Administrative Regulations of the People's Republic of China on Foreign-invested Insurance Companies (Revised in 2016)

Order of the State Council of the People's Republic of China No. 666

February 6, 2016

(Promulgated by the Order of the State Council of the People's Republic of China No. 336 on December 12, 2001, revised in accordance with the Decision of the State Council on Revising the Administrative Regulation of the People's Republic of China on Foreign-invested Insurance Companies with the docket No. as Order of the State Council of the People's Republic of China on February 6, 2016)

Chapter I General Provisions

Article 1 These Regulations have been enacted for the purpose of satisfying the requirements of opening up to the outside world and economic development, strengthening and improving the supervision and administration of foreign invested insurance companies, and promoting the healthy development of the insurance industry.

Article 2 The term "foreign invested insurance company" as referred to in these Regulations shall mean any of the following types of insurance companies established and approved in accordance with relevant laws and administrative regulations to carry on business within the territory of the People's Republic 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 a joint venture insurance company);
2. a foreign invested insurance company established and invested in by a foreign insurance company to carry on business operations within the territory of China (hereinafter referred to as a wholly foreign-owned insurance company); or
3. a branch office of a foreign insurance company established within the territory of China (hereinafter referred to as a foreign insurance company branch).

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 Sino-foreign 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.
The head office of a foreign invested insurance company shall provide its branch offices 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 required in the above two paragraphs.

Article 8 Any foreign insurance company that applies for permission to establish a foreign invested insurance company shall meet the following criteria:
1. it shall have been engaged in the insurance business for 30 years or more;
2. it shall have had a representative office established within the territory of China for no less than 2 years;
3. the applicant company's total assets as at the end of the year prior to the application for establishment shall be no less than USD 5 billion;
4. the country or region in which the foreign insurance company is based shall have a sound system for the regulation of insurance business and the foreign insurance company concerned 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 to seek to establish a Chinese operation from the relevant authority in the country or region concerned; 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 with the CIRC and submit the following materials:
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 signed by the legal representatives of the parties to the joint venture insurance company arrangement;
2. the duplicate 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 based;
3. the foreign applicant's articles of incorporation and annual reports for the past 3 years;
4. where the applicant seeks to establish a joint venture insurance company, relevant materials concerning the Chinese applicant;
5. a feasibility study and preparatory establishment plan for the company to be established;
6. the names and 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 of any application to establish a foreign invested insurance company and shall, within 6 months of the date on which it receives the complete set of application materials, decide whether or not to accept the application for consideration. Where it decides to accept the application for consideration, it shall issue the applicant with a formal application form; where it decides not to accept 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 of the date on which it receives the formal application form. Where it fails to do so, but can justify its failure to complete the preparatory work within the specified period of time, 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 decision to accept the application for consideration shall be automatically invalidated. After completing the preparatory work, the applicant shall fill in the formal application form and submit it to the CIRC for examination and approval, together with the following documents:
1. a preparatory establishment report;
2. the articles of incorporation 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 appointing the person in charge of the company to be established;
6. the names and resumes of and letters appointing the senior managers 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 office 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 office;
11. for a joint venture insurance company, the agreement relating to joint venture business operations; and
12. any other document required by the CIRC.

Article 12 The CIRC shall, within 60 days of receiving the complete formal application materials for the establishment of a foreign invested insurance company, decide 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, on the basis of 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 registered capital or operating funds to a bank designated by the CIRC. The security deposit may not be used for any purpose other than to clear 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 any or all of the following types of insurance business:
1. property insurance, including property loss insurance, liability insurance, credit insurance, etc; or
2. personal insurance, including life insurance, health insurance, accidental injury insurance, etc.
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, etc. within the scope of its permitted business activities.

Article 16 No foreign invested insurance company may be engaged in property insurance and personal insurance activities 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 these 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 have the power to inspect the business operations and financial affairs of and the expenditure of funds by foreign invested insurance companies, demand that foreign invested insurance companies provide relevant documents, materials and written reports within a prescribed period of time, and punish such companies in accordance with the law for any violation of law 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 Unless approved by the CIRC, a foreign investment insurance company shall not carry out sale and purchase of assets or other transactions with its associated enterprises.
The term "connected enterprise" as referred to in the preceding paragraph means an enterprise that has any of the following types of relationship with the foreign invested insurance company concerned:
1. a relationship whereby one party controls the other through a capital contribution or shareholding;
2. a relationship whereby both parties are controlled by a third party through its shareholdings or capital contributions; or
3. any other relationship whereby the parties have common interests.

Article 21 Branch offices of foreign invested insurance companies shall, within three months of the end of each financial 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 office of a foreign invested insurance company, the branch office shall, within 10 days of the date on which the relevant circumstances occur, notify the CIRC in writing of the relevant information:
1. any change in the name of the head office, the major person in charge 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 in which it is based;
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 office 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 office to cease accepting any new business.

Article 24 Foreign invested insurance companies engaged in foreign exchange insurance activities shall comply with the relevant foreign exchange provisions.
Any foreign invested insurance company that carries on business within Chinese territory shall settle its transactions in CNY unless it has obtained approval from the State Administration of Foreign Exchange to do otherwise.

Article 25 Documents, materials and written reports to be submitted or provided to the CIRC as specified in these 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 incorporation, 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 operated in life insurance business shall not be dissolved except for separation and mergence.

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 law 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 law.

Article 28 The liquidation of a foreign invested insurance company as a result of its dissolution or the revocation of its license according to law shall be publicized no less than three times in a newspaper within 60 days 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 Chinese territory 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 these Regulations or unlawfully engages in insurance business shall be ordered to take remedial action 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 proceeds shall be confiscated by the CIRC and a fine of between 1 and 5 times the value of the illegal proceeds shall be imposed; where no illegal proceeds have been gained or the illegal proceeds amount to 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 these 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 offending company shall be criminally liable; where the violation is not so serious as to warrant criminal prosecution, the CIRC shall order the offending company to take corrective action and refund all premiums collected, confiscate any illegal proceeds and impose a fine of between 1 and 5 times the value of any such illegal proceeds; where no illegal proceeds have been gained or the illegal proceeds do not amount to CNY100,000, the offending company shall be fined between CNY100,000 and CNY500,000. Where the offending company 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 these 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 comply with the provisions to supplement the registered capital or operating funds.

Article 34 Any foreign invested insurance company that violates these Regulations by acting in any of the following ways shall be ordered by the CIRC to take corrective action; in the event that the offending company fails to take corrective action within the prescribed period of time, 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 to accept or impeding lawful supervisory or inspection activities.

Article 36 Any foreign invested insurance company that violates these Regulations by transferring its assets beyond Chinese territory shall be ordered by the CIRC to transfer the relevant assets back to Chinese territory and be fined no less than 20% of the equivalent value of the transferred assets.

Article 37 In the event that any foreign invested insurance company violates any of the relevant laws or administrative regulations of China or these Regulations, the CIRC may disqualify its senior managers 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 not provided for in these Regulations, the Insurance Law of the People's Republic of China or other relevant laws, administrative regulations or State provisions shall apply.

Article 39 These Regulations shall be applicable 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.

Article 40 These Regulations shall come into force on February 1, 2002.