Div 3Statutory Funds.

Division 3.—Statutory Funds. Establishment of statutory funds. Eng. Bill 1927, Cl. 3. 37.—(1.) Every company shall, subject to this section, establish, as at the date of the commencement of its financial year next after the commencement of this Act or as at the date on which it commences to carry on life insurance business in Australia, whichever is the later, and shall maintain, a statutory fund, under an appropriate name, in respect of the life insurance business carried on by it. (2.) A company may establish and maintain a separate statutory fund, under an appropriate name, in respect of any class or classes of its life insurance business (or, with the consent of the Commissioner, in respect of a part of any class or classes of its life insurance business) and references in this Act to statutory funds shall include references to separate statutory funds so established. (3.) The consent of the Commissioner under the last preceding sub-section to the establishment and maintenance of a separate statutory fund in respect of a part of any class or classes of the life insurance business of a company shall not be withheld in any case where he is satisfied that the company, as at the first day of January, One thousand nine hundred and forty-five, maintained the assets of that part separate from all other assets of the company. (4.) Where the Commissioner has consented to the establishment of a separate statutory fund in respect of any part of a class or classes of life insurance business, that part shall, for the purposes of this Act, be deemed to be a class of life insurance business. Formation and application of statutory funds. Ibid. Cl. 4. 38.—(1.) All amounts received by a company in respect of any class of life insurance business, after the establishment by the company of a statutory fund in respect of that class of life insurance business, shall be carried to, and become assets of, that fund. (2.) Subject to the payment and application of such sums as may be allocated as surplus in pursuance of section fifty of this Act, the assets of a statutory fund shall not, so long as the company carries on the class or classes of life insurance business in respect of which the fund was established, be available to meet any liabilities or expenses of the company other than— (a) liabilities or expenses referable to that class or those classes of life insurance business; and (b) liabilities charged on those assets or any of them immediately prior to the commencement of this Act, and shall not otherwise be directly or indirectly applied for any purpose other than the purposes of that class or those classes of life insurance business. Ibid. Cl. 4. Imp. Act 1923, s. 13. (3.) A company shall not mortgage or charge any of the assets of any statutory fund otherwise than to secure a temporary bank overdraft. (4.) Subject to the next succeeding sub-section, a transaction shall not be invalidated by reason only that it has been entered into in contravention of the last preceding sub-section, but nothing in this sub-section shall affect the liability of any person to a penalty in respect of any such contravention. (5.) The Court may, on the application of the Commissioner, make an order that a transaction entered into in contravention of sub-section (3.) of this section shall be invalidated, but the Court shall not make any such order if the Court is satisfied that the effect of the order (if made) would be to prejudice the rights of any person in respect of, or arising out of, the transaction which have been acquired in good faith and without knowledge of the contravention. (6.) The assets of each statutory fund shall be kept distinct and separate from all other assets of the company. (7.) The income arising from the investment of the assets of any statutory fund shall be carried to that fund. (8.) Every director of a company shall be under the same liability, in the event of a contravention of the provisions of this section in respect of any statutory fund, as if he had been a trustee under a trust for the execution of those provisions in respect of that fund, and as if the appropriate policy owners had been beneficiaries of such a trust, unless the director proves that the contravention occurred without his knowledge and that he used all due diligence to prevent the contravention. Investment of statutory funds. Eng. Bill 1927, Cl. 4. 39.—(1.) Subject to this Act, the assets of every statutory fund maintained by a company may be invested (subject to any provisions in the instruments constituting the company or in the articles of association or other rules of the company which impose restrictions upon the manner in which the assets of the company may be invested) in such manner as the company thinks fit. (2.) The assets of a statutory fund shall not, without the sanction of the Court, be invested directly or indirectly in any share or interest in any company or undertaking carrying on life insurance business whether in Australia or elsewhere, but nothing in this sub-section shall prevent the allocation, under the next succeeding section, to a statutory fund of any such share or interest held at the commencement of this Act or require the re-investment of any such share or interest. Transitory provisions with respect to statutory funds. Ibid. Cl. 5. 40.—(1.) Every company which, at the date of the commencement of this Act, is carrying on life insurance business in Australia shall, as at the date of the commencement of its financial year next after the commencement, of this Act, allocate to every statutory fund established by the company assets at least equivalent to the aggregate amount of the sums which immediately before the date of the commencement of that financial year were standing to the credit of any fund or account maintained by the company as representing a liability of the company in respect of the class or classes of life insurance business in respect of which the statutory fund is established. (2.) Every company to which the last preceding sub-section applies shall, within six months after the date of the commencement of that financial year, lodge with the Commissioner a statement showing that the provisions of that sub-section have been complied with and specifying the assets allocated to each statutory fund established by the company and all other assets of the company, and shall, if directed by the Commissioner so to do, supply to the Commissioner such information as he requires for the purpose of exercising his powers under this section. (3.) If it appears to the Commissioner that any statement lodged with him under the last preceding sub-section is in any particular unsatisfactory, incomplete, inaccurate or misleading, or that insufficient assets are by the statement shown as having been allocated to any statutory fund, the Commissioner may, after considering any explanation made by or on behalf of the company, give to the company such directions in writing as he thinks necessary for the variation of the statement and for the allocation to the statutory fund of further assets and, subject to this section, the company shall forthwith comply with any directions so given. (4.) An appeal shall lie to the Court against any direction given under the last preceding sub-section. (5.) On any such appeal, the Court may confirm, disallow or vary the direction. (6.) The assets shown— (a) by any statement lodged with the Commissioner by a company under this section; or (b) where directions are given by the Commissioner or, on appeal, by the Court, for the variation of the statement—by any such statement as so varied, as being allocated to any statutory fund, shall form part of the assets of that statutory fund, and shall be deemed to have formed part of those assets as from the date of the commencement of the financial year of the company next after the commencement of this Act.