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March 8, 2018

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Home » Business » Finance

Supervision over insurers to tighten

CHINA’S insurance watchdog will enhance its supervision of the equity structure of insurers by tightening criteria on market entry for investors as well as monitoring shareholders’ behavior and scrutinizing share capital strictly.

The China Insurance Regulatory Commission will require insurers to set clear, reasonable and transparent equity structures to protect the rights and interests of policyholders, insured and beneficiaries, according to a statement detailing revised policies on its website.

Investors are now categorized into four types — finance type I, finance type II, strategic and controlling — and they are subject to strict restrictive standards to become shareholders.

A company hoping to become a qualified finance type I shareholder of an insurance company must show that it has been operating well, has sound finances and is profitable for the last fiscal year.

Also, any single shareholder’s stake in an insurance company has been cut from the previous 51 percent to a third, the statement said.

The CIRC also drafted a negative list on market entry by forbidding investors who have unclear ownership structures and hold poor record in the industry to become shareholders of insurance companies.

Investors should not transfer their shares within five years of becoming the controlling shareholders of the company, with a three year limit for strategic shareholders, two years for financial II shareholders and one year for financial I shareholders, the CIRC said.

The CIRC will strengthen its deep supervision of the equity structure, sources of funds and actual controllers of the insurance companies. Any change of actual controllers needs to be reported to the CIRC.


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