Regulation Governing Foreign-funded Insurance Companies

(Adopted at the 49th Executing Meeting of the State Council on December 5, 2001, promulgated by Decree No. 336 of the Premier of the People's Republic of China on December 12, 2001,and effective on February 1, 2002.)

Chapter I General Provisions

Article 1 For the purposes of suiting the needs of opening to the outside world and economic development, strictly and soundly supervising and administering foreign-funded insurance companies and promoting the healthy development of the insurance industry, this Regulation is formulated.

Article 2 In this Regulation, foreign-funded insurance companies mean the following insurance companies established and managed in the territory of China upon approval and under the provisions of relevant laws and administrative regulations of the People's Republic of China:
1. Joint-funded insurance companies managed in the territory of China by foreign insurance companies with Chinese companies or enterprises (hereinafter cited as the joint-funded insurance company);
2. Foreign capital insurance companies invested and managed in the territory of China by foreign insurance companies (hereinafter cited as the sole-funded insurance company); and
3. Branch offices established in the territory of China by foreign insurance companies (hereinafter cited as the branch office of the foreign insurance company).

Article 3 Foreign-funded insurance companies must comply with laws and regulations of China, and may not prejudice the social and public interests of China.Chinese Laws shall protect lawful business activities and legitimate interests of foreign-funded insurance companies.

Article 4
China Insurance Regulatory Commission (hereinafter cited as 
the CIRC) shall be responsible for supervising and 
administering foreign-funded insurance companies. According to 
its authorization, its accredited offices shall impose the 
routine supervision and administration on foreign-funded 
insurance companies within their respective jurisdictions.

Chapter II Establishment and Registration
Article 5
The establishment of foreign-funded insurance companies shall 
be in possession of approval of the CIRC.
Under the relevant provisions, the CIRC shall determine the 
areas where foreign-funded insurance companies may be 
established.
Article 6
Under the relevant provisions, the CIRC shall specify the form 
and foreign capital ratio for foreign-funded insurance 
companies engaging in personal insurance business or in 
property insurance business.
Article 7
The minimum registered capital of the joint- or sole-funded 
insurance company shall be 200 millions RMB yuan or the 
convertible money equivalent to that amount. The minimum 
registered capital must be the money capital paid in. The 
contributions of foreign insurance companies shall be the 
convertible money.
The working capital of the branch office of the foreign 
insurance company shall be the convertible money equivalent to 
not less than 200 million RMB yuan rendered gratis by the head 
office of that company.
According to the business scope and scale of foreign-funded 
insurance companies, the CIRC may raise the minimum registered 
or working capital specified in the two paragraphs above. 
Article 8
The foreign insurance company applying for establishing a 
foreign-funded insurance company shall satisfy the following 
conditions:
1. Having carried on insurance business in more than 30 years;
2. Having a representative office in the territory of China in 
more than two years;
3. Having total assets of not less than US $ 50 billion at the 
end of the year prior to the application;
4. Having a sound system for insurance control in the country 
or region where it is located, and being effectively 
controlled by the competent authorities of that country or 
region;
5. Having the paying ability set by the country or region 
where it is located;
6. Having the consent from the competent authority of the 
country or region where it is located for its application; and
7. Satisfying other prudential conditions specified by the 
CIRC.
Article 9
The applicant for the foreign-funded insurance company shall 
file a request in writing with, and submit the following 
materials to, the CIRC:
1. The written request signed by the legal representative of 
the applicant, or in respect of the joint-funded insurance 
company, the written request signed by legal representatives 
of all the parties thereto;
2. The business license (its copy) of the foreign applicant, 
the paying ability certificate and the written opinion on the 
request, which shall be issued by the competent authorities of 
the country or region where the foreign applicant is located;
3. Company articles of association and annual reports in the 
last three years of the foreign applicant;
4. In respect of the joint-funded insurance company, relevant 
materials about the Chinese applicant;
5. The feasibility study report and preparatory plan for the 
company intended;
6. The name list, curricula vitae and qualification 
certificates of the persons responsible for preparation of the 
company intended; and
7. Other materials specified by the CIRC.
Article 10
The CIRC shall make a preliminary examination over the request 
for the foreign-funded insurance company and within six months 
from the date of receipt of all materials of request, make a 
decision of acceptance or denial. If deciding to accept, it 
shall issue an official form of application; if deciding to 
deny, it shall notify the applicant and give the reasons in 
writing.
Article 11
Within one year from the date of receipt of the official form 
of application, the applicant shall complete preparations. If 
he fails to complete preparations as scheduled but has 
justified grounds, the period for preparations may be extended 
for three months upon approval by the CIRC. If he still fails 
to complete preparations within the extended period, the 
decision of acceptance made by the CIRC shall automatically 
become invalid. After preparations, the applicant shall submit 
the official form of application he filled out, together with 
the following documents, to the CIRC for examination and 
approval:
1. The report on preparations;
2. The articles of association of the company intended;
3. Investors and their contributions in the company intended;
4. The capital verification certificate issued by the official 
verification agency;
5. The letter of authorization to the principal officers 
responsible for the company intended;
6. The name list, curricula vitae and qualification 
certificates of the superior managerial staffs of the company 
intended;
7. The business program and reinsurance plan of the company 
intended in the near future three years;
8. Descriptions on insurance clauses, premium and rate, and 
liability reserve computation for the types of insurance 
intended in the territory of China;
9. Materials about the business site and other facilities for 
the business of the company intended;
10. In respect of the branch office of the foreign insurance 
company, the guarantee of the head office for assuming 
liabilities for taxes and debts of the branch office;
11. In respect of the joint-funded insurance company, the 
contract for joint-funded business; and
12. Other documents specified by the CIRC.
Article 12
The CIRC shall make the decision of approval or disapproval 
within 60 days from the date of receipt of all the official 
documents of application. If deciding to approve, it shall 
issue the insurance business permit; if deciding to 
disapprove, it shall notify the applicant and give the reasons 
in writing.
If the foreign-funded insurance company is approved, the 
applicant shall accomplish registration at the industrial and 
commercial administration authority based on the insurance 
business permit and obtain the business license.
Article 13
After the foreign-funded insurance company is established, the 
guarantee reserve shall be allocated at 20% of the total 
registered or working capital and deposited in the bank 
designated by the CIRC. The guarantee reserve shall be used 
only for paying debts when it enters into liquidation and may 
not be used for other purposes.
Article 14
Under the relevant provisions, the CIRC shall examine and 
approve the branches of foreign-funded insurance companies in 
the territory of China.

Chapter III Business Scope
Article 15
Within the business scope approved by the CIRC, foreign-funded 
insurance companies may, wholly or partly, carry on the 
following types of insurance business according to law:
1. Property insurance business, including property damage 
insurance, liability insurance, credit insurance and others; 
and
2. Personal insurance business, including life insurance, 
health insurance, accident injury insurance and others;

Upon approval by the CIRC under the relevant provisions, 
foreign-funded insurance companies may carry on large 
commercial risk insurance business and block policy insurance 
business within the approved scope.
Article 16
No foreign-funded insurance company may concurrently carry on 
property insurance business and personal insurance business.
Article 17
Foreign-funded insurance companies may, according to law, 
carry on the following types of reinsurance of insurance 
business specified in Article 15 of this Regulation:
1. Outward reinsurance; and
2. Inward reinsurance.
Article 18
The specific scopes of business, regional area and service 
target of foreign-funded insurance companies shall be 
determined by the CIRC under the relevant provisions. 
Foreign-funded insurance companies may carry on insurance 
business activities only within the scopes determined.

Chapter IV Supervision and Administration
Article 19
The CIRC shall be entitled to inspect the conditions of 
business, finance and capital use of foreign-funded insurance 
companies, to require foreign-funded insurance companies to 
submit relevant documents, materials and written reports 
within the specified period and according to law, to punish 
and treat their irregular conducts.
Foreign-funded insurance companies shall accept the 
supervision and inspection imposed by the CIRC according to 
law, truthfully submit relevant documents, materials and 
written reports, and may not have any refusal, obstruction or 
concealment.
Article 20
Unless as approved by the CIRC, foreign-funded insurance 
companies may not have the following trading activities with 
their affiliate enterprises:
1. Inward or outward reinsurance; and
2. Assets trading or other trading.
Affiliate enterprises mentioned in the paragraph above mean 
the enterprises having any of the following relations with 
foreign-funded insurance companies:
1. Relation of control in respect of share or capital;
2. Being controlled by the same third party in respect of 
share or capital; or
3. Any other relation in respect of benefits.
Article 21
Branch offices of foreign insurance companies shall, within 
three months after the end of each accounting year, submit 
financial accounting reports in the last year of them and 
their head offices to the CIRC and publish these reports.

Article 22
The branch office of the foreign insurance company shall, if 
its head office is under any of the following situations, 
submit a written report on the situation to the CIRC within 
ten days after the date of occurrence of the situation:
1. To Change name, principal responsible person or place of 
registration;
2. To adjust the amount of capital;
3. To change the shareholder who holds more than 10% of the 
total capital or shares;
4. To adjust the business scope;
5. To be punished by the competent authority of the country or 
region where it is located;
6. To have a serious loss;
7. To split, merge, dissolve, be revoked or declared bankrupt 
according to law; or
8. To have any other situations specified by the CIRC.
Article 23
If the head office of the foreign insurance company is 
dissolved, revoked or declared bankrupt according to law, the 
CIRC shall prohibit the new business of the branch office.
Article 24
Foreign exchange insurance business of foreign-funded 
insurance companies shall comply with the provisions of the 
State on foreign exchange control.
Unless as approved by the foreign exchange authority of the 
State, foreign-funded insurance companies shall use RMB in 
counting and settling their insurance business in the 
territory of China.
Article 25
Documents, materials and written reports provided and 
submitted to the CIRC under the provisions of this Regulation 
shall be in the Chinese language.

Chapter V Termination and Liquidation
Article 26
When a foreign-funded insurance company falls into split, 
merge or occurrence of the cause of dissolution stipulated in 
its articles of association, it shall be dissolved after 
approval by the CIRC. If the foreign-funded insurance company 
is dissolved, it shall form a liquidation group and carry out 
liquidation according to law.
Foreign-funded insurance companies engaging in life insurance 
business may not be dissolved, but may be split or merged.
Article 27
When a foreign-funded insurance company violates laws and 
administrative regulations, thus being revoked its insurance 
business permit, the CIRC shall dissolve it and organize, in 
time, to form a liquidation group and to carry out liquidation 
according to law.
Article 28
When a foreign-funded insurance company enters into 
liquidation due to dissolution or revocation according to law, 
it shall make public notice in the newspaper at least three 
times within 60 days from the date of the formation of the 
liquidation group. The contents of public notice shall be in 
possession of approval of the CIRC.
Article 29
When a foreign-funded insurance company is unable to pay its 
due debts, the people's court shall declare its bankruptcy 
according to law with the consent of the CIRC. If the 
foreign-funded insurance company is declared bankruptcy, the 
people's court shall organize relevant departments such as the 
CIRC and relevant persons to form a liquidation group and to 
carry out liquidation.
Article 30
If a foreign-funded insurance company is dissolved, revoked or 
declared bankruptcy according to law, it may not transfer its 
property out of the territory of China before it pays its all 
debts.

Chapter VI Legal Responsibility
Article 31
If, in violation of the provisions of this Regulation, a 
foreign-funded insurance company is established without 
approval or illegally carries on insurance business 
activities, the CIRC shall ban it; and concurrently, its 
criminal responsibility shall be demanded according to law 
under the provisions of the Crime Law on crimes of illegally 
establishing financial institutions, crimes of illegally 
operations or other crimes; if the criminal punishment is 
inappropriate, the CIRC shall confiscate the ill-gotten gains 
therefrom and impose a fine exceeding one time but not 
exceeding five times the ill-gotten gains thereon; if the 
ill-gotten gains has not been received or is less than 200,000 
yuan, the CIRC shall impose a fine exceeding 200,000 yuan but 
not exceeding 1,000,000 yuan thereon.

Article 32
If a foreign-funded insurance company, in violation of the 
provisions of this Regulation, carries on insurance business 
activities beyond the approved scope of business, regional 
area or service target, its criminal responsibility shall be 
demanded according to law under the provisions of the Crime 
Law on crimes of illegal operations or other crimes; if the 
criminal punishment is inappropriate, the CIRC shall order it 
to make corrections and to return the premium it received, 
confiscate the ill-gotten gains therefrom and impose a fine 
exceeding one time but not exceeding five times the ill-gotten 
gains thereon; if the ill-gotten gains has not been received 
or is less than 100,000 yuan, the CIRC shall impose a fine 
exceeding 100,000 yuan but not exceeding 500,000 yuan thereon; 
if it fails to make corrections as scheduled or causes a 
serious result, the CIRC shall order it to stop business 
within a specified limit of time or revoke the insurance 
business permit.
Article 33
If a foreign-funded insurance company, in violation of the 
provisions of this Regulation, commits any of the following 
acts, the CIRC shall order it to make corrections and impose a 
fine exceeding 50,000 yuan but not exceeding 300,000 yuan 
thereon; if the circumstance is serious, the CIRC may order it 
to stop the acceptance of new business or revoke the insurance 
business permit:
1. Failing to deposit the guarantee reserve according to the 
provisions or using the guarantee reserve in violation of the 
provisions;
2. Having trading activities with its affiliate enterprise in 
violation of the provisions; or
3. Failing to have the full amount of registered or working 
capital as required.
Article 34
If a foreign-funded insurance company, in violation of the 
provisions of this Regulation, commits any of the following 
acts, the CIRC shall order it to make corrections within a 
specified limit of time; if it fails to make corrections as 
scheduled, the CIRC shall impose a fine exceeding 10,000 yuan 
but not exceeding 100,000 yuan thereon:
1. Failing to submit or provide a document, material or 
written report according to the provisions; or
2. Failing to make public notice according to the provisions.
Article 35
If a foreign-funded insurance company, in violation of the 
provisions of this Regulation, commits any of the following 
acts, the CIRC shall impose a fine exceeding 100,000 yuan but 
not exceeding 500,000 yuan thereon:
1. To submit a false document, material or written report; or
2. To refuse or obstruct the supervision or inspection imposed 
according to law.

Article 36 If a foreign-funded insurance company, in violation of the provisions of this Regulation, transfers its property out of the territory of China, the CIRC shall order it to return back the property it transferred and impose a fine exceeding 20% of the value of that property but not exceeding the value of that 
property.

Article 37 If a foreign-funded insurance company violates the provisions of the relevant laws or administrative regulations of the State or this Regulation, the CIRC may terminate the qualifications of the superior managerial staffs of that 
foreign-funded insurance company for the positions in China within a certain period of time or even up within the whole life.

Chapter VII Supplementary Provisions

Article 38 Where this Regulation remains silent in respect of governing 
foreign-funded insurance companies, the Insurance Law of the People's Republic of China, other laws and administrative regulations and other relevant provisions of the State shall apply thereto.

Article 39 Insurance companies established and managed in the mainland by insurance companies of Hong Kong special administrative area, Macao special administrative area and Taiwan region shall be governed by applying mutatis mutandis this Regulation.

Article 40 This Regulation shall enter into operation on February 1,  2002.