NOTES TO FINANCIAL STATEMENTS NOTES TO F I NANC I AL STATEMENTS 16. RELATED PARTY TRANSACTIONS The Company provides insurance coverage to Class A Members, as described in note 1. The premiums and related transactions with these Class A Members are thus related party transactions. In addition, as described in note 10 above, the two Class C Members provided Returnable Capital to the Company. These financial liabilities are also related party transactions, given that ARC Ltd. is a mutual company. Remuneration during the year in respect of the Board of Directors is in the form of an annual fixed Honorarium of $30,000 (2022: $20,000) for Board Chair, $25,000 (2022: $18,000) for Board Committee Chair, $20,000 (2022: $15,000) per Director and $10,000 (2022: $10,000) for the Board Advisor. There were six Directors on the Board and one Advisor to the Board at the beginning and end of the year. The total Honorarium paid during the period was $150,000 (2022: $133,000). The total amount of travel and subsistence expenses reimbursed to Directors, or to entities who have paid on behalf of respective Directors, for the period was $43,525 (2022: $21,880). Effective August 2020, the Company entered into an agreement with GP3 Institute Trust, a non-profit which provides Legal Advisory and Governance Support Services for public private corporation initiatives within the United Nations Sustainable Development Goals framework. The Company’s Legal Secretary service is provided by the GP3 Institute Trust. The Company provides grant funding to GP3 Institute in recognition of the legal and governance services provided to the Company. The amount of $Nil (2022: $15,454) representing grant funding due to GP3 Institute is included in accounts payable and accrued liabilities at the year end. GP3 Institute is not considered a related party as ARC Ltd.’s Legal Secretary is an independent contractor of GP3 Institute. 17. TAXATION Under current Bermuda law, the Company is not required to pay any taxes in Bermuda on either income or capital gains. The Company has received an undertaking from the Bermuda government exempting it from all local income, withholding and capital gains taxes until March 31, 2035. At present, the Bermuda government has enacted legislation for its 15% corporate income tax (“CIT”) that would apply to Bermuda businesses that are part of multinational enterprise groups (MNE Groups) with annual revenue of €750milion or more. The corporate income tax was enacted on December 27, 2023 and will be effective for tax years beginning on or after January 1, 2025. It is not anticipated that the CIT will affect the Company since it is not an MNE Group. 18. CAPITAL RISK MANAGEMENT AND STATUTORY FINANCIAL DATA 18.1. Bermuda ARC Ltd. is a mutual insurance Company, registered as a Class 2 Insurer under the Bermuda Insurance Act 1978 and Related Regulations (“the Act”). In accordance with the Act, statutory capital and surplus at the period end was $62,811,197 (December 31, 2022: $52,120,302) and the amount required to be maintained by the Company was $4,583,406 (December 31, 2022: $1,944,097). The Company has met the minimum solvency margin requirement at the year end. In addition, a minimum liquidity ratio must be maintained whereby relevant assets, as defined by the Act, must exceed 75% of relevant liabilities. The ratio was met at the period end. 130
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