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The Official Gazette

of the Hashemite Kingdom of Jordan

[Image of the Map of the Hashemite Kingdom of Jordan]

Amman: Wednesday, 2 Dhu al-Hijjah, 1436 AH. Corresponding to September 16, 2015 AD

Issue Number: 5358

Issued by the Prime Ministry - Official Gazette Directorate Website: www.pm.gov.jo

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The Official Gazette

Instructions No. (1) of 2015

Insurance Companies Merger Instructions

Issued by the Minister of Industry and Supply, based on the letter from the Prime Minister No. 19838/1/11/83 dated 2014/6/8, which includes the Cabinet's decision to transfer all authorities of the Insurance Authority Board stipulated in the Insurance Activities Regulation Law No. (33) of 1999 and its amendments, as well as the systems, instructions, and decisions issued thereunder, to the Minister of Industry and Supply, effective from April 30, 2014. It also transfers all authorities of the General Director of the Insurance Authority stipulated in the Insurance Activities Regulation Law No. (33) of 1999 and its amendments, and the instructions and decisions issued thereunder, to the Undersecretary of the Ministry of Industry, Trade, and Supply. This is based on the provisions of paragraph (c) of Article (58) of the Insurance Activities Regulation Law No. (33) of 1999 and its amendments.

Article (1): These instructions shall be known as the "Insurance Companies Merger Instructions of 2015" and shall be effective from the date of their publication in the Official Gazette.

Article (2): A- The words and phrases used in these instructions shall have the meanings assigned to them in Article (2) of the Insurance Activities Regulation Law No. (33) of 1999 and its amendments, unless the context indicates otherwise.

B- For the purposes of these instructions, the following words and phrases shall have the meanings indicated below: The Ministry: The Ministry of Industry and Supply. The Insurance Department: The Insurance Department within the Ministry. The Minister: The Minister of Industry and Supply. The Undersecretary: The Undersecretary of the Ministry.

Article (3): For the purposes of these instructions, a merger shall be carried out in one of the following two ways: A- By merging one or more companies (the Merged Companies) into another company (the Merging Company), where the Merged Company or Companies shall cease to exist and their legal personality shall be extinguished for each, after the cancellation of the registration of the Merged Company with the Companies Control Department in accordance with the provisions of the prevailing Companies Law. B- By merging two or more companies to establish a new company, which shall be the Resulting Company from the merger, where the companies that merged shall cease to exist and their legal personality shall be extinguished for each, after the cancellation of the registration of each with the Companies Control Department in accordance with the provisions of the prevailing Companies Law. C- By merging a branch of a foreign company registered in the Kingdom into an existing or newly established Jordanian company created for this purpose, where that branch shall cease to exist and its legal personality shall be extinguished after the cancellation of its registration with the Companies Control Department in accordance with the provisions of the prevailing Companies Law.

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Article (4): A- For the purposes of Article (3) of these instructions, a merger shall be carried out in one of the following cases:

1. Merger of a company practicing life insurance business into a company practicing both types of insurance, in accordance with the provisions of paragraph (a) of Article (3) of these instructions.
2. Merger of a company practicing general insurance business into a company practicing both types of insurance, in accordance with the provisions of paragraph (a) of Article (3) of these instructions.
3. Merger of a company practicing both types of insurance into another company also practicing both types of insurance, in accordance with the provisions of paragraph (a) of Article (3) of these instructions.
4. Merger of a company practicing life insurance business with another company also practicing life insurance business, in accordance with the provisions of paragraphs (a) or (b) of Article (3) of these instructions.
5. Merger of a company practicing general insurance business into another company also practicing general insurance business, in accordance with the provisions of paragraphs (a) or (b) of Article (3) of these instructions.

B- A Takaful (Islamic insurance) company may not be merged except with another Takaful company practicing the same type of insurance. C- If the Merging Company is a Takaful company or the Resulting Company from the merger is a Takaful company, and one of the parties to the merger process is a conventional insurance company, it is required to amend the Articles of Association of that company to comply with the provisions and principles of Islamic Sharia in all its transactions, including its insurance and investment activities, and in conformity with the provisions of the prevailing Takaful Insurance Regulation Instructions, prior to completing the merger process.

Article (5): Companies wishing to merge must submit a request to the Undersecretary to obtain prior written approval to commence the merger process, including the following information and data: A- Names of the companies wishing to merge. B- Identification of the Resulting Company from the merger and the types of insurance it wishes to practice. C- Statement of whether the Resulting Company from the merger will practice conventional insurance or Takaful insurance. D- The work program of the Resulting Company from the merger, which must include at a minimum, estimated financial data and solvency margin for three years. E- The proposed merger plan signed by the authorized signatories for the companies wishing to merge. F- Statement of any changes or amendments to be made to the Memorandum of Association or Articles of Association of each of the companies wishing to merge. G- Financial statements for the last two financial years of the companies wishing to merge, certified by auditors in due form. H- Statement of the names of shareholders or partners who own more than (10%) of the capital of each of the companies wishing to merge.

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I- The prior written approval for the merger issued by the regulatory authorities with jurisdiction in the country of which the parent company holds nationality, in the event that one of the parties to the merger is a branch of a foreign insurance company. J- Submission of a plan outlining the procedures that the conventional insurance company will follow to regularize its status in accordance with the provisions of the prevailing Takaful Insurance Regulation Instructions, for the purposes of applying the provisions of paragraph (c) of Article (4) of these instructions. K- Any data, documents, or information necessary as requested by the Undersecretary for this purpose.

Article (6): A- The Undersecretary shall submit his recommendation regarding the request submitted under the provisions of Article (5) of these instructions to the Minister within a period not exceeding twenty days from the date of completion of the request with all data and documents submitted in accordance with the provisions of Article (5) of these instructions. The Minister shall issue his decision within fifteen days from the date of submission of the recommendation.

B- In the event that the companies wishing to merge obtain prior written approval in accordance with the provisions of paragraph (a) of this Article, they must submit the following data and documents to complete the merger request:

1. The Extraordinary General Assembly resolution of each of the companies wishing to merge approving the merger in accordance with the conditions and data specified in the merger agreement, including the specified date for the final merger.
2. Financial statements of the companies wishing to merge for the closest date to the General Assembly resolution of each, certified by the company's auditors.
3. The initial estimate of the assets and liabilities of the companies wishing to merge at fair value.
4. An actuarial report licensed by the Insurance Department regarding the technical reserves of the companies wishing to merge, which must include the following actuarial report details:

• The potential effects of the merger process on the rights of insurance policyholders.
• Any changes in the terms and conditions of insurance policies issued by the companies wishing to merge.
• Any changes in the insurance benefits provided under the insurance policies issued by the companies wishing to merge.
• The potential effects of the merger process on the expectations of insurance policyholders regarding investment portfolios.
• The potential effects of the merger process on the financial status of the company or companies resulting from the merger, which may negatively affect insurance policyholders.

5. Any data, documents, or information necessary as requested by the Undersecretary for this purpose.

C- The Undersecretary shall submit a recommendation to the Minister regarding the merger request, accompanied by the necessary reports and data, within twenty days from the date of completion of the request with all data and documents submitted in accordance with the provisions of paragraph (a) of this Article.

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D- The Minister shall issue his decision to approve the merger preliminarily or to reject it within fifteen days from the date of submission of the recommendation stipulated in paragraph (c) of this Article. In the event that preliminary approval is issued, the Undersecretary shall form an appraisal committee consisting of a representative from each of the companies wishing to merge, their auditors, and experts and specialists, appointing one of them as the chairman of the committee.

E- The committee stipulated in paragraph (d) of this Article shall be responsible for appraising all assets, rights, and obligations of the companies wishing to merge to determine the net equity of shareholders on the specified date of the merger.

F- The committee shall submit its report to the Undersecretary along with the opening balance sheet of the Resulting Company from the merger within a period not exceeding ninety days from the date of referral of the matter to it.

G- The Minister may, based on the proposal of the Undersecretary, extend the period stipulated in paragraph (f) of this Article by a similar period if necessity dictates.

Article (7): The companies wishing to merge shall bear the fees of the appraisal committee equally. In the event of a dispute over these fees, they shall be determined by a decision of the Undersecretary.

Article (8): A- The Undersecretary shall submit the appraisal committee's report and his recommendation to the Minister within thirty days from the date of submission of the appraisal committee's report to him. B- The Minister shall issue his decision to approve or reject the appraisal committee's report within thirty days from the date of submission of the appraisal committee's report to him by the Undersecretary. C- In the event of the Minister's approval of the appraisal committee's report, the Minister shall form an executive committee in accordance with the provisions of paragraph (d) of Article (57) of the Law.

Article (9): The merger decision shall be published in accordance with the provisions of paragraph (c) of Article (105) of the Law in the Official Gazette and in two local newspapers at the expense of the company.

Article (10): A- The companies parties to the merger must make the agreement by which the merger was effected available to the insured for their review to allow them to verify its terms. This agreement shall be displayed at the main center of each of these companies for a period of fifteen days from the date of publication of the decision in the Official Gazette. B- Any interested party may object to the Minister within thirty days from the date of publication of the decision regarding the merger of companies, stating the subject of the objection, the reasons relied upon, and the damages claimed to have been caused by the merger specifically.

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Article (11): A- For the purposes of settling the objections stipulated in paragraph (b) of Article (10) of these instructions, the Minister shall form a committee consisting of three members, chaired by the Undersecretary and two other senior employees of the Insurance Department, vested with the authority to receive objections submitted against the merger process, study them, and submit recommendations regarding them to the Minister within ten days from the date of receipt of the objection. B- The Minister shall issue his decision regarding the submitted objection within twenty days from the date of its submission to him, and the objector shall be notified of the decision. C- If the Minister is unable to settle the objection for any reason within thirty days from the date of submission of the objection, the objector has the right to resort to the competent court. Such objections or lawsuits filed in court shall not stay the merger decision.

Article (12): A- In the event of approval of the merger in accordance with the provisions of paragraph (a) of Article (3) of these instructions, the license of the Merged Company or Companies shall transfer to the license of the Merging Company. B- In the event of approval of the merger in accordance with the provisions of paragraph (b) of Article (3) of these instructions, the licenses of the merged companies shall transfer to the Resulting Company from the merger, and a new license shall be granted encompassing all the licenses practiced by the companies participating in the merger process.

Article (13): Subject to the provisions of the prevailing Minimum Capital System for Insurance Companies, the Resulting Company from the merger shall be committed to the minimum for each type of insurance license obtained by each company before the merger. In the event that the license type matches, the higher limit between the two companies before the merger shall apply.

Article (14): The Undersecretary shall issue the necessary decisions to implement the provisions of these instructions.

M. Maha Ali Minister of Industry, Trade, and Supply

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