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Promulgated by Decree No.336 of the State Council of the People’s Republic of China on December 12, 2001
Chapter 1 General Provisions
1. In an aim to meet the demands of the opening up and economic development, strengthen and improve the supervision and management of insurance companies with foreign capitals, and promote the healthy development of insurance industry, Regulations on Administration of Foreign-funded Insurance Companies of the People’s Republic of China (the Regulations) are hereby formulated.
2. The insurance companies with foreign capitals stated herein include the following insurance companies approved for establishment and operation in China according to the provisions of the related laws and regulations of the People’s Republic of China.
(1) The insurance companies jointly invested and operated by the foreign insurance companies along with the domestic companies and enterprises (hereinafter referred to as the jointly funded insurance companies).
(2) The insurance companies with foreign capitals invested and operated in China by the foreign insurance companies alone (hereinafter referred to as the solely-funded insurance companies).
(3) The branches established in China by the foreign insurance companies (hereinafter referred to as branches of foreign insurance companies).
3. The insurance companies with foreign capitals must adhere to the laws and regulations in China and shall never harm the social and public interests of China.
All the regular business activities and lawful rights and interests of the insurance companies with foreign capitals shall be protected by the related laws in China.
4. China Insurance Regulatory Commission (hereinafter referred to as the CIRC) shall assume the responsibility for conducting the supervision and management of insurance companies with foreign capitals. The institutions assigned by the CIRC shall perform, according to the authorization of the CIRC, the regular supervision and management of the insurance companies with foreign capitals within their scopes of power.
Chapter 2 Establishment and Registration
5. The establishment of insurance companies with foreign capitals shall be approved by the CIRC.
The regions where the aforesaid companies are to be established shall be determined according to the related regulations by the CIRC.
6. When it comes to the insurance companies with foreign capitals specialized in the business of personal insurance and property insurance, their pattern of establishment and ratio of foreign capitals shall be defined according to the related regulations by the CIRC.
7. The registered capitals for the jointly funded insurance companies and the solely funded insurance companies shall be no less than CNY 0.2 billion or the freely convertible currencies of the same value. The minimal quota of the registered capitals must be the paid-up currency capitals. The investments from foreign insurance companies shall adopt the freely convertible currencies.
The branches of foreign insurance companies shall be granted free of charge by their head offices the operating funds in the form of freely convertible currencies with a value of no less than CNY 0.2 billion.
In conformity with the scope of business and scale of operation, the CIRC shall increase the minimal quota for the registered capitals or operating funds of insurance companies with foreign capitals as described in the above two items.
8. If the foreign insurance companies plan to apply for establishing the insurance companies with foreign capitals, they shall meet the following conditions:
(1) Having been engaged in the insurance business for over 30 years;
(2) Having the representative offices which have been operating in China for over 2 years;
(3) Claiming the total assets of no less than USD 5 billion at the end of the year before the applications are filed;
(4) The insurance supervisory systems are well established in the countries or regions where their headquarters are based, and they receive the effective supervisions from the competent authorities of the said countries and regions.
(5) Meeting the standards of solvency as defined by the said countries and regions;
(6) Having obtained approvals from the competent authorities of the said countries and regions;
(7) Other prudent conditions defined by the CIRC.
9. Once the insurance companies with foreign capitals are to be established, the applicants shall file the written applications to the CIRC and submit the following documents.
(1) The letters of application signed by the legal representatives of applicants, and cosigned by the legal representatives of all the parties involved in the joint ventures once the jointly funded insurance companies are to be established.
(2) Business licenses (copy), certificates of meeting the standards of solvency and the letters of comments on their applications verified and issued by the competent authorities of the countries and regions where the foreign applicants are headquartered;
(3) Articles of Association and annual reports of foreign applicants for the recent three years;
(4) Relevant materials of the Chinese applicants when the jointly funded insurance companies are to be established;
(5) Feasibility study reports and preparatory construction plans for the companies to be established;
(6) Lists, resumes and certificates of post qualification for the personnel responsible for preparatory construction in the companies;
(7) Other materials deemed as necessary by the CIRC.
10. The CIRC shall conduct the preliminary reviews over the applications for establishing the insurance companies with foreign capitals and make the decisions on whether the complete application documents are to be accepted or rejected within 6 months since the said documents are received. If the application documents are accepted, the formal application forms shall be issued. Otherwise, the written notices shall be provided for the applicants to explain the reasons.
11. The applicants shall complete the preparatory construction work within one year in receipt of the formal application forms. If the said work has not been completed within the defined period, an extension of 3 months shall be allowed for the well-grounded delays once approved by the CIRC. In case the preparatory construction work still remains unfinished even after the extension, the decisions of the CIRC on acceptance shall automatically become ineffective. If the preparatory construction work is completed, the applicants shall submit to the CIRC the completed application forms along with the following documents.
(1) Reports on the preparatory construction;
(2) Articles of Association of the companies to be established;
(3) Financial contributors and amounts of financial contribution of the companies to be established;
(4) Certificates of capital verification issued by the legal capital verification institutions;
(5) Letters of authorization for chief personnel in charge to be appointed in the companies;
(6) Lists, resumes and certificates of post qualification for the senior executives in the companies.
(7) Business planning and reinsurance plans of the companies in the next three years;
(8) Insurance clauses, and the instructions for calculating the insurance premium rates and the liability reserves for the insurances to be started in China;
(9) Materials about the business offices and other facilities related to business in the companies to be established;
(10) Letters of guarantee by which the head offices take the responsibility for the taxes and debts incurred by their branches if the foreign insurance companies intend to set up the branches;
(11) Contracts of joint operation if the jointly funded insurance companies are to be established;
(12) Other documents deemed as necessary by the CIRC.
12. The CIRC shall make the decisions on whether the applications are approved or rejected within 60 days in receipt of the complete and formal application documents for the establishment of the insurance companies. If the applications are approved, the licenses of insurance business shall be issued. Otherwise, the written notices shall be sent to the applicants for explaining the reasons.
If the insurance companies are approved for establishing, the applicants shall use their licenses of insurance business for handling the related proceedings in the administrative organs of industry and commerce to receive their business licenses.
13. Once the insurance companies with foreign capitals are established, the guarantee deposits shall be withdrawn according to 20% of their registered capitals or working capitals, and then deposited in the banks appointed by the CIRC. The guarantee deposits shall never be used for other purposes than settlement of debts when the liquidation of said companies is conducted.
14. When the insurance companies with foreign capitals are to establish the branches in China, the CIRC shall verify and approve the relevant application according to the related regulations.
Chapter 3 Scope of Business
15. In conformity with the scope of business defined by the CIRC, the insurance companies with foreign capitals are allowed to develop some or all the insurance businesses hereinafter:
(1) Property insurance business including the property loss insurance, liability insurance, credit insurance and other insurance businesses;
(2) Personal insurance business including the life insurance, health insurance, casualty accident insurance and other insurance businesses.
Once checked and approved by the CIRC, the insurance companies with foreign capitals are allowed to conduct such insurance businesses as the commercial risk insurance and omnibus clause insurance.
16. The same insurance companies with foreign capitals shall not conduct the property insurance and personal insurance at the same time.
17. The insurance companies with foreign capitals are permitted to conduct, according to the related laws, the reinsurance business for those insurance businesses as specified in Article 15 herein.
(1) Outward reinsurance;
(2) Inward reinsurance.
18. The insurance companies with foreign capitals shall have their specific scopes of business, regional scopes of business and scopes of service objects checked and approved according to the related regulations by the CIRC. The said companies shall only develop their insurance businesses within the defined scopes.
Chapter 4 Supervision and Management
19. The CIRC shall have the right to check the business status, financial status and use of funds in the insurance companies with foreign capitals, to demand the related documents, materials and written reports from the said companies within the specified period, and to penalize and handle the infringements in line with the related laws.
The insurance companies with foreign capitals shall be supervised and checked according to law by the CIRC, and shall provide the relevant documents, materials and written reports. They shall not find any excuse to refuse, hinder and conceal.
20. Unless approved by the CIRC, the insurance companies with foreign capitals shall develop none of the following transactions with the affiliated enterprises.
(1) Outward or inward reinsurance business;
(2) Assets sales and purchases or other transactions. The affiliated enterprises stated hereinbefore refer to the enterprises with any of the following relationships with the insurance companies with foreign capitals.
(1) Having the relation of control in terms of shares and financial contributions;
(2) Controlled together by the third party in terms of shares and financial contributions;
(3) Having other relationships in terms of interests.
21. The branches of foreign insurance companies shall submit within 3 months following the end of each accounting year to the CIRC the financial and accounting reports of their branches and head offices for the previous year, and then publish.
22. Once the head offices of the foreign insurance companies are found in any of the following cases, the branches shall submit to the CIRC the written reports within 10 days following the said cases.
(1) Changes of names, major leaders in charges and domiciles;
(2) Changes of capitals;
(3) Changes of shareholders with over 10% of total capitals or shares;
(4) Adjustments of scopes of business;
(5) Punished by the competent authorities of the relevant countries or regions;
(6) Heavy losses incurred;
(7) Separation, merger, dissolution, revocation according to law or declaration of bankruptcy;
(8) Other situations defined by the CIRC.
23. In case the head offices of the foreign insurance companies are dissolved, revoked according to law or declared bankrupt, the CIRC shall ban any new business of the branches concerned.
24. If the insurance companies with foreign capitals conduct the insurance business of foreign currencies, they shall adhere to the state regulations on exchange control.
Unless approved by the state exchange control organs, the insurance companies with foreign capitals shall have their insurance businesses priced and settled by Renminbi as long as their businesses are conducted in China.
25. Once the documents, materials and written reports shall be submitted according to the Regulations to the CIRC, the Chinese versions shall be furnished.
Chapter 5 Termination and Liquidation
26. The insurance companies with foreign capitals can be approved for dissolution by the CIRC in case of separation, merger and other causes for dissolution as defined by the Articles of Association. When the insurance companies with foreign capitals are dissolved, the liquidation team shall be established to handle the liquidation affairs.
The said companies with the business of life insurance shall not be dissolved unless separated or merged.
27. Once the insurance companies with foreign capitals are found to infringe the related laws and administrative regulations, they shall have their insurance business licenses suspended by the CIRC and the companies themselves revoked according to law. The CIRC shall organize and establish according to law the liquidation teams to start the liquidation work.
28. When the insurance companies with foreign capitals are liquidated because of dissolution and revocation according to law, the formal notices shall be published at least three times on the newspapers within 60 days following the establishment of the liquidation teams. The contents of the notices shall be reviewed and approved by the CIRC.
29. If the insurance companies with foreign capitals fail to repay the due debts, they shall be declared according to law bankrupt by the people’s courts once approved by the CIRC. If the said companies are declared bankrupt, the people’s courts shall organize the CIRC and other related departments and personnel to set up the liquidation teams to conduct the liquidation work.
30. In case the insurance companies with foreign capitals are dissolved, revoked according to law or declared bankrupt, their properties shall not be transferred abroad before all their debts are paid off.
Chapter 6 Legal Responsibilities
31. In case the insurance companies with foreign capitals are found to be established prior to formal approvals or to conduct the unlawful insurance businesses, the aforesaid infringements of the Regulations shall be banned by the CIRC. The criminal liability shall be investigated according to the provisions of crime of unauthorized establishment of financial institutions, crime of unlawful business or other crimes. If the offenses are not serious enough to investigate the criminal liabilities, all their illegal gains shall be confiscated by the CIRC. In addition, they shall be imposed a fine of once to five times the amount of the illegal gains. If there are no illegal gains or the illegal gains are less than CNY 200 thousand, a fine of not less than CNY200 thousand but not more than CNY1 million shall be imposed.
32. In case the insurance companies with foreign capitals are found to infringe the Regulations by conducting the insurance businesses beyond the approved scopes of business, regional scopes of business or scopes of service objects, the criminal liability shall be investigated according to the provisions of crime of unlawful business or other crimes. If the offenses are not serious enough to investigate the criminal liabilities, they shall be ordered for rectification and refund all the premiums collected by them. All their illegal gains shall be confiscated by the CIRC. In addition, they shall be imposed a fine of once to five times the amount of the illegal gains. If there are no illegal gains or the illegal gains are less than CNY 100 thousand, a fine of not less than CNY100 thousand but not more than CNY500 thousand shall be imposed. In case they fail to rectify within the specified periods or create serious consequences, they shall be ordered to suspend their operation within defined periods or have their insurance business licenses revoked.
33. If the insurance companies with foreign capitals are found to infringe the provisions of the Regulations and have any of the following acts, they shall be ordered by the CIRC for rectification and a fine of not less than CNY50 thousand but not more than CNY300 thousand shall be imposed. In case of the severe offense, they shall be ordered to stop accepting any new businesses or have their business insurance licenses revoked.
(1) Failing to draw the guarantee deposits according to the regulations or using the guarantee deposits against the regulations;
(2) Conducting any transactions with their affiliated enterprises against the regulations;
(3) Failing to fully complement the registered capitals or operating funds according to the regulations;
34. If the insurance companies are found to infringe the Regulations and have any of the following acts, they shall be ordered by the CIRC for rectification within a specified period. A fine of not less than CNY10 thousand but not more than CNY100 thousand shall be imposed in case they fail to conduct the rectifications on schedule.
(1) Failing to provide and submit the related documents, materials and written reports according to the regulations;
(2) Failing to publish the formal notices according to the regulations;
35. If the insurance companies with foreign capitals are found to infringe the Regulations and have any of the following acts, a fine of not less than CNY100 thousand but not more than CNY500 thousand shall be imposed by the CIRC.
(1) Providing the untrue documents, materials and written reports;
(2) Refusing or hindering the lawful supervision and check.
36. If the insurance companies with foreign capitals are found to transfer their properties abroad against the Regulations, they shall be ordered to recover their transferred properties by the CIRC and a fine of not less than 20% but not more than 100% of the value of the transferred properties shall be imposed.
37. If the insurance companies with foreign capitals are found to infringe the related laws, administrative regulations of China and the Regulations, the CIRC shall revoke the qualifications of those senior executives in the said companies concerned within a certain period and even during their lifetime in China.
Chapter 7 Supplementary Provisions
38. If the administration of insurance companies with foreign capitals are not stipulated by the Regulations, the Insurance Law of the People’s Republic of China, other related laws, administrative laws and regulations and other relevant state regulations shall prevail.
39. Once the insurance companies in Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan establish and operate the branches in Mainland China, the Regulations shall prevail.
40. The Regulations shall come into effect since February 1, 2002.
The China Securities Regulatory Commission
(This English version by Shenzhen Securities Information Co., Ltd. is for your reference only. In case any discrepancy exists between the Chinese and English context, the Chinese version shall prevail.) | 
