Interim Measures for the Administration of Subordinated Term Debts of Insurance Companies
Interim Measures for the Administration of Subordinated Term Debts of Insurance Companies
Interim Measures for the Administration of Subordinated Term Debts of Insurance Companies
Order of the China Insurance Regulatory Commission [2011] No. 2
October 6, 2011
The Interim Measures for the Administration of Subordinated Term Debts of Insurance Companies, which were adopted at the chairman meeting of the China Insurance Regulatory Commission on August 22, 2011 after due deliberations, are hereby promulgated and shall come into force as of the date of promulgation.
Chairman: Wu Dingfu
Interim Measures for the Administration of Subordinated Term Debts of Insurance Companies
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with The Company Law of the People's Republic of China, The Insurance Law of the People's Republic of China and other relevant laws and administrative regulations for the purpose of regulating acts of insurance companies for their targeted collection, transfer, and repayment of principals and interests of subordinated term debts (hereinafter referred to as "subordinated debts") as well as information disclosure, and ensuring the solvency of insurance companies.
Article 2 For the purpose of these Measures, "insurance companies" shall mean Chinese-funded insurance companies, Sino-foreign joint venture insurance companies and wholly foreign-owned insurance companies established within the territory of China in accordance with the Chinese law.
Article 3 For the purpose of these Measures, "subordinated debts " shall mean the debts of an insurance company which are collected on a targeted basis by the insurance companies upon approval for the purpose of making up the temporary or phased shortage of capital, and whose time limit is five years or more, and the repayment order of whose principal and interests ranks after the liabilities in the insurance policy and other liabilities, and before the share right capital of the insurance company.
Article 4 Funds obtained by an insurance company from the targeted collection of subordinated debts may be included in the secondary capital but shall not be used to make up the daily operational losses of the insurance company. The amount of subordinated debts included in the secondary capital by an insurance company shall not exceed 50% of its net assets and the specific determination standard shall be separately prescribed by the China Insurance Regulatory Commission (hereinafter referred to as "the CIRC").
Article 5 Insurance groups (or holding companies) shall not collect subordinated debts.
Article 6 The CIRC supervise and regulate such acts of an insurance company as its targeted collection, management, repayment of principals and interests of subordinated debts and information disclosure.
Article 7 An insurance company that collects subordinated debts on a targeted basis (hereinafter referred to as the "collector") shall follow a sound management and operation approach so as to improve its solvency and protect the lawful rights and interests of the creditors of subordinated debts.
Chapter II Application
Article 8 An insurance company shall meet the conditions of these Measures when collecting subordinated debts on a targeted basis and report to the CIRC for examination and approval.
Article 9 If the solvency adequacy ratio of an insurance company is less than 150% or it is expected that its solvency adequacy ratio in the future two year will be less than 150%, it may apply to collect subordinated debts.
Article 10 An insurance company shall meet the following requirements when applying for targeted collection of subordinated debts:
1. The company has started business for more than three years;
2. The audited net assets at the end of the preceding year shall be no less than 500 million yuan;
3. After such collection, the accumulated amount of unpaid principals and interests of subordinated debts shall not exceed 50% of the un-audited net assets of the insurance company at the end of the preceding year;
4. The company has debt-paying ability
5. The company has a sound corporate governance structure;
6. The internal control system of the company is appropriate and is properly observed;
7. The assets of the company are not impropriated by any natural person, legal person or other organization and affiliated party that has actual control right thereto;
8.
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