Agency Obligations

1. The Council has specified the following circumstances under 2.3 in Agency Agreements: Underwriting Agents:

(a) The acquisition, development or acceptance of underwriting business (or source of such business) by a Related Person other than for the benefit of the underwriting members of a syndicate managed by the managing agent in question (the “Syndicate”) where the conditions specified in paragraph 2 or the conditions specified in paragraph 3 have been satisfied and any supplementary requirements made under paragraph 5 have been complied with; and

(b) The transfer or redirection of underwriting business (or source of such business) previously accepted by the underwriting members of a syndicate managed by the managing in agent in question (the “Syndicate”) to the underwriting members of another syndicate under the management of the same managing agent or to a Related Person where the conditions specified in paragraph 2 or the conditions specified in paragraph 3 have been satisfied and any supplementary requirements made under paragraph 5 have been complied with.

^{App. 1 to Bulletin 090/99, 18 November 1999, paragraph 1}

2. The conditions specified in this paragraph are as follows:

(a) the managing agent has fully and fairly disclosed to the members of the Syndicate:

(i) the terms of the Proposal; and

(ii) the nature of any conflict of duty or interest or potential conflict of duty or interest of the managing agent with regard to the Proposal; and

(b) the managing agent has invited any member of the Syndicate who objects to the Proposal to notify the managing agent of his objection by a specified date not less than 21 days after the date of the disclosure referred to in subparagraph (a) and having attached to or enclosed with that disclosure a prepaid notice of objection which may be used for that purpose;

(c) the managing agent and its auditors certify to the Council after the period for objections in sub-paragraph (b) has expired either that no objections were received from members or that objections were received from members whose aggregate member’s syndicate premium income limits for the syndicate for the current year of account are less than 10% of the aggregate of the

member’s syndicate premium limits for the syndicate for the current year of account of the members who are not Related Persons; and

(d) the Council has confirmed to the managing agent that it does not consider that the Proposal should be subject to a ballot in accordance with paragraph 3(b) or the condition specified in paragraph 3(b) is satisfied.

^{App. 1 to Bulletin 090/99, 18 November 1999, paragraph 2}

3. The conditions specified in this paragraph are as follows:

(a) the managing agent has fully and fairly disclosed to the members of the Syndicate:

(i) the terms of the Proposal; and

(ii) the nature of any conflict of duty or interest or potential conflict of duty or interest of the managing agent with regard to the Proposal; and

(b) the managing agent has conducted a ballot of the members of the Syndicate in question no earlier than 21 days and no later than 60 days from the date of disclosure referred to in sub-paragraph (a) or in paragraph 2(a) and the managing agent and its auditors certify to the Council that a resolution to approve the Proposal has been approved in the ballot by a majority by Value of the members of the syndicate who have voted in the ballot and who are not Related Persons.

^{App. 1 to Bulletin 090/99, 18 November 1999, paragraph 3}

4. For the purposes of sub-paragraphs 2(c) and 3(b) any objection which has been withdrawn by the member before the managing agent and its auditor make the certification referred to in those sub-paragraphs shall be disregarded.

^{App. 1 to Bulletin 090/99, 18 November 1999, paragraph 4}

5. The Council may make supplementary requirements in respect of any matter to be undertaken in accordance with the above conditions.

^{App. 1 to Bulletin 090/99, 18 November 1999, paragraph 5}

6. For the purposes of these circumstances the following expressions shall have the following meanings:

(a) “Proposal” means –

(i) in relation to the circumstance referred in paragraph 1(a), the proposed acquisition, development or acceptance of underwriting business (or source of such business) in question;

(ii) in relation to the circumstance referred to in paragraph 1(b), the proposed transfer or redirection of underwriting business (or source of such business) in question.

(b) “Related Person” means in relation to a managing agent, a person who is related to that managing agent in any manner other than by merely participating in the underwriting business of a syndicate managed by that managing agent (but including without limitation through the possession by either of them of an interest in the other or by a third party of interests in both, or through the possession or common directors or employees) which would or might indicate that interests of that person are to be taken as being also interests of that managing agent or that that managing agent is to be taken to be interested in any matter in which that person is interested; and

(c) “Value” in relation to any ballot, shall be determined by reference to the respective members’ syndicate premium limits of the members of the relevant syndicate for the year of account corresponding to the year in which the ballot is held.

^{App. 1 to Bulletin 090/99, 18 November 1999, paragraph 6}