CHINA INSURANCE REG OPENS 3RD EQUITIES M'MENT DRAFT TO PUBLIC

The China Insurance Regulatory Commission unveiled on Monday its third draft of Administrative Regulations on Equities in Insurance Companies, which will be open to public opinion until September 18.

In August of 2007 and March of 2008, the insurance regulator opened up its first and second drafts to public opinion. Compared to the second draft, the third has set stricter rules on changing insurance companies' shareholders.

It provides that if an insurance company wants to replace a shareholder owning more than five per cent of its total shares or total capital, the regulator's approval is necessary

The proportional requirement was more than 10 per cent in the previous draft.

It is believed that the rewrite is aimed at preventing frequent shareholders changes of insurance companies that may affect the continuity of their business.

And similar with the previous draft, the third bans the use of bank loans as capital for equity investments in insurers. It also stipulates that a single investor (including its related parties) may hold no more than one fifth of the share capital of an insurance company.

Divided into five chapters covering general provisions, equity changes, application materials, and supplementary provisions, the latest draft standardizes the equity management of Chinese capital insurers, that is,