Schedule 2: Other Duties, Functions and Powers Conferred on the Regulatory Authority

1. General

1.1 The Regulatory Authority may undertake such duties, functions and powers as may be lawfully vested, assigned or delegated in or to it pursuant to any Regulations from time to time.
1.2 For the avoidance of doubt, the duties, functions and powers of the Regulatory Authority under Parts 8-10 of the Regulations shall (where appropriate and unless otherwise stated in the Regulations or instrument effecting such vesting, assignment or delegation) apply equally in respect of the duties, functions and powers vested, assigned or delegated in or to the Regulatory Authority pursuant to paragraph 1.1.

2. Money Laundering and terrorist financing

The Regulatory Authority is responsible for the detection and prevention of money laundering and terrorist financing in or from the QFC and, in particular, for ensuring, by monitoring, supervision, investigation, enforcement, and other ways, that Authorised Firms and other QFC Licensed Firms comply with requirements relating to the combating of money laundering and terrorist financing.

3. Insolvency

3.1 General
(1) Paragraph 3 does not have effect until the coming into force of the Insolvency Regulations.
(2) Upon the coming into force of the Insolvency Regulations, the general law of insolvency contained in the Insolvency Regulations and any analogous Regulations enacted from time to time relating to Companies or other types of entity (including provisions relating to branches or establishments of overseas entities in the QFC), has effect subject to the duties, functions and powers conferred on the Regulatory Authority under paragraph 3 (which, in the case of the analogous Regulations described above, shall apply mutatis mutandis).
(3) Words used in paragraph 3, not otherwise defined in these Regulations, have the meanings given to them in the Insolvency Regulations.
3.2 Company Arrangements
(1) Regulatory Authority's powers to participate in proceedings: Company Arrangement
(A) Paragraph 3.2(1) applies in respect of a Company which is an Authorised Firm and is subject to a Company Arrangement.
(B) The Regulatory Authority, being dissatisfied by any act, omission or decision of the supervisor of a Company Arrangement, may make an application to the Tribunal in relation to the Company under the relevant Article of the Insolvency Regulations.
(C) If a Person other than the Regulatory Authority makes an application referred to in paragraph 3.2(1)(B) to the Tribunal in relation to the Company, the Regulatory Authority shall be served with notice of the application and is entitled to be heard at any hearing relating to the application.
3.3 Administration
(1) Applications
(A) The Regulatory Authority may apply to the Tribunal for an Administration order in relation to a Company which:
(i) is, or has been, an Authorised Firm; or
(ii) is carrying on, or has carried on, a Regulated Activity in contravention of the QFC Law.
(B) Paragraph 3.3(1)(C) applies to a Company in respect of which an application is made by the Regulatory Authority under this paragraph 3.3(1).
(C) If the Company is in default on an obligation to pay a sum due and payable under an agreement the making or performance of which constitutes or is part of a Regulated Activity carried on by the Company, it is to be treated for the purpose of making an Administration order as unable to pay its debts.
(2) Insurers
(A) The Regulatory Authority may by Rules provide that such provisions of the Insolvency Regulations relating to Administration as may be specified are to apply in relation to Insurers with such modifications as may be specified.
(B) A Rule under this paragraph 3.3(2):
(i) may provide that such provisions of paragraph 3 as may be specified are to apply in relation to the Administration of Insurers in accordance with the Rule with such modifications as may be specified; and
(ii) requires the consent of the Regulatory Authority.
(C) For the purposes of this paragraph 3.3(2) "specified" means specified in the Rule made under paragraph 3.3(2)(A).
(3) Administrator's duty to report to Regulatory Authority

If:
(A) a Company is in Administration by virtue of an application or an appointment made by a Person other than the Regulatory Authority; and
(B) it appears to the Administrator that the Company is carrying on, or has carried on, a Regulated Activity in contravention of the QFC Law
the Administrator must report the matter to the Regulatory Authority without delay.
(4) Regulatory Authority's powers to participate in proceedings
(A) Paragraph 3.3(4) applies if a Person other than the Regulatory Authority makes an Administration application to the Tribunal or appoints an Administrator under the Insolvency Regulations in relation to a Company which:
(i) is, or has been, an Authorised Firm; or
(ii) is carrying on, or has carried on, a Regulated Activity in contravention of the QFC Law.
(B) The Regulatory Authority shall be served with notice of the application or notice of intention to appoint and is entitled to be heard:
(i) at the hearing of the application; and
(ii) at any other hearing of the Tribunal in relation to the Company under the Insolvency Regulations.
(C) Any notice or other document required to be sent to a creditor of the Company must also be sent to the Regulatory Authority.
(D) The Regulatory Authority, believing that the Administrator is managing, or proposes to manage, the Company's affairs in a manner which is unfairly prejudicial, may apply to the Tribunal under the relevant Article of the Insolvency Regulations.
(E) The Regulatory Authority may appoint a representative:
(i) to attend any meeting of creditors of the Company summoned under any enactment;
(ii) to attend any meeting of a creditors' committee established in relation to the Company; and
(iii) to make representations as to any matter for decision at such a meeting.
3.4 Voluntary Winding Up
(1) Regulatory Authority's powers to participate in proceedings
(A) Paragraph 3.4(I) applies in relation to a Company which:
(i) is being wound up voluntarily;
(ii) is an Authorised Firm; and
(iii) is not a Long Term Insurer.
(B) The Regulatory Authority shall be served with notice of any application to the Tribunal in relation to the voluntary winding-up of the Company and is entitled to be heard at any hearing of the application.
(C) Any notice or other document required to be sent to a creditor of the Company must also be sent to the Regulatory Authority.
(D) The Regulatory Authority may appoint a representative:
(i) to attend any meeting of creditors of the Company summoned under the Insolvency Regulations;
(ii) to attend any meeting of a creditors' committee established in relation to the Company; and
(iii) to make representations as to any matter for decision at such a meeting.
(E) The voluntary winding-up of the Company does not bar the right of the Regulatory Authority to have it wound up by the Tribunal.
3.5 Insurers
(1) Long Term Insurers
(A) A Long Term Insurer may not be wound up voluntarily without the consent of the Regulatory Authority.
(B) If notice of a general meeting of a Long Term Insurer is given, specifying the intention to propose a Winding-up Resolution of the Long Term Insurer, a director of the Long Term Insurer must notify the Regulatory Authority as soon as practicable after he becomes aware of it.
(C) A Person who fails to comply with paragraph 3.4(1)(B) shall be liable to a fine.
(D) A Long Term Insurer that passes a Winding-up Resolution must forward a copy of that Winding-up Resolution to the Registrar, accompanied by a certificate issued by the Regulatory Authority stating that it consents to the voluntary winding-up of the Long Term Insurer.
(E) If paragraph 3.4(1)(D) is complied with, the voluntary winding-up is to be treated as having commenced at the time the resolution was passed.
(F) If paragraph 3.4(1)(D) is not complied with, the resolution has no effect.
3.6 Compulsory Winding-Up
(1) Winding-up applications
(A) The Regulatory Authority may apply to the Tribunal for the winding up of a Company which:
(i) is, or has been, an Authorised Firm; or
(ii) is carrying on, or has carried on, a Regulated Activity in contravention of the QFC Law.
(B) On such an application, the Tribunal may wind up the Company if:
(i) the Company is unable to pay its debts within the meaning of the Insolvency Regulations; or
(ii) the Tribunal is of the opinion that it is just and equitable that it should be wound up.
(C) If a Company is in default on an obligation to pay a sum due and payable under an agreement the making or performance of which constitutes or is part of a Regulated Activity carried on by the Company concerned, it is to be treated for the purpose of paragraph 3.6(1)(B)(i) as unable to pay its debts.
(2) Insurers: service of application on Regulatory Authority
(A) If a Person other than the Regulatory Authority makes an application for the winding-up of an Insurer, the applicant must serve a copy of the application on the Regulatory Authority.
(B) If a Person other than the Regulatory Authority applies to have a provisional liquidator appointed under the Insolvency Regulations in respect of an Insurer, the applicant must serve a copy of the application on the Regulatory Authority.
(3) Liquidation's duty to report to Regulatory Authority

If:
(A) a Company is being wound up voluntarily or a body is being wound up on an application made by a person other than the Regulatory Authority; and
(B) it appears to the liquidator that the Company or body is carrying on, or has carried on, a Regulated Activity in contravention of the QFC Law,
the liquidator must report the matter to the Regulatory Authority without delay.
(4) Regulatory Authority's powers to participate in proceedings
(A) Paragraph 3.6(4) applies if a Person other than the Regulatory Authority makes an application for the winding-up of a Company which:
(i) is, or has been, an Authorised Firm; or
(ii) is carrying on, or has carried on, a Regulated Activity in contravention of the QFC Law.
(B) The Regulatory Authority shall be served with notice of the application and is entitled to be heard:
(i) at the hearing of the application; and
(ii) at any other hearing of the Tribunal in relation to the Company under or by virtue of the Insolvency Regulations.
(C) Any notice or other document required to be sent to a creditor of the Company must also be sent to the Regulatory Authority.
(D) The Regulatory Authority may appoint a representative:
(i) to attend any meeting of creditors of the Company;
(ii) to attend any meeting of a creditors' committee established in relation to the Company; and
(iii) to make representations as to any matter for decision at such a meeting.
3.7 Provisions Against Debt Avoidance
(1) Regulatory Authority's right to apply for an order
(A) The Regulatory Authority may apply for an order in respect of a transaction at an undervalue in relation to a Company if:
(i) at the time the transaction at an undervalue was entered into, the Company was carrying on a Regulated Activity (whether or not in contravention of the QFC Law); and
(ii) a creditor of the Company is or was party to an agreement entered into with the Company, the making or performance of which constituted or was part of a Regulated Activity carried on by the Company.
(B) An application made under paragraph 3.7(1) is to be treated as made on behalf of every creditor to whom paragraph 3.7(1)(A)(ii) applies.
3.8 Supplemental Provisions Concerning Insurers
(1) Continuation of contracts of Long Term Insurance Contracts where Long Term Insurer is in liquidation
(A) Paragraph 3.8(1) applies in relation to the winding-up of a Long Term Insurer.
(B) Unless the Tribunal otherwise orders, the liquidator must carry on the Insurer's business so far as it consists of Carrying Out Contracts of Insurance which are Long Term Insurance Contracts with a view to its being transferred as a going concern to a Person who may lawfully carry out those contracts.
(C) In carrying on the business, the liquidator:
(i) may agree to the variation of any Contracts of Insurance in existence when the winding-up order is made; but
(ii) must not effect any new Contracts of Insurance.
(D) If the liquidator is satisfied that the interests of the creditors in respect of liabilities of the Insurer attributable to Long Term Insurance Contracts effected by the Insurer require the appointment of a special manager, he may apply to the Tribunal.
(E) On such an application, the Tribunal may appoint a special manager to act during such time as the Tribunal may direct.
(F) The special manager is to have such powers as the Tribunal may direct.
(G) If the Tribunal thinks fit, it may reduce the value of one or more of the Long Term Insurance Contracts effected by the Insurer.
(H) Any reduction is to be on such terms and subject to such conditions (if any) as the Tribunal thinks fit.
(I) The Tribunal may, on the application of an official, appoint an independent actuary to investigate the Insurer's business so far as it consists of carrying out its Long Term Insurance Contracts and to report to the official:
(i) on the desirability or otherwise of that part of the Insurer's business being continued; and
(ii) on any reduction in the Long Term Insurance Contracts effected by the Insurer that may be necessary for successful continuation of that part of the Insurer's business.
(J) For the purposes of paragraph 3.8(1) "official" means:
(i) the liquidator;
(ii) a special manager appointed under paragraph 3.8(1)(E); or
(iii) the Regulatory Authority.
(2) Reducing the value of contracts instead of winding-up
(A) This paragraph 3.8(2) applies in relation to an Insurer which has been proved to be unable to pay its debts.
(B) If the Tribunal thinks fit, it may reduce the value of one or more of the Insurer's contracts instead of making a winding-up order.
(C) Any reduction is to be on such terms and subject to such conditions (if any) as the Tribunal thinks fit.
(3) Treatment of assets on winding-up
(A) The Regulatory Authority may by Rules provide for the treatment of the assets of an Insurer on its winding-up.
(B) The Rules may, in particular, provide for:
(i) assets representing a particular part of the Insurer's business to be available only for meeting liabilities attributable to that part of the Insurer's business; and
(ii) separate general meetings of the creditors to be held in respect of liabilities attributable to a particular part of the Insurer's business.
(C) Regulations made under this paragraph 3.8(3) may include provision:
(i) for determining the amount of the liabilities of an Insurer to policyholders of any class or description for the purpose of proof in a winding-up; and
(ii) generally for carrying into effect the provisions of paragraph 3 with respect to the winding up of Insurers:
(D) Regulations made under paragraph 3.8(3) may, in particular, make provision for all or any of the following matters:
(i) the identification of assets and liabilities;
(ii) the apportionment, between assets of different classes or descriptions, of:
(a) the costs, charges and expenses of the winding-up; and
(b) any debts of the Insurer of a specified class or description;
(iii) the determination of the amount of liabilities of a specified description;
(iv) the application of assets for meeting liabilities of a specified description;
(v) the application of assets representing any excess of a specified description.
(E) For the purposes of paragraph 3.8(3) "specified" means specified in Rules made under paragraph 3.8(3).
Amended by QFC Reg 2010-2 (as from 9th December 2010)