Mergers, Acquisitions, Rehabilitation and Liquidation of Companies
التاريخ
| Article (56) | A- | The merger of insurance companies shall be subject to the provisions stated in this Act. The provisions related to mergers stated in the effective Companies Act shall be applied if no special provisions are stated in this Act, Regulations or Instructions issued by virtue thereof. | |
| B- | The merger of an insurance company shall not be permitted except with another Company transacting the same type of insurance. The Company shall not be permitted to proceed with any of the merger procedures before submitting the application to merge to the Director General attached with the required reports and data, and obtaining a prior written approval from the Board. | ||
| Article (57) | A- | The Director General shall submit to the Board a recommendation in respect of the application of merger attached with the necessary reports and data. | |
| B- | If the merger was preliminary approved by the Board, the Director General shall form an evaluation committee whose membership shall include representatives of the companies willing to merge, Auditors of the companies, and experienced and specialized persons, one of which shall be appointed head of the committee. | ||
| C- | The committee stipulated in paragraph (B) of this Article shall assume to evaluate all the assets of the companies willing to merge with their rights and obligations, in order to substantiate the net equity of the shareholders at the date fixed for the merger. The committee shall submit the report to the Director General along with the opening balance sheet for the company resulting from the merger, within a period not exceeding ninety days from the date of referring the issue thereto. The Board upon the recommendation of the Director General may extend this period for another similar period, should necessity dictate, in addition to the fees of the committee, which shall equally be borne by the companies willing to merge. In case of disagreement over the fees, it shall be determined by a decision from the Director General. | ||
| D- | The Director General shall refer to the Board the report of the committee as well as his recommendations regarding the report. If the Board approves the report, the Board shall form an executive committee from the chairmen and members of the boards of directors of the companies wishing to merge and their Auditors in order to perform the executive procedures for the merger pursuant to the provisions of the Companies Act in force. | ||
| Article (58) | A- | The merging companies shall enable the Insureds to examine the merger agreement, in order to ascertain the terms thereof. The agreement shall be exhibited at the head office of the companies for a period of fifteen days from the date of publishing the merger decision in the Official Gazette. | |
| B- | Any interested party may object to the Board within thirty days of the announcement of the decision related to the merger of the companies, provided that the subject of the objection, the reason on which the objection is based on and the damages claimed due to the merger. If the Board fails to settle the objection for what so ever reason within the period of thirty days as of the date of referring the objections thereto, the objecting entity shall have the right to refer to the competent court. These objections or cases raised before the court shall not suspend the decision to merge. |
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| C- | The Board shall issue special instructions regarding the merger procedures, the settlement of the objections submitted thereon, and all other matters related thereto. | ||
| D- | Incentives may be granted to the merged companies including tax exemptions by a decision from the Council of Ministers pursuant to the recommendation of the Minister of Finance based upon the recommendation of the Board. | ||
| Article (59) | A- | 1. | Subject to the prior approval of the Board, the Company may acquire in full or in excess 50% of another insurance Company transacting or intends to transact another type of insurance. The acquired Company shall be named the (Subsidiary Company), whereas the owning Company shall be named the (Mother Company). The Subsidiary Company shall stay existing and shall maintain its corporate status, provided that each Company transacts either types of insurance. |
| 2. | The Subsidiary Company shall be prohibited from acquiring any stocks or shares in the mother company. | ||
| 3. | The Mother Company shall appoint its representatives at the Subsidiary board of directors of the Company in proportion to its shareholding percentage in that Company. | ||
| B- | The basis of acquisition and procedures in the Company thereof shall be determined by Instructions to be issued by the Board for this purpose, notwithstanding what is stated in any other legislation. | ||
| Article (60) | A- | 1. | For purposes of rehabilitation of the Company according to Item (10) of paragraph (B) of Article (41) of this Act, the Board may upon the recommendation of the Director General dissolve the board of directors of the Company and form a neutral committee of experience and competence to rehabilitate the Company, and appoint a head for the committee and a deputy thereof, for a period not exceeding one year as of the date the decision was issued, provided that the Company shall bear the fees of the committee as determined by the Board. The committee shall submit a monthly report to the Director General about the progress of procedures relevant to rehabilitation or whenever requested to do so. |
| 2. | For this purpose, rehabilitation shall include managing the Company and regulating its difficult financial situation through negotiating with its creditors for the purpose of determining the debts of the Company and the manner of settlement by approving the rehabilitation plan. | ||
| B- | The committee stated in Item (1) of paragraph (A) of this Article shall publish an announcement in at least two local daily newspapers, and for a period of three consecutive working days at the expense of the Company, to call all creditors to submit data of the amount of their debts attached with documents proving such, within a period not exceeding thirty days as of the date the last announcement was published. After the expiry of this period no data submitted by any creditor shall be accepted. | ||
| Article (61) | A- | Notwithstanding what is stated in the provisions of any other legislation, any seizure on the properties or assets of Company shall be considered void whether precautionary or executive, or any action or execution taken on those properties or assets, from the date the decision of rehabilitation was issued until any of the following cases is fulfilled:- | |
| 1. | The expiration of the period stated in Item (1) of paragraph (A) of Article (60) of this Act, in case the rehabilitation plan was approved. | ||
| 2. | The issuance of a decision by the Board that refused rehabilitation plan, pursuant to the provisions of this Act. | ||
| 3. | Refusal by the creditors of the rehabilitation plan, pursuant to the provisions of this Act. | ||
| 4. | The issuance of a decision by the Board to suspend the rehabilitation procedures pursuant to the provisions of this Act. | ||
| B- | Periods related to prescription shall be suspended regarding the procedures stated in paragraph (A) of this Article. | ||
| Article (62) | A- | The committee shall prepare its report regarding the rehabilitation plan in a period not exceeding fifteen days as of the date the debt was fixed with the committee, and shall call the creditors to approve the plan by publishing an announcement in at least two daily local newspapers, provided that it is approved by creditors that represent at least three quarters of non preference debt and without collaterals. | |
| B- | 1. | In case the plan is approved by the creditors pursuant to the provisions of paragraph (A) of this Article, the committee shall submit a report of such to the Director General. The Director General shall submit the report to the Board along with his recommendations. | |
| 2. | Where the creditors disapprove of the plan prepared pursuant to the provisions of paragraph (A) of this Article, the committee shall submit a report to the Director General, who shall submit the report to the Board along with his recommendation to take the appropriate procedure according to the provisions of paragraph (B) of Article (41) of this Act. | ||
| C- | The Board may approve or disapprove the submitted plan pursuant to the provisions of Item (1) of paragraph (A) of this Article. In case of approval, the procedures of rehabilitation shall be initiated. In case of disapproval the Board shall decide to take the appropriate procedure according to the provisions of paragraph (B) of Article (41) of this Act. | ||
| D- | After rehabilitation a new Board shall be elected pursuant to the provisions of the Companies Act in force. | ||
| Article (63) | A- | If it was evident to the Board that the status of the Company is hindering even if the rehabilitation plan is being applied or if the rehabilitation is in effective, the Board may decide to suspend the rehabilitation procedures and take the suitable procedure pursuant to paragraph (B) of Article (41) of this Act. | |
| B- | The Board upon the recommendation of the Director General may issue the necessary Instructions for rehabilitation and all other matters related thereto according to the provisions of this Act. | ||
| Article (64) | A- | Notwithstanding what is stated in any other legislation, the provisions in this Act, Regulations and Instructions issued by the virtue thereof, shall apply to the liquidation of companies. The Board shall be the only competent authority to issue a decision to liquidate a Company. | |
| B- | The Company may be liquidated voluntarily upon a decision by the extraordinary general assembly after obtaining a prior approval from the Board upon the recommendation of the Director General. The liquidation procedures shall only start after the Company is notified of the approval of the Board. | ||
| C- | As of the date of the issuance of a decision to liquidate the Company, the board of directors of the Company, the general manager, the general assembly, and any administrative committee formed to manage the Company shall lose all duties and authorities as assigned pursuant to the legislation in force and pursuant to the memorandum and articles of association of the Company and the by-laws thereof. | ||
| D- | The Board shall upon the recommendation of the Director General issue the necessary Instructions of the liquidation procedures of the Company and all other matters related thereto according to the provisions of this Act. | ||
| Article (65) | A- | Any interested party may challenge the decision issued according to the provisions of paragraph (A) of Article (64) of this Act before the High Court of Justice within thirty days as of the date the decision had been published in the Official Gazette. | |
| B- | If the High Court of Justice decided to cancel the liquidation decision the board of directors of the Company shall before the Company transacts its business again, comply with any requirements or special conditions decided by the Board. | ||
| C- | Notwithstanding the stipulations of any other legislation, the challenge according to paragraph (A) of this Article shall not suspend the liquidation procedures. | ||
| Article (66) | A- | The Board upon the recommendation of the Director General shall appoint a liquidator or more for the Company, who shall manage the operations of the Company, protect the properties and assets thereof, and represent the Company until its dissolution. The Board shall determine the legal fees, duties, obligations and authorities and obligate him, as well, to submit a guarantee. The Board has the right to dismiss or replace the liquidator in any stage of liquidation pursuant to a justified recommendation by the Director General. | |
| B- | The Board pursuant to the recommendation of the Director General may decide to suspend the liquidation, if the Company submits a plan for adjusting its status within a time frame before the liquidator proceeds with the liquidation procedures, or during such procedures. | ||
| C- | The provisions of bankruptcy stated in other legislations in force, shall not be applied on the Company. | ||
| Article (67) | The following shall result upon issuing the liquidation decision:- | ||
| A- | The liquidator shall add the phrase (under liquidation) to the name of the Company on all its documents and correspondences. | ||
| B- | Suspend any authorization or signatory rights issued by any party in the Company. The liquidator shall exclusively be authorized to grant any authorizations or signatory rights required in the liquidation procedures. | ||
| C- | Cessation, for one year starting from the date of the issuance of the liquidation decision, of the prescription period that would prevent hearing any action regarding any current or due right or claim in favor of the Company. | ||
| D- | Cease, for six months, the cases and the judicial procedures filed by the Company or against it unless the liquidator decides to continue the proceedings before the end of this period, subject to the provisions of paragraph (E) of this Article. | ||
| E- | Prohibit the proceedings in any procedural or executive petition against the Company, unless based on the request of a mortgagee and concerns the mortgaged property. In such case, the petition shall be suspended or denied for six months starting from the date on which the liquidation decision is issued. | ||
| Article (68) | The liquidator may take all the decision and procedures, he deems necessary to complete the liquidation procedures, including:- | ||
| A- | Managing the operations of the Company within the limits required for the liquidation proceedings. | ||
| B- | Inventorying all assets of the Company. | ||
| C- | Appointing any of the experts and persons to assist in the execution of the liquidation procedures, appointing special committees and delegate to them any of the functions and authorities assigned to the liquidator, and issuing the necessary decisions to complete the liquidation procedures. | ||
| D- | Appointing one or more attorneys to represent the Company under liquidation in any claims or judicial procedures related thereto. | ||
| Article (69) | A- | Notwithstanding any contrary agreement, the liquidator may take all the measures, he deems necessary to protect the rights of the Company, including:- | |
| 1. | Canceling any action, revoking any contract concluded by the Company, or reclaiming any sum paid by the Company during the three months proceeding the issuance of the liquidation decision if these actions constitute a privilege to a specific person over the creditors of the Company. This period shall be one year if the Company has an ownership interest with that person or related thereto. The privilege shall be considered established if the disposal or the action was affected without compensation or with partial compensation, or if it entailed the valuation of property or a right at other than its real or prevailing market value. | ||
| 2. | Canceling any action or revoking any contract concluded by the Company with a person that has an ownership interest or related therewith, or reclaiming any sum paid by the Company to any of the aforesaid within the three months preceding the issuance of the liquidation decision. | ||
| 3. | Concluding an agreement with any of the debtors of the Company regarding the schedule for paying or paying in installments any sums or obligations owed by the debtors. | ||
| 4. | Terminating the employment of any of the employees of the Company and paying all sums owed to them. | ||
| 5. | Terminating any contract concluded by the Company with any person before the elapse of the duration of the Contract. | ||
| B- | The liquidator shall take any of the measures mentioned in paragraph (A) of this Article by means of a written notice to be notified to the relevant person. The notice may be contested before the court of first instance within thirty days as of the date of notification. | ||
| Article (70) | A- | All mortgages and guarantees placed on any of the properties or rights of the Company, that took place during three months prior to the date on which the liquidation decision was issued, shall be considered null. This period shall be one year if the mortgage or guarantees are in favor of a person whom the company has an ownership interest or is related therewith. | |
| B- | Any decision to attach any of the property of the Company or right before the issuance of the liquidation decision shall be revoked, unless this decision was based on the request of a mortgagee and concerns the mortgaged property itself. | ||
| Article (71) | For purposes of Article (69) and (70) of this Act, a person shall be considered related to the Company in any of the following cases:- | ||
| A- | If this person is an administrative in the Company or has a mutual business interest with an administrative therein. | ||
| B- | Is a spouse of an administrative in the Company, is related to that administrative or his spouse up to the third degree, or has mutual business interest with any of those aforesaid. | ||
| Article (72) | The liquidator, upon a prior approval from the Board, may borrow, in the name of the Company under liquidation, the funds needed to enable the liquidator to complete the liquidation proceedings; the liquidator may mortgage any of the assets of the Company or rights to guarantee any such loan. Notwithstanding any provision to the contrary, the terms of the loan shall be binding on the liquidator. | ||
| Article (73) | A- | Subject to the provisions regarding the Insureds and the Beneficiaries of the Insurance Policies, the liquidator must within thirty days as of the date of the issuance of the liquidation decision, publish in a conspicuous space in at least two daily newspapers a notification to the creditors of the need to submit their claims against the Company, whether they were due or not, within two months in the case of creditors resident in the Kingdom and three months in the case of creditors resident abroad. | |
| B- | The notification shall be republished in the same manner immediately upon the lapse of the fourteen-day period from the date of the publication of the first announcement. The period for the submission of claims shall be calculated from the publication date of the first announcement. | ||
| C- | If the liquidator or a competent court is convinced that the creditor has a legitimate excuse for not being able to submit his claim within the period stipulated in paragraph (A) of this Article, it shall extend the period for no longer than three additional months. | ||
| D- | The period from the date of the issuance of the liquidation decision to the date on which the first announcement stated in paragraph (A) of this Article, shall not be calculated as part of the period during which any action regarding any rights or claims of creditors towards the Company under liquidation is prevented from being heard. | ||
| Article (74) | A- | Subject to the provisions of paragraph (B) of this Article, the liquidator shall within three months as of the date of the issuance of the liquidation decision, issue the notifications stated below unless he finds a justifiable reason for exceeding this period:- | |
| 1. | Notice to each Insured or Beneficiary from the Insurance Policy stating the amount of their rights and obligations. | ||
| 2. | A claim notice to each debtor of the amount of debts and obligations, which the debtor owes to the Company. | ||
| B- | An objection on the notice stated in paragraph (A) of this Article, may be filed with the liquidator within thirty days as of the date on which it is notified. If no objection is submitted within this period, the Insured, the Beneficiary or the debtor shall be considered to have approved the contents of the notice. | ||
| C- | The period set for preventing hearing lawsuit, shall be interrupted by the claim submitted pursuant to paragraph (B) of this Article. | ||
| D- | If the claim notification issued by the liquidator to the debtor under Item (2) of paragraph (A) of this Article becomes final, the liquidator may conduct a settlement with the debtor or enforce the notice against him through the competent execution departments in accordance with the provisions of legislations in force. | ||
| Article (75) | A- | 1. | The liquidator shall issue his decisions on claims and objections submitted under Articles (73) and (74) of this Act within six months as of the date on which they are submitted. |
| 2. | If the liquidator does not issue his decision within the period stipulated in Item (1) of this paragraph, the claims and objections shall be considered dismissed, de facto. | ||
| B- | Any interested party may challenge, before the court of first instance where the head office of the Company is located within its jurisdiction, the decision issued by the liquidator pursuant to the provisions of paragraph (A) of this Article within thirty days as of the date on which the interested party was notified of the decision, or within thirty days as of the end of the six-month period mentioned in Item (1) of paragraph (A) of this Article, whichever is shorter. | ||
| Article (76) | Notwithstanding what is stated in any other legislation, the liquidator may submit a petition to the competent court of first instance to obtain provisional attachment to any of the properties of the debtors of the Company or to take precautionary or expeditious procedures against such a debtor according to the provisions of the legislation in force, subject to the following:- | ||
| A- | The liquidator shall be exempted from attaching a guaranty to this petition. | ||
| B- | The liquidator should have issued a claim notification to the debtor or shall issue it within eight days upon filing the aforementioned petition, or within eight days following the issuance of a decision on the petition. This notice shall substitute the case to be filed in accordance with the provisions of the Civil Procedures Act in force. | ||
| Article (77) | A- | No creditor, debtor, Insured or Beneficiary, after the issuance of a liquidation decision, shall file a claim against the Company under liquidation except in accordance with the bases and procedures stipulated in this Act. | |
| B- | Subject to the provisions of paragraph (A) of this Article, any damaged party may challenge the actions or measures of the liquidator, before the court of first instance where the head office of the Company is located within its jurisdiction, in accordance with the provisions of the legislations in force. The court may approve, dismiss, or amend such actions or measures. | ||
| Article (78) | The liquidator after obtaining a written approval from the Board may take any of the following measures:- | ||
| A- | Agree with one or more insurance Company to sell all or more than half of the assets, rights and obligations of the Company under liquidation. | ||
| B- | Sell all or a portion of the assets and rights of the Company under liquidation in a public auction, according to special procedures established by the liquidator, notwithstanding what is stated in any other legislation. | ||
| Article (79) | No party shall have the right to object the activation of the cut through clause from the Insured or the Beneficiary of the Insurance Policy. For the purpose of this Article, the cut through clause means: a clause stated in the reinsurance contracts, which stipulate that in case of the liquidation of the Company, the liability of the Reinsurer shall stay in place with regard to his share of the reinsured loss towards the Insured and not towards the liquidator. That means that a direct relationship would be established between the Insured or the Beneficiary from the Insurance Policy and the Reinsurer, contrary to the normal conditions, where the relationship is restricted between the Company and the Reinsurer. | ||
| Article (80) | Notwithstanding what is stated in any other legislation, the debts and obligations owed by a Company under liquidation shall be paid in the following order:- | ||
| A- | The expenses and expenditures incurred by the liquidator and the loans that he obtained. | ||
| B- | The rights of the employees and workers for the last six months. | ||
| C- | he rights of the Insured and the Beneficiaries from the Insurance Policies. The liquidator is obliged to determine the assets of the Company that represent the Technical Provisions required to be maintained according to the provisions of this Act to fulfill these obligations. Any amount obtained by the Company according to the reinsurance arrangements shall be considered as part of the Technical Provisions. | ||
| D- | The rights of other creditors according to their priorities pursuant to the legislations in force. | ||
| E- | The rights of shareholders. | ||
| Article (81) | A- | The liquidator must provide the Director General with monthly reports on the progress of the liquidation proceedings, the stage reached, the results achieved, and any data, information or documents within the period determined by the Director General. | |
| B- | The liquidator must complete the liquidation proceedings within two years from the date on which the liquidation decision is issued. The period may be extended upon the approval of the Board to a period that is sought to be suitable. | ||
| C- | After completing the liquidation of the Company, the Board shall issue a decision to dissolve the Company, and the Company shall be deemed terminated as of the date of publishing the decision in the Official Gazette. | ||
| Article (82) | A- | 1. | Any notice or decision issued by the liquidator under this Act shall be notified to the concerned person by delivering it personally to the said person or his legal representative, or by sending such by registered mail to the person at the last address filed with the Company under liquidation. |
| 2. | Any notice sent under this Article shall be considered as being properly delivered to the person to whom it was sent, even if the person refuses to receive the notice. | ||
| B- | 1. | If by registered mail, the notice shall be considered notified to the concerned person fifteen days after it is placed in the registered mail if the addressee resides in the Kingdom, or thirty days if the addressee resides outside the Kingdom. | |
| 2. | It suffices to prove the service mentioned in Item (1) of this paragraph, if it is evident that the notice has been placed in the mail with the correct address is established, unless the liquidator or court is convinced that the addressee has not received the notice. | ||
| C- | If service according to the provisions of paragraphs (A) and (B) of this Article is not possible, the liquidator must publish the notification in two daily local newspapers at least twice. The publication fees shall be borne by the concerned person. Such publication shall be considered legal from all aspects. | ||
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Last update Thursday on 23-11-2023 at 15:26:57
