China will start to amend rules relevant to foreign-funded insurance companies in the near future, Shanghai Securities News reported Wednesday, citing anonymous sources.
The amendment in the Detailed rules for implementation of regulations of the People's Republic of China on administration of foreign-funded insurance companies may involve raising the proportion of foreign equity in a joint-equity life insurance company from 50 percent to 51 percent, according to Shanghai Securities News.
The amendment may also involve simplifying procedures and lowering requirements for joint-equity life insurance companies and solely foreign-funded life insurance companies to set up branches.
Under the current rules, where a joint-equity or wholly owned insurance company which has been established with a minimum registered capital of 200 million yuan, applies for the first time for the establishment of a branch in every other province, autonomous region, or municipality outside its base, it shall increase the registered capital by no less than 20 million yuan.
In addition, these companies should provide audited solvency status reports as of the end of the previous fiscal year and as of the end of the last quarter.
The amendment may also involve equity change.
Under the amendment, a foreign-funded insurance company should have at least one insurance company, which is in normal operation, as its major shareholder and if there is a change of shareholding, after the change, there should also be at least one insurance company, which is in normal operation, as its major shareholder.
The major shareholder would be prohibited from transferring its equities within 5 years and if the major shareholder wants to reduce its stake or exit from the Chinese market in the way of transferring equities, it still needs to fulfill its duty as a shareholder before the reduction or exit and it needs to supplement capital when necessary to make sure the insurance company has solvency as required by the authorities.
