Regulation 44 Interpretation: Part VIII

In this Part of these Regulations, unless the context otherwise requires—

• “approved counterparty” means any of the following—

  1. (a)

     an approved credit institution;

  2. (b)

     a person who is exempt pursuant to section 43 of the Financial Services Act 1986; or

  3. (c)

     a person who is an authorised person within the meaning of section 207(1) of the Financial Services Act 1986^f1 in respect of investment business of a kind which includes entering into unlisted derivative contracts as principal;

• “approved credit institution” means an institution recognised or permitted under the law of an EEA State to carry on any of the activities set out in Annex 1 to Council Directive 89/646/EEC of 15 December 1989 on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions^f2;

• “approved financial institution” means any of the following—

• the central bank of an EEA State;

• the International Bank for Reconstruction and Development;

• the International Finance Corporation;

• the International Monetary Fund;

• the Inter-American Development Bank;

• the African Development Bank;

• the Asian Development Bank;

• the Caribbean Development Bank;

• the European Investment Bank;

• the European Community;

• the European Atomic Energy Community; and

• the European Coal and Steel Community;

• “approved investment firm” means an investment firm as defined in article 2 of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field^f3;

• “approved securities” means any of the following—

  1. (a)

     any securities issued or guaranteed by, or the repayment of the principal of which, or the interest on which is guaranteed by, and any loans to or deposits with, any of the following, namely, any government, public or local authority or nationalised industry or undertaking, which belongs to Zone A as defined in Council Directive 89/647/EEC of 18 December 1989 on a solvency ratio for credit institutions^f4;

  2. (b)

     any loan to, or deposit with, an approved financial institution; and

  3. (c)

     debentures issued by the Agricultural Mortgage Corporation Limited or the Scottish Agricultural Securities Corporation Limited;

• “asset” includes part of an asset;

• “building society” means a building society within the meaning of the Building Societies Act 1986^f5;

• “company” includes any body corporate;

• “contract for differences” means a contract which falls within paragraph 9 of Part I of Schedule l to the Financial Services Act 1986^f6;

• “debenture” includes debenture stock and bonds, whether constituting a charge on assets or not, and loan stock or notes;

• “debt” includes an obligation to pay a sum of money under a negotiable instrument;

• “derivative contract” means a contract for differences, a futures contract or an option;

• “enactment” includes an enactment of the Parliament of Northern Ireland;

• “equity share” means a share of equity share capital;

• “equity share capital” means, in relation to a company, its issued share capital excluding any part thereof which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution;

• “fixed interest securities” means securities which under their terms of issue provide for fixed amounts of interest;

• “futures contract” means a contract which falls within paragraph 8 of Part I of Schedule l to the Financial Services Act 1986;

• “general business amount” has the meaning given in regulation 57(9) below;

• “general business assets” and “general business liabilities” mean respectively assets and liabilities of an insurance company which are not long term business assets or long term business liabilities;

• “general premium income” means, in relation to any body in any year, the net amount, after deduction of any premiums payable for reinsurance, of the premiums receivable by the body in that year in respect of all insurance business other than long term business;

• “index linked benefits” means benefits—

  1. (a)

     provided for under any contract the effecting of which constitutes the carrying on of ordinary long-term insurance business; and

  2. (b)

     determined by reference to fluctuations in any index of the value of property (whether specified in the contract or not);

• “industrial and provident society” means any society registered (or deemed to be registered) under the Industrial and Provident Societies Act 1965^f7 or the Industrial and Provident Societies Act (Northern Ireland) 1969^f8;

• “insurance liabilities” means, in relation to an insurance company, any debt due from or other liabilities of the company under any contract of insurance to which it is a party;

• “intermediary” means a person who in the course of any business or profession invites other persons to make offers or proposals or to take other steps with a view to entering into contracts of insurance with an insurance company, other than a person who only publishes such invitations on behalf of, or to the order of, some other person;

• “linked assets” means, in relation to an insurance company, long term business assets of the company which are, for the time being, identified in the records of the company as being assets by reference to the value of which property linked benefits are to be determined;

• “listed” means, in relation to an investment—

  1. (a)

     that there has been granted and not withdrawn a listing in respect of that investment on any stock exchange in a member State which is a stock exchange within the meaning of the law of that member State and that dealings in the investment are effected regularly on such stock exchange; or

  2. (b)

     that dealings in that investment are effected regularly on a regulated market;

  and “unlisted” shall be construed accordingly;

• “long term business amount” has the meaning assigned to it in regulation 57(9) below;

• “long term business assets” and “long term business liabilities” mean respectively assets of an insurance company which are, for the time being, identified as representing the long term fund or funds maintained by the company in respect of its long term business and liabilities of the company which are attributable to its long term business;

• “middle market quotation” means—

  1. (a)

     in relation to an investment for which two prices are quoted in the official list published for the relevant market, the average of the two prices so quoted for the relevant date or, if no official list has been published for that day, for the most recent day prior to that day for which the official list has been published; and

  2. (b)

     in relation to an investment for which one price is quoted in the official list published for the relevant market, the price so quoted for the relevant date or, if no official list has been published for that day, for the most recent day prior to that day for which the official list has been published; and

  3. (c)

     in any other case, the nearest equivalent to the average referred to in paragraph (a) above which is published or can be reasonably ascertained from information which is published;

• “option” means an option which falls within paragraph 7 of Part I of Schedule 1 to the Financial Services Act 1986^f9 or a warrant;

• “price earnings ratio” means the price earnings ratio (net) estimated in respect of the non-financial index of the Financial Times-Stock Exchange-Actuaries Share Indices jointly compiled by the Financial Times, the Stock Exchange, the Institute of Actuaries and the Faculty of Actuaries;

• “proper valuation” means, in relation to land, a valuation made by a qualified valuer not more than three years before the relevant date which determined the amount which would be realised at the time of the valuation on an open market sale of the land free from any mortgage or charge;

• “property linked benefits” means benefits other than index linked benefits—

  1. (a)

     provided for under any contract the effecting of which constitutes the carrying on of ordinary long-term insurance business, and

  2. (b)

     determined by reference to the value of, or the income from, property of any description (whether specified in the contract or not);

• “qualified valuer”, in relation to any particular type of land in any particular area, means—

  1. (a)

     a person who is a fellow or professional associate of the Royal Institution of Chartered Surveyors or a fellow or associate of the Incorporated Society of Valuers and Auctioneers or a fellow or associate of the Rating and Valuation Association and either—

     1. (i)

        has knowledge of and experience in the valuation of that particular type of land in that particular area, or

     2. (ii)

        has knowledge of and experience in the valuation of land and has taken advice from a valuer who he is satisfied has knowledge of and experience in the valuation of that particular type of land in that particular area, or

  2. (b)

     a person who conforms with paragraph (a)(i) or (ii) above and immediately before 15th June 1981 was recognised as a qualified valuer by virtue of an approval by the Secretary of State under the Insurance Companies (Valuation of Assets) Regulations 1976^f10 (and for these purposes an approval given under the Insurance Companies (Valuation of Assets) Regulations 1974^f11 shall be deemed to have been given under the said Regulations of 1976);

• “regulated institution” means any of the following—

  1. (a)

     an EC company, a UK company or an EFTA company;

  2. (b)

     an approved credit institution;

  3. (c)

     a body which is registered under the enactments relating to friendly societies and which is authorised to carry on insurance business; and

  4. (d)

     an approved investment firm;

• “regulated market” means a market which is characterised by—

  1. (a)

     regular operation;

  2. (b)

     the fact that regulations issued or approved by the appropriate authority of the state where the market is situated—

     1. (i)

        define the conditions for the operation of and access to the market;

     2. (ii)

        define the conditions to be satisfied by a financial instrument in order for it to be effectively dealt in on the market; and

     3. (iii)

        require compliance with reporting and transparency requirements comparable to those laid down in articles 20 and 21 of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field; and

  3. (c)

     in the case of a market situated outside the European Community, the fact that the financial instruments dealt in are of a quality comparable to those in a regulated market in the United Kingdom;

• “regulated subordinated debt” means any debt which is due or to become due from a regulated institution and which satisfies the following conditions—

  1. (a)

     in the event of liquidation of the regulated institution the debt ranks after all claims of all other creditors and is not to be repaid until all other debts outstanding at the time have been settled;

  2. (b)

     for debts with a fixed maturity date the original term is at least five years;

  3. (c)

     subject to sub-paragraph (d) below, the terms for repayment of the debt are such that the debt will not become repayable before the agreed payment date in any circumstances other than the bankruptcy or winding up of the debtor;

  4. (d)

     early repayment of the debt may only be made with the prior consent of the supervisory authority for the relevant regulated institution; and

  5. (e)

     the terms of the debt may only be amended with the prior consent of the supervisory authority for the relevant regulated institution;

• “related company” means, in relation to an insurance company—

  1. (a)

     a dependant of the insurance company, or

  2. (b)

     a company of which the insurance company is a dependant, or

  3. (c)

     a dependant of a company of which the insurance company is a dependant;

• “relevant date” means, in relation to the valuation of any asset for any purpose for which this Part of these Regulations applies, the date when the asset falls to be valued for that purpose;

• “salvage right” means any right of an insurance company under a contract of insurance to take possession of and to dispose of property by virtue of the fact that the company has made a payment or has become liable to make a payment in respect of a loss thereof;

• “securities” includes shares, debentures, Treasury Bills, Tax Reserve Certificates and Certificates of Tax Deposit;

• “settlement date” means any date on which the fulfilment of an obligation under a derivative contract is or may be required;

• “share” includes stock;

• “stock lending transaction” means an agreement under which title to securities is transferred from one party to the agreement, described in the agreement as the lender, to another, described as the borrower, on terms which provide for redelivery of identical securities from the borrower to the lender on demand or at an agreed date;

• “Talisman short term certificate” means a short term certificate provided by the Stock Exchange to Talisman trading account holders which have been endorsed by such account holders and passed to lenders as security under stock lending transactions;

• “Treasury Bills” includes bills issued by Her Majesty’s Government in the United Kingdom and Northern Ireland Treasury Bills;

• “warrant” means an instrument which falls within paragraph 4 of Part I of Schedule l to the Financial Services Act 1986.

For the purposes of these Regulations, a company is a dependant of another company if it is a subsidiary undertaking of that other company and “subsidiary undertaking” shall be construed in accordance with section 258 of the Companies Act 1985^f12 or Article 266 of the Companies (Northern Ireland) Order 1986^f13.

For the purposes of these Regulations, a debt owed to an insurance company shall be regarded as being secured only to the extent that—

A debt arising under a stock lending transaction shall not be deemed to be unsecured by reason only that the conditions set out in sub-paragraph (3)(d)(ii) above is not satisfied if the total value of the assets providing security for the debt is not dependant on fluctuations in the value of any individual asset.