China’s regulator sets a lower ceiling on insurers’ shareholders to rein in a runaway industry
China Insurance Regulatory Commission seeks transparent ownership structure as rules take effect from April 10
China on Wednesday introduced new rules to restrict the ownership of big shareholders in insurance companies as it seeks transparent shareholding structures in the wake of the issues surrounding the country’s top life insurer Anbang Insurance Group.
Under the new rules introduced by the China Insurance Regulatory Commission (CIRC), a single shareholder will only be allowed to hold as much as 33 per cent stake in an insurer, down from the current cap of 51 per cent and prohibiting the holding of stakes through proxies.
The new rules, which take effect from April 10, also stipulate that investors must use their own funds to buy a stake in an insurer and cannot use a holding company or the transfer of expected returns to bypass capital restrictions.
Investors are also forbidden from misappropriating insurance funds or repurposing funds for investment.
All insurers have to build “clear and reasonable shareholding structure”, and must reveal “the actual controlling entity to the regulator”, said the document published on the CIRC’s website.
Sun Wujun, a professor with the School of Business in Nanjing University, said the regulator has picked an interesting timing to introduce the new rules, hinting at the ongoing National People’s Congress, China’s most important annual political meetings.
