China Insurance Regulatory Commission Makes
Foreign Office, Investment Policy Announcements
The China Insurance Regulatory Commission, which regulates
the insurance industry in China, has announced regulations
for foreign representative offices in China, and plans
to allow insurance funds to invest in China's Shanghai
and Shenzhen exchanges.
On April 22, the China
Insurance Regulatory Commission (CIRC) announced new
regulations in English pertaining to foreign representative
offices in China. The new
regulations are aimed at reciprocity to foreign companies
doing business in China, and are based on requirements
of World Trade Organization (WTO) membership. WTO regulations
do not allow discrimination in favor of domestic companies
at the expense of foreign companies, and the new regulations
are aimed at leveling the playing field.
The CIRC has adopted a higher profile following China
Life's listing in Hong Kong and New York. Before its IPO,
China
Life was oversubscribed. The company came under criticism
for less than full disclosure of funds, when US$560 million
was found to be unaccounted for after the company went
public. After the disclosure, China Life has come under
a pall which has affected the perception of all Chinese
companies on Wall St. The end result is that almost all
Chinese companies which have come to market in the past
six months are now trading at less than their IPO price.
Another major insurance player which will come to market
is Ping
An Insurance, which is China's largest private insurer.
While the company is financially strong and growing in
China, it has repeatedly delayed its offering.
Another new CIRC regulation will allow companies to invest
their money into China's Shenzhen and Shanghai stock exchanges.
The new regulation, which will come into effect on June
1, stipulates that fund management companies must be organized
as limited liability companies or corporations, and must
be capitalized at a minimum of 30 million yuan. At the
same, the capitalization of the company must not be less
than .01 percent of the funds managed.
The CIRC regulation does not allow non-insurance companies
to invest their funds in a fund management company. Under
the regulations, the only two industries which meet these
requirements are mutual fund management companies and
securities companies. Observers believe that insurance
companies will be the third industry which is able to
meet the requirements.
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