Order of the State Council of the People's Republic of China

No. 636

The Decision of the State Council on Revising the Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies (hereinafter referred to as the “Decision”) is hereby promulgated for implementation as of August 1, 2013.

Premier: Li Keqiang

May 30, 2013

Decision of the State Council on Revising the Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies

The State Council decided to make the following revisions to the Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies:

Paragraph 1 of Article 7 shall be revised as: "The minimum registered capital of a joint venture insurance company or a wholly-owned insurance company shall be CNY200 million or the equivalent amount in freely exchangeable currency; the minimum registered capital shall be fully paid-up capital."; Paragraph 2 of this Article shall be revised as: "The head office of a foreign-invested insurance company shall provide its branches with a total of no less than CNY200 million or the equivalent amount in freely exchangeable currency as operating funds."

The Decision shall come into force as of August 1, 2013.

The Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies shall be revised in accordance with the Decision for reissuance.

Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies

(Promulgated by the Order of the State Council of the People's Republic of China No. 336 on December 12, 2001, and revised in accordance with the Decision of the State Council on Revising the Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies on May 30, 2013)

Chapter I General Provisions

Article 1 In order to adapt to the requirements of opening up and economic development, strengthen and improve the supervision and administration of foreign-invested insurance companies, and promote the healthy development of the insurance industry, The Administrative Regulations of the People’s Republic of China (hereinafter referred to as the "Provisions") have been enacted.

Article 2 The "foreign-invested insurance company" in the Regulations refer to any of the following types of insurance companies established and approved in accordance with relevant laws and administrative regulations of the People’s Republic of China to carry on business within the territory of China:

1.    an insurance company established by a foreign insurance company and a Chinese company or enterprise within the territory of China to carry on joint business operations (hereinafter referred to as the "joint venture insurance company");

2.    a foreign-invested insurance company established and invested by a foreign insurance company to carry on business operations within the territory of China (hereinafter referred to as the "wholly foreign-owned insurance company"); or

3.    a branch of a foreign insurance company established within the territory of China (hereinafter referred to as the "branches of foreign insurance company").

Article 3 Foreign-invested insurance companies shall abide by the laws and regulations of China and shall not damage the social public interests of China.

The lawful business operations, rights and interests of foreign-invested insurance companies shall be subject to the protection of Chinese law.

Article 4 The China Insurance Regulatory Committee (hereinafter referred to as the "CIRC") shall be responsible for the supervision and regulation of foreign-invested insurance companies. The representative offices of the CIRC shall, on the basis of the CIRC's authorization, be responsible for the day-to-day supervision and regulation of foreign-invested insurance companies within their respective jurisdictions.

Chapter II Establishment and Registration

Article 5 The establishment of a foreign-invested insurance company shall be subject to the approval of the CIRC.

The locations in which foreign-invested insurance companies may be established shall be determined by the CIRC in accordance with the relevant provisions.

Article 6 For the establishment of a foreign-invested insurance company that seeks to engage in personal insurance or property insurance, the form of establishment and proportion of foreign capital shall be determined by the CIRC in accordance with the relevant provisions.

Article 7 The minimum registered capital of a joint venture insurance company or a wholly-owned insurance company shall be CNY200 million or the equivalent amount in freely exchangeable currency; the minimum registered capital shall be fully paid-in monetary capital.

The head office of a foreign-invested insurance company shall provide its branches with a total of no less than CNY200 million or the equivalent amount in freely exchangeable currency as operating funds.

The CIRC may, according to the scope of business and business scale of the foreign-invested insurance company concerned, increase the minimum amount of registered capital or operating funds of foreign-invested insurance company set forth in the above two paragraphs.

Article 8 Any foreign insurance company that applies for establishment of a foreign-invested insurance company shall meet the following conditions:

1.    it shall have been engaged in the insurance business for over 30 years;

2.    it shall have had a representative office established within the territory of China for over 2 years;

3.    it shall have a total asset of no less than USD 5 billion as at the end of the year prior to the application;

4.    it shall locate in a country or region in which a sound system for the regulation of insurance business is in place and it shall be subject to the effective supervision of the relevant authority in that country or region;

5.    it shall satisfy the solvency standards applicable in the relevant country or region;

6.    it shall have obtained approval for establishment of a Chinese operation from the relevant authority in the country or region; and

7.    any other prudent conditions required by the CIRC.

Article 9 To establish a foreign-invested insurance company, the applicant shall file a written application and submit the following materials to the CIRC:

1.    an application form signed by the applicant's legal representative; where the application concerns the establishment of a joint venture insurance company, it shall be jointly signed by the legal representatives of the parties to the joint venture insurance company;

2.    the duplicate of business license, certificate demonstrating that it meets the applicable solvency standards, and opinion letter concerning the application issued by the relevant regulatory authority of the country or region in which the applicant is located;

3.    the foreign applicant's articles of association and annual reports for the past three years;

4.    relevant materials concerning the Chinese applicant where the applicant seeks to establish a joint venture insurance company;

5.    a feasibility study and preparatory establishment plan for the company to be established;

6.    the names, resumes of and letters appointing the individuals to be in charge of the company to be established; and

7.    any other materials required by the CIRC.

Article 10 The CIRC shall carry out a preliminary assessment in respect of any application for establishing a foreign-invested insurance company and shall, within six months as of the date on which it receives the complete set of application materials, decide on whether or not to accept the application. Where it decides to accept the application, it shall issue a formal application form to the applicant; where it refuses the application, it shall inform the applicant in writing and state its reasons.

Article 11 Any applicant shall complete the preparatory establishment of the company within one year upon receipt of the formal application form. Where it fails to do so within the specified period of time but with proper reasons, the CIRC may approve an extension of the time limit for three months. Where the applicant fails to complete the preparatory work within the extended period of time, the CIRC's decision to accept the application shall be automatically invalid. After completing the preparatory work, the applicant shall fill in the formal application form and submit the same to the CIRC for examination and approval, together with the following documents:

1.    a preparatory establishment report;

2.    the articles of association of the company to be established;

3.    the capital contributors of the company to be established and their respective capital contributions;

4.    a capital verification certificate issued by a legally approved capital appraisal institution;

5.    the letter of authorization to the main principal of the company to be established;

6.    the names and resumes of and letters appointing the senior officers of the company to be established;

7.    the 3-year business plan of the company to be established and its reinsurance strategy;

8.    for any company to be established within the territory of China, the insurance clauses and premiums for the types of insurance to be offered and the method to be used for calculating its liability reserve funds;

9.    materials on the place of business and other facilities for the business operations of the company to be established;

10.  for any branch to be established by a foreign insurance company, a letter of guarantee issued by the head office guaranteeing that it will be responsible for the taxes and liabilities of the branch;

11.  for a joint venture insurance company, the agreement relating to joint venture business operations; and

12.  any other documents required by the CIRC.

Article 12 The CIRC shall, within 60 days upon receipt of the complete formal application materials for the establishment of a foreign-invested insurance company, decide on whether or not to approve the application. Where the application is approved, it shall issue a License to Engage in Insurance Business; where the application is declined, it shall inform the applicant in writing and state its reasons.

Where the establishment of a foreign-invested insurance company is approved, the applicant shall, with its License to Engage in Insurance Business, apply to the administrative department of industry and commerce for registration and a business license.

Article 13 A foreign-invested insurance company shall, after being established, transfer a security deposit of 20% of its total registered capital or operating funds to a bank designated by CIRC. The security deposit may not be used for any purpose other than repayment of the debts of the company in the event of its liquidation.

Article 14 The establishment of any branch within the territory of China by a foreign-invested insurance company shall be subject to the examination and approval of the CIRC.

Chapter III Scope of Business

Article 15 A foreign-invested insurance company may, according to the scope of its business as verified by the CIRC, engage in the following types of insurance business in whole or in part:

1.    property insurance, including property loss insurance, liability insurance, credit insurance and other business; or

2.    personal insurance, including life insurance, health insurance, accidental injury insurance and other business.

A foreign-invested insurance company may, on the basis of CIRC verification in accordance with relevant provisions, engage in major commercial risk insurance, all-inclusive policy insurance within the permitted scope.

Article 16 No foreign-invested insurance company may engage in property insurance and personal insurance business at the same time.

Article 17 A foreign-invested insurance company may engage in the reinsurance of the following types of insurance business as referred to in Article 15 of the Regulations:

1.    outward reinsurance; and

2.    inward reinsurance.

Article 18 The specific scope of business, geographic area of business and range of clients of a foreign-invested insurance company shall be subject to verification by the CIRC in accordance with the relevant provisions. A foreign-invested insurance company may engage in insurance business only within its permitted scope of business.

Chapter IV Supervision and Regulation

Article 19 The CIRC shall be entitled to inspect the business operations and financial affairs of and the expenditure of funds by foreign-invested insurance companies, to demand foreign-invested insurance companies to provide relevant documents, materials and written reports within a prescribed period of time, and to punish such companies in accordance with the law for any violation of laws or regulations.

Foreign-invested insurance companies shall accept the lawful supervision and regulation of the CIRC, provide the CIRC with authentic and relevant documents, materials and written reports, and shall not refuse to cooperate with the CIRC, impede its supervisory and inspection activities, or conceal any information.

Article 20 No foreign-invested insurance companies may have any of the following types of dealings with any connected enterprise unless otherwise approved by CIRC:

1.    outward or inward reinsurance activities; or

2.    the purchase and sales of assets or other transactions.

The term "connected enterprise" in the preceding paragraph refers to an enterprise that has any of the following types of relationship with the foreign-invested insurance company:

1.    a relationship whereby one party controls the other through capital contribution or shareholding;

2.    a relationship whereby both parties are controlled by a third party through shareholding or capital contribution; or

3.    any other relationship whereby the parties have common interests.

Article 21 Branches of foreign-invested insurance companies shall, within three months as of the end of each accounting year, submit to the CIRC their financial statements and those of their head offices for the previous financial year; such financial statements shall be made public.

Article 22 Where any of the following circumstances apply to the head office of a branch of a foreign-invested insurance company, the branch shall, within ten days as of the date on which the relevant circumstances occur, notify the CIRC in writing of the relevant information:

1.    any change in the name, the main principal of the head office or its place of registration;

2.    any change in registered capital;

3.    any change in shareholders holding more than 10% of the total capital or shares;

4.    any adjustment to its scope of business;

5.    any penalty imposed by the relevant authority of the country or region where it is located;

6.    the occurrence of any significant loss;

7.    any demerger, merger, dissolution or removal from the company register in accordance with the law, or any declaration of bankruptcy; or

8.    any other circumstances specified by the CIRC.

Article 23 In the event that the head office of any branch of a foreign-invested insurance company is dissolved, removed from the company register or declared bankrupt in accordance with the law, the CIRC shall order the branch to cease accepting any new business.

Article 24 Foreign-invested insurance companies engaging in foreign exchange insurance activities shall comply with the relevant national provisions concerning foreign exchange.

Any foreign-invested insurance company that carries on business within territory of China shall settle its transactions in CNY unless otherwise approved by national authority of foreign exchange.

Article 25 Documents, materials and written reports to be submitted or provided to the CIRC as specified in the Regulations shall be in Chinese.

Chapter V Termination and Liquidation

Article 26 In the event that a foreign-invested insurance company is to be dissolved as a result of any demerger or merger or because of the occurrence of any other circumstances under which the company is to be dissolved as stipulated in its articles of association, it shall not be dissolved until the approval of the CIRC has been obtained. To dissolve a foreign-invested insurance company, a liquidation committee shall be formed to oversee the liquidation process.

A foreign-invested insurance company operating life insurance business shall not be dissolved except for demerger and merger.

Article 27 Any foreign-invested insurance company that has its License to Engage in Insurance Business revoked by the CIRC due to any violation of laws or administrative regulations shall have its license revoked in accordance with the law; a liquidation committee shall promptly be formed to oversee the liquidation process according to the law.

Article 28 The liquidation of a foreign-invested insurance company as a result of its dissolution or the removal from the company register according to the law shall be publicized no less than three times in a newspaper within 60 days as of the date on which the liquidation committee is formed. The contents of the public notice shall be subject to CIRC examination and approval.

Article 29 Any foreign-invested insurance company that becomes unable to meet its liabilities as they fall due may, subject to CIRC approval, be declared bankrupt by the people's court in accordance with the law. Where a foreign-invested insurance company is to be declared bankrupt, a liquidation committee made up of relevant departments such as the CIRC and relevant individuals shall be appointed by the people's court to oversee the liquidation process.

Article 30 Where a foreign-invested insurance company is dissolved, removed from the company register or declared bankrupt in accordance with the law, it shall refrain from transferring any of its assets outside the territory of China before it has paid off its debts in full.

Chapter VI Legal Liability

Article 31 Any person who establishes a foreign-invested insurance company in violation of the Regulations or unlawfully engages in insurance business shall be banned by the CIRC. In the event that the violation constitutes the crime of establishing a financial institution without authorization, the crime of participating in illegal business activities or any other crime, the offender shall be criminally liable; where the offence is not so serious as to warrant criminal prosecution, any illegal proceed shall be confiscated by the CIRC and a fine of between one and five times the value of the illegal proceeds shall be imposed; where no illegal proceeds have been gained or the illegal proceeds are no more than CNY200,000, the offender shall be fined between CNY200,000 and CNY1 million.

Article 32 Where a foreign-invested insurance company violates the Regulations by engaging in insurance business beyond its approved scope of business, geographic area or client scope and such a violation constitutes the crime of participating in illegal business activities or any other crime, the offender shall be criminally liable; where the violation is not so serious as to warrant criminal prosecution, the CIRC shall order the offender to take corrective action and refund all premiums collected, confiscate any illegal proceed and impose a fine of between one and five times the value of any such illegal proceeds; where no illegal proceeds have been gained or the illegal proceeds are less than CNY100,000, the offender shall be fined between CNY100,000 and CNY500,000. Where the offender fails to take corrective action within the specified period of time or where its conduct has resulted in serious consequences, it shall either be ordered to suspend its business activities for a certain period of time or have its License to Engage in Insurance Business revoked.

Article 33 Where a foreign-invested insurance company violates the Regulations by acting in any of the following ways, the CIRC shall order it to take corrective action and impose a fine of between CNY50,000 and CNY300,000; where the circumstances are serious, it may be ordered to cease accepting new business or have its License to Engage in Insurance Business revoked:

1.    failing to transfer a security deposit or using the security deposit in violation of the relevant provisions;

2.    having any dealings with a connected enterprise in violation of the relevant provisions; or

3.    failing to supplement the registered capital or operating funds according to the provisions.

Article 34 Any foreign-invested insurance company that violates the Regulations by acting in any of the following ways shall be ordered by the CIRC to take corrective action within the prescribed period of time; in the event that the offender fails to take corrective action, it shall be fined between CNY10,000 and CNY100,000:

1.    failing to submit or provide relevant documents, materials or written reports in accordance with the relevant provisions; or

2.    failing to make a public announcement in accordance with the relevant provisions.

Article 35 Any foreign-invested insurance company that violates these Regulations by acting in any of the following ways shall be fined between CNY100,000 and CNY500,000 by the CIRC:

1.    providing false documents, materials or written reports;

2.    refusing or impeding lawful supervisory or inspection activities.

Article 36 Any foreign-invested insurance company that violates the Regulations by transferring its assets beyond territory of China shall be ordered by the CIRC to transfer the relevant assets back to the territory of China and amount of more than 20% of the value of the transferred assets and less than equivalent value thereof shall be fined.

Article 37 In the event that any foreign-invested insurance company violates any of the relevant laws or administrative regulations of China or the Regulations, the CIRC may disqualify its senior officers from holding any post in China either for a specified period of time or permanently.

Chapter VII Supplementary Provisions

Article 38 For any issue concerning the administration of foreign-invested insurance companies that is uncovered in the Regulations, the Insurance Law of the People's Republic of China or other relevant laws, administrative regulations or State provisions shall apply.

Article 39 The Regulations shall apply mutatis mutandis to the establishment and business operations of insurance companies within Mainland China by insurance companies from either of the Hong Kong or Macao Special Administrative Regions or from Taiwan region.

Article 40 The Regulations shall come into force as of February 1, 2002.