Labuan Financial services Authority Approval to AirAsia Corporate Services Limited To Carry On Labuan Captive Insurer Business
BackApr 27, 2010
|Subject||Labuan Financial Services Authority approval to AirAsia Corporate Services Limited to carry on Labuan Captive Insurer Business|
|Contents||The Board of Directors of AirAsia Berhad (“AirAsia” or “the Company”) wishes to announce that its wholly-owned subsidiary, AirAsia Corporate Services Limited (“AACSL”) which was incorporated in the Federal Territory of Labuan, had received approval through a letter dated 23 April 2010 (“the Approval”) from the Labuan Financial Services Authority (“Labuan FSA”) to carry on a Labuan captive insurance business in, from or through the Federal Territory of Labuan (“Labuan Captive Insurance Business”).
1. Terms of the Approval
The Approval is subject to among others-
(a) AACSL making a payment of the requisite license fee to Labuan FSA; and
(b) the provision of evidence that a working fund of RM300,000 or its equivalent in any foreign currency has been deposited with a bank in Labuan.
Following the Approval, AACSL will now be able to insure and reinsure all of the risks within the AirAsia Group.
The primary purpose of establishing the Labuan Captive Insurance Business is to provide access for the Company to commercial insurance markets and provide flexibility in managing and retaining its own risks.
a. With the establishment of the Labuan Captive Insurance Business, AirAsia will have a choice of which risks and how much risk the Company intends to retain within the Group thus simultaneously giving the Company greater flexibility in managing its risks.
b. the Labuan Captive Insurance Business will have inherent tax and investment advantages.
c. the Labuan Captive Insurance Business offers AirAsia an opportunity to set up a profit centre within its group following the exemption order to the Insurance Act 1996 by Labuan FSA. This enables
• the Labuan Captive Insurance Business to directly insure AirAsia’s International Aviation, Maritime and Liability Risks;
• AirAsia to pay its insurance premium to the Labuan Captive Insurance Business instead of paying through local insurers.
d. With enough funds the Labuan Captive Insurance Business is contemplated to transfer some of its fund to AirAsia through the payment of dividends.
3. Directors’ and major shareholders’ interests
No directors and/or major shareholders of AirAsia and/or persons connected with them have any interest, whether directly or indirectly, to the Labuan Captive Insurance Business.
4. Directors’ opinion
The Board having considered all the relevant factors in respect of the Approval is of the opinion that carrying on a Labuan Captive Insurance Business in AACSL is in the best interest of the Company.
5. Financial effect of the Labuan Captive Insurance Business
The Labuan Captive Insurance Business is not expected to have any material impact on the financial position of AirAsia for this current financial year.
6. Approval required
AirAsia has obtained the approval of its Board of Directors to carry on the Labuan Captive Insurance Business via AACSL. No approval of its shareholders is required.
7. Amendment to AACSL’s Memorandum and Articles of Association
Further to the Approval, AirAsia has agreed to amend AACSL’s Memorandum and Articles of Association to reflect that it can undertake, carry or transact every kind of insurance, re-insurance pertaining to the Labuan Captive Insurance Business
This announcement is dated 27 April, 2010
|Company Name||AIRASIA BERHAD|
|Date Announced||27 Apr 2010|