DRAFT LEGISLATIVE AMENDMENTS IMPLY SELLING OF NEWLY ISSUED SHARES OF INSURANCE SOCIETIES

The draft law on amending the Law on insuring, clearly regulates the procedure of selling the newly-issued share of insurance societies, which was conducted at the regulator's prescription.

According to State Secretary of the National Commission for Financial Market (NCFM) Elena Pui, a clear regulation of this procedure is very relevant in conditions, when there is lack of some information about potential investors, who are hardly to be identified.

"Thus, as applied to packages of the newly issued shares, the corresponding norms prepared in the draft law will legalize the process of their redemption and canceling, thus ensuring a monitoring of risks connected with insurer's inconsistency with the proposed Moldovan legislation norms", she said.

Elena Pui explained that the strengthening of the regulating basis in Moldova's financial sector is dictated by the presence of two different situations.

"The first concerns the cases when due to lack of investors the newly-issued shares are not sold and the insurer is forced to redeem them, reducing the authorized capital by means of its canceling. As a result of this procedure, the insurer preserves the compliance with norms of liquidity and solvency rates", Pui said.

The second concerns an equivalent situation with a single difference: as a result of share redemption and authorized capital redemption, the insurer does not correspond to norms of liquidity and solvency rates.

"In order to prevent the de-capitalization of insurers, involved in procedures of canceling, issuing, selling the newly issued shares, it is desirable to update the redemption price, as well as the price on which the payments to owners of cancelled shares will be conducted. For this, it should be clearly established that this price is equaled not with the nominal cost, but with the last price of selling the newly-issued and put for sale papers", Elena Pui said.

According to her, during the preparing of amendments, the peculiarities of the Moldovan capital market insurance segment were taken into account.

"The NCFM hopes that these will be taken into consideration in the draft law, which is currently undergoing the procedure of second reading in the Parliament", said the NCFM General Secretary.