In accordance with Article 4 of the Administrative Measures
on Equity Interest in Insurance Companies
("Measures"), which came into force on
10 June 2010, the maximum shareholding of any one shareholder in a
domestic insurance company cannot exceed 20% unless the shareholder
meets the requirements under Article 15 (as set out below) and has
obtained approval from the China Insurance Regulatory Commission
A domestic insurance company is defined under the Measures as an
insurance company in which the aggregate shareholding of its
foreign investor(s) is less than 25%.
On 9 April 2013, the CIRC promulgated the Notice on Relevant
Issues regarding Article 4 of the Administrative Measures on Equity
Interest in Insurance Companies
("Notice"), which supplements the
requirements under Article 4 and further clarifies the position. In
accordance with the Notice, a shareholder who meets the relevant
criteria (as set out below) can hold up to 51% equity interest in a
domestic insurance company.
A shareholder who wants to break through the 20% shareholding
limit must meet all of the following requirements: -
Requirements under Article 15 of the
Additional requirements under the Notice
being capable of making continuous capital contribution, with
each of the three most recent fiscal years being profit-making
having total assets of RMB10 billion or more at the end of the
having strong financial capability, with net assets of RMB200
million or more
having a net asset value of not less than 30% of the value of
being of a good creditworthiness and a leading company in its
the value of long-term equity investments (including the
investment in insurance companies) being no higher than its net
having invested in the domestic insurance company for three
years or more
not having acted in violation of the laws and regulations
regarding acts of insurance companies' shareholders
In addition, there is a three-year lock-up period before a
shareholder holding more than 20% equity interest in a domestic
insurance company is able to transfer its equity to another
investor, unless otherwise approved by the CIRC or transferred by
way of court auction. The Notice also provides that for any
domestic insurance company with less than three-year trading
history, none of its shareholders is allowed to hold more than 20%
of its equity.
According to the CIRC, it anticipates that the clarifications in
the Notice will help attract more strategic investors to invest in
the insurance industry so as to enhance the financial capacity of
the insurance industry; it may also help strengthen the
shareholders' responsibility so as to improve the corporate
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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