CCTV News:According to the website of the China Insurance Regulatory Commission, the China Insurance Regulatory Commission recently revised and issued the Measures for the Administration of Equity of Insurance Companies. The person in charge of the relevant departments of the China Insurance Regulatory Commission pointed out that the "Measures" further improve the entry threshold and ensure that "the insurance industry is guaranteed" based on the principle of "letting people who really want to do insurance enter the insurance industry". The "Measures" clearly require investment insurance companies to use "self-owned funds with legitimate sources" to strengthen the examination of the authenticity of the shares.
How does the Measures further tighten shareholder access? The person in charge said that the "Measures" are based on the principle of "letting people who really want to do insurance enter the insurance industry", further improving the entry threshold, standardizing the investment and shareholding behavior, preventing improper interest transfer and various risks, and ensuring "the insurance industry’s surname is guaranteed".
First, strict access conditions, in terms of financial status, investment capacity and other aspects have put forward more stringent requirements.
The second is to set up a negative list of market access, which clearly stipulates that investors with unclear ownership structure or disputes, records of holding shares, providing false information or false statements, and bearing heavy responsibility for insurance companies’ business failures and major violations are not allowed to invest in shares.
Third, it is forbidden for investors who have cash flow fluctuations that are greatly affected by the economic boom, have a record of bad investment behavior in the open market, and have had bad influence from dishonest business practices to become controlling shareholders of insurance companies.
The fourth is to increase the consideration of shareholders’ capacity building in the industry.
How does the Measures strengthen the supervision of ownership structure? The person in charge said that in line with the principle of prudent supervision, the Measures reduced the upper limit of the shareholding ratio of a single shareholder from 51% to 1/3. At the same time, according to the principle of classified supervision, according to the shareholding ratio of shareholders and their influence on the operation and management of insurance companies, the shareholders of insurance companies are divided into control category (the shareholding ratio is more than 1/3, or their voting rights have a controlling influence on the resolutions of the shareholders’ meeting), strategic category (the shareholding ratio is more than 15% but less than 1/3, or their voting rights have a significant influence on the resolutions of the shareholders’ meeting), financial category II (the shareholding ratio is more than 5% but less than 15%), and financial category II. Different categories, different qualification requirements, different review priorities and different regulatory measures are imposed.
After the formal implementation of the new measures, in principle, the ownership structure of existing insurance companies will not be retroactively adjusted, but some insurance companies with potential risks in the ownership structure will be given window guidance and targeted regulatory measures will be taken. For the new behavior of investment insurance companies, the new regulatory requirements shall be strictly followed.
How does the Measures strengthen the supervision of capital authenticity? The person in charge said that the "Measures" clearly require investment insurance companies to use "their own funds with legitimate sources" to strengthen the examination of the authenticity of the shares.
First, it is clear that self-owned funds should be limited to net assets.
Second, in the form of a negative list, the types of funds that cannot be used to invest in insurance companies are clearly defined, including the prohibition of using insurance companies’ relevant loans, funds secured by insurance companies’ deposits or other assets, funds obtained by improper use of insurance companies’ financial influence or improper relationship with insurance companies to invest in insurance companies’ equity, etc.
Third, it is clear that the regulatory authorities can trace the source of their own funds upward according to the principle of penetrating supervision and substance over form. For those who use non-owned funds to invest in shares, measures are stipulated, including ordering the transfer of shares, revoking administrative licenses, and restricting investment in the insurance industry.
What are the requirements of the Measures for shareholders’ behavior, number of shares and holding period?
The person in charge said that regarding shareholders’ behavior, strict supervision of shareholders’ exercise process requires the establishment of an effective risk isolation mechanism, and it is not allowed to conduct improper related party transactions with insurance companies, and it is not allowed to use equity pledge to illegally hold shares, related shares and transfer shares in disguise, and it is not allowed to use controlling shareholders’ position to harm the interests of insurance companies, prevent the transmission of improper interests, and use insurance companies as ATMs and other risk behaviors.
Regarding the number of shares, in order to avoid similar vicious competition and encourage insurance companies to focus on their operations, the Measures stipulate that, except in special circumstances, the same investor, its related parties and concerted parties can only become the controlling shareholders of an insurance company operating similar businesses, and the total number of controlling shareholders and strategic shareholders shall not exceed two.
With regard to the holding period, it is stipulated that controlling shareholders are not allowed to transfer their shares within five years, strategic shareholders are not allowed to transfer their shares within three years, financial class II shareholders are not allowed to transfer their shares within two years, and financial class I shareholders are not allowed to transfer their shares within one year. The purpose is to prevent investors from speculating on licenses and forcing them to focus on the main business of insurance.
What measures does the Measures take to penetrate supervision?
The person in charge said that the "Measures" clearly stipulated that the regulatory authorities should carry out penetrating supervision of insurance companies according to the principle that substance is more important than form, and can make substantive identification of the shareholders of insurance companies and their actual controllers, related parties and concerted parties.
First, shareholders are required to explain the ownership structure step by step until the actual controller, as well as its relationship with other shareholders or the relationship of concerted action.
Second, in terms of shareholder qualification, it is stipulated that the shareholding ratio of shareholders, their related parties and concerted parties should be calculated together, and if the total shareholding reaches a certain type of shareholder standard, the shareholder with the highest shareholding ratio should meet the qualification conditions of this type of shareholder; At the same time, investors are required not to entrust others or accept others’ entrustment to hold shares in insurance companies.
Third, in terms of the source of funds, investors are required not to evade the regulatory provisions of their own funds in disguise by setting up shareholding institutions, and the regulatory authorities can trace the source of their own funds upwards. If the investor is an insurance company, it shall not use its registered capital to make repeated capital contributions to its subsidiaries step by step.
Fourth, in the supervision of the actual controller of shareholders, it is required that the shareholders whose main business is investment insurance companies should meet the conditions of shareholders if their actual controllers change; It also applies the prohibition conditions of controlling shareholders to the actual controllers of insurance companies.
How does the Measures strengthen the review measures and accountability? The person in charge said that the "Measures" established a full chain review and accountability mechanism for equity management through a series of regulatory means such as prior disclosure, in-process tracing and post-event accountability.
First, public supervision, the establishment of equity pre-disclosure, supervision and public inquiry system.
Second, shareholders’ statements, if shareholders make false statements, will not only affect their current shareholding behavior, but also affect their future investments in the insurance industry and even the financial industry.
The third is commitment, which requires insurance companies or shareholders to make commitments on the consequences of providing false information or false statements such as related relationships and shareholding funds.
Fourth, the special provisions of the articles of association require reasonable arrangements for the nomination and election rules of directors, the protection of the interests of minority shareholders, policyholders, insured and beneficiaries, so as to provide a basis for later accountability and regulatory disposal, and increase measures to deal with illegal or fraudulent licensing.
Fifth, strict accountability. For insurance companies, directors and senior managers of insurance companies, shareholders of insurance companies or related parties, the accountability methods for violations of laws and regulations are stipulated, bad records of equity management are established, incorporated into the enterprise credit information system, and joint punishment is implemented.
What are the regulatory measures and measures for illegal shareholders in the Measures? The person in charge said that the Measures enriched the means of shareholder supervision from many aspects and clarified the withdrawal mechanism:
First, it is stipulated that the regulatory authorities can investigate or publicly question the behavior of shareholders involving the equity of insurance companies.
The second is to require insurance companies or shareholders to provide false materials or false statements. If the circumstances are serious, the regulatory authorities will revoke the administrative license according to law, and require investors whose administrative licenses have been revoked to withdraw according to the lower of the share price and the net asset price per share.
The third is to stipulate that the regulatory authorities can restrict the relevant rights of illegal shareholders in insurance companies and order them to transfer or auction their shares according to law. If the transfer is not completed within the time limit, the investors who meet the relevant requirements will transfer the equity at the assessed price.
The fourth is to establish a negative list of investors’ market access, record investors’ violations of laws and regulations, and stipulate that the regulatory authorities can restrict investors from reinvesting in the insurance industry for more than five years until their lives. Anyone suspected of committing a crime shall be transferred to judicial organs according to law.