the risk of the Company's failure to meet .current or anticipated claims .The Company's failure to fulfil any of its obligations under this Law and the Regulations - 2 .The Company's provision of the Authority with incorrect data or information - 3 The Company's failure to make the necessary arrangements to ensure the compliance of the - 4 licensed Takaful Insurance activities with the provisions of Islamic Sharia, including its failure to .appoint the Sharia Supervisory Authority or its non-compliance with the decisions it issues The Company's failure to take necessary arrangements to cover the risk of re-Takaful - 5 Insurance. 6 - The Company's failure to take the necessary measures to enable the Authority to .exercise its competences and powers provided for in the Law and the Regulations
Article 8
The Authority shall set the minimum requirements and qualifications for membership and expertise in the Company's Board of Directors and Executive Management, according to the Regulations. The Company shall notify the Authority of the decisions of appointment of members of the Board of its Executive Management within (15) fifteen days as of the date of appointment, and so as shown by the Regulations; the Authority may object to the appointment decision within (15) fifteen days as the date of its notification thereof if it considers the appointment decision harmful to the interests of the Company or the interests of the .participants. The Regulations shall determine the legal effects resulting from such objection
Chapter 3 - Licensing
Article 9: The Company shall obtain a Licence for conducting Takaful Business in each of its
branches. It shall likewise obtain CMA’s written approval to engage in the classes of activities .included under the licensed branch
Article 10
:In order to obtain a licence, the following conditions shall be met The applicant shall be a Joint Stock Company in accordance with the provisions of the laws in - 1 force in the Sultanate, and if the applicant is a Closed Joint Stock Company, it shall commit to .offer its shares for public subscription within two (2) years maximum The paid-up capital of the Public Shareholding Company shall not be less than ten - 2 .(10.000000) million Omani riyals .Submission of documents confirming the Company's meeting of the solvency margin - 3 Submission of documents confirming the existence of a financial deposit in a bank licensed to - 4 carry on Islamic banking transactions in the Sultanate, and within the limits indicated by the .Regulations Submission of documents confirming the conduct of the necessary arrangements to cover the - 5

risk of re-Takaful Insurance, unless the Authority deems such arrangements not necessary on the basis of an objective satisfactory reasons presented by the Company. 6 - Submission of documents confirming the appointment of the Director-General or Chief Executive Officer of the .Company Submission of documents confirming the appointment of the Sharia Supervisory Authority in - 7 .accordance with the provisions of this Law .Payment of the prescribed fees - 8 .Any other conditions specified in the Regulations - 9
Article 11
The licence application shall be submitted to the Authority by the legal representative of the Company on a form prepared for that purpose, accompanied by the documents provided for in .Article (10) of this Law, and that as determined by the Regulations
Article 12
The Chief Executive Officer shall issue a decision on the licence application within (60) days as of the date of its submission along with all the required documents, and in the case of rejection, the decision shall be justified, and the elapse of said period without a decision shall be deemed a rejection thereof. In the case of approval, the Authority shall publish the licensing decision in the Official Gazette within a period not to exceed thirty (30) days as of the date of approval, and shall grant the Company a certificate of registration in the licensed companies register, in which the licensed activities and the duration of the licence shall be indicated; the Company shall post that certificate in a prominent place, and may not practice the Takaful Insurance activities prior .to the publication of the decision
Article 13
The licence term shall be of five (5) years, renewable at the request of the legal representative of the Company submitted to the Authority two months at least before the expiry of its term, provided that the Company continues to meet the conditions of the licence and to pay the .prescribed fees
Article 14
The Board may, within the framework of organisation of the Takaful Insurance Sector, cease to issue new licences for the periods it deems appropriate, provided that its decision in this regard is grounded; new licences shall only be issued if the National Economy and the Takaful Insurance .Sector are able to absorb them
Article 15
:The Authority shall cancel the licence in the following cases .If the Company ceases to meet any of the licence conditions - 1 If the Company seriously violates any of its duties and obligations, or commits any of the - 2 .prohibitions set forth in this Law or the Regulations .Other cases specified in the Regulations - 3 In all cases, the Authority shall not cancel the licences if the Company removes the causes of the .violation within the time limit specified by the Authority
Article 16

The Authority shall publish the decision on the cancellation of the licence in the Official Gazette .within a period not to exceed thirty (30) days as of the date of issuance of the decision
Article 17
The Company may, after the approval of the Authority, establish branches and adopt agents .inside or outside the Sultanate, as determined by the Regulations
Chapter 4 - Obligations of Takaful Insurance Companies
Section 1 - General Obligations
Article 18
The Company licensed to practice activities of Family Takaful Insurance shall before engaging therein, appoint an external or full-timer actuary. The appointed actuary shall inform the .Authority of any facts or actions in violation of the provisions of this Law or the Regulations
Article 19
The Company shall appoint an external auditor in accordance with the provisions of the Commercial Companies Law, taking into account the conditions and controls identified in the .Regulations
Article 20
The Company shall not terminate the services of the actuary or auditor unless for one of the reasons specified in the Regulations; it shall as well notify the Authority of its intention to terminate the services of any of them prior to the issuance of the decision. The actuary and external auditor shall notify the Authority of his intention to resign an adequate time prior to the resignation submission with a statement of reasons thereof, and so as determined in the .Regulations
Article 21
The Company shall appoint a substitute for the actuary or auditor who resigned or whose .services were terminated, within the period specified in the Regulations
Article 22
The Company shall establish a Sharia Supervisory Authority which number of members are not less than three (3), among them a specialist in the jurisprudence of financial transactions and experts in the field of Takaful Insurance activities, to be specialised in the guidance, supervision and control of Takaful insurance activities carried out by the Company so as to ensure its compliance with the provisions of Islamic Sharia. The Sharia Supervisory Authority shall be formed by a decision of the General Assembly of the Company, and the Regulations shall .determine its powers, membership conditions and its working conditions
Article 23
The Company shall furnish the Authority with documents proving its preservation of the deposit and the solvency margin in accordance with the procedures and deadlines specified in the .Regulations
Article 24
The solvency margin shall be calculated on the basis of the money of the Participants' Fund, and in the case of inadequacy or deficit and the Fund's failure to meet its obligations, the Shareholders' Fund shall fulfil them on its behalf as a goodwill loan, as determined by the .Regulations

Article 25
For the purposes of calculating the solvency margin, the Company's assets and liabilities shall be .calculated in accordance with the assessment provisions identified in the Regulations
Article 26
The Company shall periodically assess the solvency margin, prepare a report on the result, and submit a copy thereof to the Authority, in accordance with the conditions and requirements, procedures and deadlines specified in the Regulations. The Company shall be automatically considered not retaining the solvency margin in case it defaults in or fails to furnish the .Authority with a copy of the report referred to on time
Article 27
The Company shall notify the Authority of the decrease of the solvency margin forthwith upon its occurrence, and in such case, the Authority shall require the Company to take any of the :following actions .Increase the capital to the extent necessary to meet the solvency margin - 1 .Increase the value of the contributions - 2 .Reduce costs, without prejudice to the legal positions of the Company's employees - 3 .Cease to conclude new insurance contracts or to renew existing ones - 4 .Liquidate some assets - 5 Any other measures specified in the Regulations - 6
Article 28
The Company are prohibited to distribute any dividends to shareholders, in the case the .solvency margin reaches the minimum limit set thereto
Article 29
The Company shall maintain the technical provisions and reserves as determined in the Regulations
Article 30
The Company shall invest in assets, comply with the provisions of Islamic Sharia and the rules set .forth in the Regulations
Article 31
The Company shall keep within the Sultanate assets of a certain value or equal to a certain percentage of its liabilities, and that in the cases and the manner determined in the Regulations. The Authority may determine the type of assets referred to in the first paragraph of this Article. .In all cases, the assets referred to shall be acceptable by the Sharia Supervisory Authority
Article 32
The company shall not distribute the surplus of the Participants' Fund, unless upon fulfilment of :the following conditions The existence in the Company of a policy approved by the Authority on the distribution of - 1 .the surplus and coverage of the deficit

.The Participants Fund's meeting of the solvency margin before and after the distribution - 2 The approval of the actuary on the distribution of the surplus of the Participants' Fund of to - 3 .the Family Takaful Insurance Branch
Article 33
The Company shall separate the Shareholders' Funds and Participants' Funds through the establishment of a "Shareholders' Fund", and a "Participants Fund" for each of the Company's licensed Takaful Insurance branches. The Company shall undertake the management of these Funds, and the Regulations shall determine the sources, revenues, returns and working conditions of each Fund, and the sections of the Participants Fund and the relationship between .them
Article 34
Each of the Funds referred to in Article (33) of this Law shall establish an independent accounting unit through the preparation of the necessary books and registers, as determined in .the Regulations
Article 35
The Company shall only use the Participants Fund's money to cover the fund's management expenses (the Agency) or the Mudarabah share or any other expenses approved by the Sharia Supervisory Authority. The Regulations shall determine the amount of the Agency's fees, the .Mudarabah share and the way of their calculations
Section 3 - Registers and Accounts
Article 36
The Company shall prepare books and registers, and the financial statements that disclose its financial position, in accordance with the accounting standards for Islamic Financial Institutions .or any other international accounting standards, as determined in the Regulations
Article 37
The Company shall submit to the Authority trimestral reports and an annual report on its activities and the results of its operations, including data that discloses its performance and .financial position, as determined in the Regulations
Article 38
The Company shall submit to the Authority an annual report on its organisation and management, including a statement of the extent of its compliance with the Charter of the .Organisation of the Takaful Insurance Companies, as determined in the Regulations
Article 39
The Company shall submit to the Authority the annual report issued by the Sharia Supervisory Authority, including a statement of the extent of the Company's compliance with the Islamic .Sharia when engaging in its activities, as determined in the Regulations
Article 40
The Company licensed to practice Family Takaful activities shall conduct an annual actuarial assessment of its financial position and prepare a report in this regard and approved by its .actuary, and submit the same to the Authority, as determined in the Regulations
Article 41

The Company licensed to conduct General Takaful Business or Health Takaful Business shall, upon the request of CMA, perform an actuarial valuation of its financial position, prepare a report thereon approved by the Actuary and submit such report to CMA, as set out in the .Regulation
Article 42
The Company shall keep the books, reports, registers and financial statements in its head office, or anywhere else in the Sultanate, for a period of not less than (10) years as of the date of the end of the register or book, or the date of submission of the report to the Authority, or the date .of end of the transaction, as the case may be
Article 43
The Company shall take all necessary measures to enable the Authority to exercise its competence and powers set forth in this Law, and shall in particular, submit the registers, books, papers, documents and information requested by the Authority at any time, and reproduce and copy the same, and delegate the auditor or actuary or any other official at the Company to provide the necessary clarifications. If the registers and other documents stated in the preceding paragraph are kept with a third party, said party shall submit them to the Authority when it .requests so, without prejudice to its rights
Chapter 5 - Practice of Takaful Insurance Activities
Article 44
Any person, who obtains information while carrying out any work related to the application of the provisions of this law, shall be prohibited to use or disclose the same in any way, except in :the following cases .Based on the provision in a law or Sultani Decree - 1 Under a decision of the competent judicial authorities on the occasion of a criminal - 2 .investigation At the request of the Authority on the occasion of the exercise of its competences stipulated - 3 .in this Law In any other case, subject to the written consent of the participant concerned with that - 4 .information
Article 45
Without prejudice to the provisions of Article (44) of the Law, the Company shall not transfer personal and commercial information of the participants to any other party except in the .circumstances and manners prescribed in the Regulations
Article 46
The announcement of Takaful Insurance activities shall be made in accordance with the conditions and procedures specified in the Regulations. The announcement shall mean in the application of this Article, the advertising and promotion of the Takaful Insurance activities by .the Company or its agents with a view to attract customers by any means
Article 47
The Company shall provide the Authority with a copy in the Arabic language of the models of forms, contracts, documents, ads and other documents prepared for use in the conduct of its activities, for review and approval thereof. The Company shall not make any amendment to the models of the forms, contracts, documents, ads and other documents prepared for use in the

.conduct of its activities - without the prior approval of the Authority
Article 48
The Authority shall compel the Company to amend the forms provided for in Article (47) of this :Law in the following cases .If they are contrary to the laws, Sutani decrees, regulations, or orders issued by the Authority - 1 .If they contain any vague or unclear provisions or conditions - 2 .If they prejudice to the interests of the participants - 3
Chapter 6 - Transfer of Takaful Insurance Activities
Article 49
A Company that wishes to transfer its activities to another company shall obtain the approval of :the Authority, and adopt the following procedures Provide a detailed plan to the Authority to which is annexed the actuary report and other - 1 .reports provided for in the plan Include in the transfer plan any action the Company deems necessary for the enforcement of - 2 its provisions, including the transfer of assets, rights and liabilities to the successor company .without the need for additional assurances Announce the transfer plan and publish the same in two daily newspapers widely circulated - 3 .in the Sultanate, one of them - at least - to be issued in Arabic Include in the announcement all data that help the concerned parties view the transfer plan - 4 during the thirty (30) days as of the date of publication, with an indication of the place .designated thereto The Statute of the Company to which the Takaful Insurance activities are transferred shall be compatible with the provisions of Islamic Sharia, and the Company shall meet requirements set .forth in Article (10) of this Law
Article 50
The concerned party may object in writing before the Authority to the transfer plan, within sixty (60) days as of the date of publication, and the Authority shall determine all objections at once within thirty (30) days as of the end of the (60) sixty-day period, and in the case of rejection, the decision shall justified. The lapse of the thirty-day period without a decision on the objection .shall be deemed a rejection thereof
Article 51
The Authority shall after deciding on the objections, or the expiry of the deadline for submission thereof without objection approve the transfer plan as it is or after its modification by its parties in light of what the Authority deems necessary; the plan shall be deemed valid between the .parties thereto as of the date of approval of the Authority or any later date it may specify
Chapter 7 - Sanctions
Article 52
Without prejudice to any severer penalty provided for in any other law, anyone who commits a violation of the provisions of Articles (4) and (44) of this Law shall be punished by imprisonment for a term not less than three (3) months and not more than three (3) years and a fine of no less

than twenty thousand (20,000) RO, and not more than one hundred thousand (100.000) RO, or .one of these penalties
Article 53
Without prejudice to the provisions of Article (52) of this Law, in the event the Company or its Board of Directors or Executive Management or its affiliates or agents or those licensed to practice professions associated with the Takaful Insurance Sector violates the provisions of this Law or the Regulations, the Authority may punish the violator with any of the following :sanctions .Notice - 1 .Warning - 2 An administrative fine not less than one thousand (1000) RO, and not more than - 3 .(100,000) one hundred thousand RO .Dismissal of the member of the Board or the Executive Management - 4 Suspension of the licensing in whole or in part for a period of not more than one (1) - 5 .year .Cancellation of the licence in whole or in part - 6 In the imposition of the penalty, the proportionality between the offense and the sanction shall be taken into account in the light of the circumstances of the incident, and the extent of .recidivism or otherwise The Regulations shall determine the procedures of investigation with the entities referred to, the authority concerned with the imposition of the sanctions, the procedures of determination of .the grievance against the decisions issued in this regard, and the competent authority
Article 54
The members of the Board of Directors and Executive Management - each within its competence

• shall be jointly liable with the Company to compensate third parties for the damage they incur
  as a result of their violations of the provisions of this Law or the Regulations
  Article 55
  The Board may - and even prior to the issuance of a court ruling - reach a reconciliation with the violator on the violation of the provisions of Article (52) of the Law by way of a financial settlement. The Regulations shall determine the procedures of reconciliation and the value of that settlement, and in all cases, the fine shall not be less than the minimum fine prescribed for the offense, and not more than twice of the maximum limit prescribed thereto. The reconciliation shall result in the termination of the public lawsuits in the crime subject of the .reconciliation
  Article 56
  The employees designated by a decision of the competent authority in accordance with the laws in force and in agreement with the Chief Executive Officer, shall be granted the capacity of judicial officers within the scope of application of the provisions of this Law and the Regulations and implementing decisions, in respect of crimes and violations committed in their jurisdictions .or related to their duties
  Chapter 8 - Final Provisions
  Article 57

The Chief Executive Officer of the Capital Market Authority shall issue the Regulations within a period not to exceed six (6) months as of the date of issuance of this Law, and shall issue the .necessary decisions to implement the provisions hereof
Article 58
This Law shall come into force as of the day following the date of its publication in the Official .Gazette